UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(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, 2004

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
     FOR THE TRANSITION PERIOD  FROM ________TO__________


                         Commission File Number: 022597


                                  CIMNET, INC.
               --------------------------------------------------
               (Exact name of registrant as specified in charter)


           Delaware                                           52-2075851
  ------------------------------                        ----------------------
  State or other jurisdiction of                          (I.R.S. Employer
   incorporation or organization                        Identification Number)


                946 W. Penn Avenue, Robesonia, Pennsylvania  19551
               ----------------------------------------------------
               (Address of principal executive offices)  (Zip Code)


         Issuer's telephone number, including area code: (610) 693-3114
                                                         --------------


Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. (1) Yes [X] No [ ]

The Company has 7,273,859 shares of common stock, par value $.0001 per share,
outstanding as of August 16, 2004.
<PAGE>

TABLE OF CONTENTS

                                                                            Page
                                                                            ----

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

Item 1     Financial Statements
           Balance Sheets                                                     1
           Statements of Operations                                           2
           Statements of Cash Flows                                           3
           Notes to Financial Statements                                      4

Item 2     Management's Discussion and Analysis or Plan of Operations        10

Item 3     Controls and Procedures                                           12

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

Item 1     Legal Proceedings                                                 13

Item 2     Changes in Securities and Small Business Issuer Purchases of
            Equity Securities                                                13

Item 3     Defaults Upon Senior Securities                                   13

Item 4     Submission of Matters to Vote of Security Holders                 13

Item 5     Other Information                                                 13

Item 6     Exhibits and Reports on Form 8-K                                  13

Signatures                                                                   14

Exhibit 31                                                                   15

Exhibit 32                                                                   17
<PAGE>
<TABLE>
<CAPTION>

                                  CIMNET, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

                                 BALANCE SHEETS
                                     ASSETS

                                                                June 30,     December 31,
                                                                  2004           2003
                                                              -----------    -----------
                                                              (Unaudited)
<S>                                                           <C>            <C>
CURRENT ASSETS
   Cash and cash equivalents                                  $   163,027    $   137,641
   Available for sale securities                                        0        201,016
   Accounts receivable, net of allowance of $11,484
    at June 30, 2004 and $17,022 at December 31, 2003             219,381        333,108
   Other Receivables                                                    0         75,000
   Inventories                                                     90,663         94,841
   Prepaid expenses                                                53,847         57,254
   Income taxes receivable                                        266,103        266,103
                                                              -----------    -----------

         Total Current Assets                                     793,021      1,164,963

PROPERTY AND EQUIPMENT, NET                                       521,765        575,865
GOODWILL                                                        2,364,145      2,364,145
OTHER ASSETS                                                      134,500         77,500
                                                              -----------    -----------

                                                              $ 3,813,431    $ 4,182,473
                                                              ===========    ===========
                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Line of Credit                                             $   499,068    $   331,000
   Current portion of long-term debt                               50,867         59,067
   Accounts payable                                                39,582        103,287
   Accrued expenses                                                63,647         68,968
   Accrued income taxes                                                 0         19,077
   Dividends payable on preferred stock                           226,000        186,000
   Deferred income                                                932,279        965,977
                                                              -----------    -----------

         Total Current Liabilities                              1,811,443      1,733,376

LONG-TERM DEBT, NET OF CURRENT PORTION                            108,376        127,705
                                                              -----------    -----------
                                                                1,919,819      1,861,081
                                                              -----------    -----------
STOCKHOLDERS' EQUITY
   Common stock, 15,000,000 shares authorized at
     $.0001 par value; 6,553,859 shares issued and
     outstanding at June 30, 2004 and December 31, 2003               655            655
   Preferred stock, $.0001 8% cumulative convertible;
     5,000,000 shares authorized; 746,965 shares issued and
     outstanding at June 30, 2004 and December 31, 2003                75             75
   Paid-in capital                                              5,566,474      5,557,761
   Accumulated deficit                                         (3,650,196)    (3,002,737)
   Accumulated other comprehensive loss                                 0       (174,481)
   Deferred stock compensation                                    (23,396)       (59,881)
                                                              -----------    -----------

                                                                1,893,612      2,321,392
                                                              -----------    -----------
                                                              $ 3,813,431    $ 4,182,473
                                                              ===========    ===========
</TABLE>

                                       1
<PAGE>
<TABLE>
<CAPTION>

                                  CIMNET, INC.
                          NOTES TO FINANCIAL STATEMENTS

                                   (Unaudited)

                            STATEMENTS OF OPERATIONS
                                                          Three Months                   Six Months
                                                         Ended June 30,                   June 30,
                                                   --------------------------    --------------------------
                                                      2004           2003           2004            2003
                                                   -----------    -----------    -----------    -----------
                                                           (Unaudited)                  (Unaudited)
<S>                                                <C>            <C>            <C>            <C>
NET SALES                                          $   558,937    $   602,474    $ 1,281,815    $ 1,445,440

COST OF GOODS SOLD                                      59,003         78,112        181,215        123,945
                                                   -----------    -----------    -----------    -----------

       Gross Profit                                    499,934        524,362      1,100,600      1,321,495
                                                   -----------    -----------    -----------    -----------
OPERATING EXPENSES
   Selling, general and administrative                 470,434        560,655        962,843      1,165,448
   Research and development                            289,638        431,889        620,027        892,322
                                                   -----------    -----------    -----------    -----------
                                                       760,072        992,544      1,582,870      2,057,770
                                                   -----------    -----------    -----------    -----------

       Operating Loss                                 (260,138)      (468,182)      (482,270)      (736,275)
                                                   -----------    -----------    -----------    -----------
NONOPERATING INCOME (EXPENSES)
   Interest income (expense), net                       (7,743)        (2,124)       (14,000)           624
   Loss on sale of available for sale securities             0       (176,006)      (115,135)      (176,006)
   Other income                                         13,141         13,141         26,282         26,283
                                                   -----------    -----------    -----------    -----------

                                                         5,398       (164,989)      (102,853)      (149,099)
                                                   -----------    -----------    -----------    -----------

       Loss before Income Tax Benefit                 (254,740)      (633,171)      (585,123)      (885,374)

INCOME TAX BENEFIT                                           0       (143,325)             0       (238,647)
                                                   -----------    -----------    -----------    -----------

       Net Loss                                    $  (254,740)   $  (489,846)   $  (585,123)   $  (646,727)
                                                   ===========    ===========    ===========    ===========

NET LOSS PER COMMON SHARE - BASIC AND DILUTED      $     (0.04)   $     (0.08)   $     (0.10)   $     (0.11)
                                                   ===========    ===========    ===========    ===========
</TABLE>

The accompanying notes are an integral part of these statements.

                                       2
<PAGE>
<TABLE>
<CAPTION>

                                  CIMNET, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

                            STATEMENTS OF CASH FLOWS

                                                                             Six Months
                                                                           Ended June 30,
                                                                        2004           2003
                                                                     -----------    -----------
                                                                            (Unaudited)
<S>                                                                  <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                           $  (585,123)   $  (646,727)
  Adjustments to reconcile net loss to net cash
      provided by (used in) operating activities:
         Depreciation and amortization                                    55,170         70,325
         Reduction in provision for doubtful accounts                     (5,588)       (28,808)
         Realized loss on sale of securities                             115,135        176,006
         Deferred income tax benefit                                           0       (226,049)
         Stock options, employees                                         21,862         40,187
         Stock options and warrants, legal and consulting services         1,000              0
         (Increase) decrease in assets:
            Accounts receivable                                          194,315        607,956
            Inventories                                                    4,178         (1,734)
            Prepaid expenses                                               3,407        (25,184)
            Income taxes receivable                                            0        510,867
         Increase (decrease) in liabilities:
            Accounts payable                                             (63,705)        19,555
            Accrued expenses                                              (5,321)       (57,279)
            Accrued income taxes                                         (19,077)             0
            Deferred income                                              (33,698)      (282,462)
                                                                     -----------    -----------

            Net Cash Provided by (Used in) Operating Activities         (317,445)       156,652
                                                                     -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES
  Investment in Limited Partnership                                       (7,000)             0
  Purchase of property and equipment                                      (1,070)        (4,853)
  Investment in software license rights                                  (50,000)             0
  Purchase of available for sale securities                                    0        (73,567)
  Proceeds from the sale of available for sale securities                260,362         73,460
                                                                     -----------    -----------

            Net Cash Provided by (Used in) Investing Activities          202,292         (4,960)
                                                                     -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Net borrowings on line of credit                                       168,068              0
  Principal payments on long-term borrowings                             (27,529)       (24,011)
                                                                     -----------    -----------

            Net Cash Provided by (Used in) Financing Activities          140,539        (24,011)
                                                                     -----------    -----------

            Net Increase in Cash and Cash Equivalents                     25,386        127,682

CASH AND CASH EQUIVALENTS - BEGINNING                                    137,641        117,825
                                                                     -----------    -----------

CASH AND CASH EQUIVALENTS - ENDING                                   $   163,027    $   245,507
                                                                     ===========    ===========
</TABLE>

The accompanying notes are an integral part of these statements.

                                       3
<PAGE>

                                  CIMNET, INC.
                          NOTES TO FINANCIAL STATEMENTS

                                   (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

                  The accompanying unaudited financial statements have been
         prepared in accordance with accounting principles generally accepted in
         the United States of America. Certain information and footnote
         disclosures normally included in financial statements under accounting
         principles generally accepted in the United States of America have been
         condensed or omitted pursuant to the Securities and Exchange Commission
         rules and regulations. These financial statements should be read in
         conjunction with the financial statements and notes thereto included in
         Form 10-KSB for the fiscal year ended December 31, 2003. In the opinion
         of management, all adjustments (consisting only of normal recurring
         adjustments) necessary for a fair presentation of the financial
         statements have been included. The results of operations for the six
         month period and three month period ended June 30, 2004, are not
         necessarily indicative of the results which may be expected for the
         entire fiscal year.

NOTE 2 - NET LOSS PER COMMON SHARE

                  Basic net loss per common share is calculated by dividing the
         net loss less preferred stock dividends and less the accretion of the
         discount on preferred stock by the weighted average number of shares of
         common stock outstanding. Diluted net income per share is calculated by
         adjusting the weighted average number of shares of common stock
         outstanding to include the effect of stock options and warrants, if
         dilutive, using the treasury stock method and the effects of
         convertible preferred shares outstanding, using the if-converted
         method.

                  The Company's calculation of net income per common share in
         accordance with SFAS No. 128 for the six months ended June 30, 2004 is
         as follows:
<TABLE>
<CAPTION>

                                                            Weighted
                                                             Average
                                              Income         Shares        Per Share
                                            (Numerator)   (Denominator)     Amount
                                            -----------    -----------    -----------
<S>                                         <C>              <C>          <C>
Basic and diluted earnings per share:
   Net loss                                 $  (585,123)
   Preferred stock dividends                    (40,000)
   Accretion of preferred stock discount        (22,338)
                                            -----------
   Net loss available to common
       stockholders                         $  (647,461)     6,553,859    $     (0.10)
                                            ===========    ===========    ===========
</TABLE>

                                       4
<PAGE>

                                  Cimnet, Inc.
                          NOTES TO FINANCIAL STATEMENTS

                                   (Unaudited)

NOTE 2 - NET LOSS PER COMMON SHARE (CONTINUED)

                  The Company's calculation of net income per common share in
         accordance with SFAS No. 128 for the three months ended June 30, 2004
         is as follows:

<TABLE>
<CAPTION>

                                                            Weighted
                                                             Average
                                              Income         Shares        Per Share
                                            (Numerator)   (Denominator)     Amount
                                            -----------    -----------    -----------
<S>                                         <C>              <C>          <C>
Basic and diluted earnings per share:
   Net loss                                 $  (254,740)
   Preferred stock dividends                    (20,000)
   Accretion of preferred stock discount        (11,169)
                                            -----------
   Net loss available to common
       stockholders                         $  (285,909)     6,553,859    $     (0.04)
                                            ===========    ===========    ===========
</TABLE>

                  A total of 1,702,500 common stock options and warrants and
         746,965 shares of convertible preferred stock were not included in the
         computation of diluted earnings per share because of their
         anti-dilutive effect.

                  The Company's calculation of net income per common share in
         accordance with SFAS No. 128 for the six months ended June 30, 2003 is
         as follows:
<TABLE>
<CAPTION>

                                                            Weighted
                                                             Average
                                              Income         Shares        Per Share
                                            (Numerator)   (Denominator)     Amount
                                            -----------    -----------    -----------
<S>                                         <C>              <C>          <C>
Basic and diluted earnings per share:
   Net loss                                 $  (646,727)
   Preferred stock dividends                    (40,000)
   Accretion of preferred stock discount        (22,338)
                                            -----------
   Net loss available to common
       stockholders                         $  (709,065)     6,292,321    $     (0.11)
                                            ===========    ===========    ===========
</TABLE>

                                       5
<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

                                   (Unaudited)

                  The Company's calculation of net income per common share in
         accordance with SFAS No. 128 for the three months ended June 30, 2003
         is as follows:
<TABLE>
<CAPTION>

                                                            Weighted
                                                             Average
                                              Income         Shares        Per Share
                                            (Numerator)   (Denominator)     Amount
                                            -----------    -----------    -----------
<S>                                         <C>              <C>          <C>
Basic and diluted earnings per share:
   Net loss                                 $  (489,846)
   Preferred stock dividends                    (20,000)
   Accretion of preferred stock discount        (11,169)
                                            -----------
   Net loss available to common
       stockholders                         $  (521,015)     6,292,321    $     (0.08)
                                            ===========    ===========    ===========
</TABLE>

                  A total of 1,767,500 common stock options and warrants and
         746,965 shares of convertible preferred stock were not included in the
         computation of diluted earnings per share for the six months and three
         months ended June 30, 2003 because of their anti-dilutive effect.

NOTE 3 - STOCK OPTION PLAN

                  The Company accounts for its stock options under APB Option
         25. Had compensation cost for the options been determined based on the
         fair value of the employee options at the grant dates consistent with
         the method of SFAS No. 123, the Company's net income and net income per
         share of common stock would have been reduced to the pro forma amounts
         indicated below:
<TABLE>
<CAPTION>

                                                                Six Months Ended
                                                                    June 30,
                                                           --------------------------
                                                               2004           2003
                                                           -----------    -----------
<S>                                                        <C>            <C>
Net loss available to common stock holders:
   As reported                                             $  (585,123)   $  (646,727)
   Add stock-based employee compensation
       expense included in reported net loss, net
       of related tax effects                                   21,862         40,187
   Deduct total stock-based employee
       compensation expense determined under
       fair value based method for all awards, net
       of related tax effect                                   (67,986)      (128,389)
                                                           -----------    -----------

   Pro Forma                                               $  (631,247)   $  (732,929)
                                                           ===========    ===========
Net loss per share of common stock, basic and diluted:
   As reported                                             $     (0.10)   $     (0.11)
   Pro forma                                               $     (0.11)   $     (0.13)
</TABLE>

                                       6
<PAGE>
<TABLE>
<CAPTION>

                                                                Three Months Ended
                                                                    June 30,
                                                           --------------------------
                                                               2004           2003
                                                           -----------    -----------
<S>                                                        <C>            <C>
Net loss available to common stock holders:
   As reported                                             $  (254,740)   $  (489,846)
   Add stock-based employee compensation
       expense included in reported net loss, net
       of related tax effects                                    7,344         20,069
   Deduct total stock-based employee
       compensation expense determined under
       fair value based method for all awards, net
       of related tax effect                                   (18,842)       (65,812)
                                                           -----------    -----------

   Pro Forma                                               $  (266,238)   $  (535,589)
                                                           ===========    ===========
Net loss per share of common stock, basic and diluted:
   As reported                                             $     (0.04)   $     (0.08)
   Pro forma                                               $     (0.05)   $     (0.09)
</TABLE>

NOTE 4 - INCOME TAXES

                  No benefit for income taxes was recorded for the six months
         ended June 30, 2004. In contrast, a $238,647 benefit for income taxes
         was recognized for the six months ended June 30, 2003. The change is
         primarily due to the Company incurring net operating losses for 2002,
         2003 and the first six months of 2004. These related net operating loss
         carry forwards will, however, be available to off-set taxable income in
         future periods. The Company has approximately $1.2 million of deferred
         tax assets available that have been fully reserved at June 30, 2004.

NOTE 5 - COMPREHENSIVE LOSS

                  Total comprehensive loss was $(410,642) and $(397,748) for the
         six months ended June 30, 2004 and 2003, respectively. Comprehensive
         loss differed from net income for the six months ended June 30, 2004
         and 2003 primarily as a result of changes in the unrealized gains and
         losses on the Company's available for sale securities and reclasses
         resulting from the sale of the Company's available for sale securities.

              Total comprehensive loss was $(254,740) and $(239,126) for the
         three months ended June 30, 2004 and 2003, respectively. Comprehensive
         loss differed from net income for the three months ended June 30, 2003
         primarily as a result of changes in the unrealized gains and losses on
         the Company's available for sale securities and reclasses resulting
         from the sale of the Company's available for sale securities. All of
         the Company's available for sale securities were sold during the first
         quarter of 2004.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

                  During 2001, the Company obtained and recorded a 25% interest
         in an aircraft and assumed and recorded 25% of the related outstanding
         debt. The Company is jointly and severably liable for the total
         outstanding debt should the other 75% of the aircraft ownership fail to
         honor their obligations. The total amount outstanding on this
         obligation was approximately $817,000 at June 30, 2004. This loan is
         payable monthly with interest at 3.04% plus a variable per annum rate
         equal to the rate listed for "1- month" Commercial Paper, and matures
         in August 2008.

                                       7
<PAGE>

                  On January 23, 2004 the Company entered into a Technology
         License Agreement with ADROIT Technologies', a South African Company.
         That agreement was amended and restated on March 17, 2004. As a result,
         the Company will obtain an irrevocable license to market ADROIT's
         VIZNET software, including the right to sub-license this product to
         third parties. The Company is required to pay ADROIT $100,000 in
         accordance with the terms of the agreement. This agreement will remain
         in effect for 5 years and holds terms for annual renewals.

NOTE 7 - SUBSEQUENT EVENT

                  In 2001, the Company acquired membership interests in Reading
         Air Charter LLC representing 25% of the total membership interests and
         an ownership interest in a small aircraft for a total investment of
         $84,500. As a result of such investment, the Company was obligated to
         make monthly payments of $6,500 in 2002 and 2003, and $6,300 in 2004,
         and was provided with an opportunity to charter such aircraft at a
         discount to market rates. In July 2004, the Company transferred its
         ownership interest in Reading Air Charter LLC and the aircraft and is
         no longer obligated to make any monthly payments. As a result of these
         transactions the Company will record a loss of approximately $ 130,000.

                  In July 2004, the Company sold units ("Units") in a private
         placement transaction to a limited number of investors. Each Unit
         consisted of 100,000 shares of Common Stock and 100,000 Class A Common
         Stock Purchase Warrants (the "Class A Warrants"), and sold for a
         purchase price of $50,000 per unit. The Company paid no commissions or
         other fees and received proceeds of $360,000 from the offering. The
         Class A Warrants are exercisable for a period of five (5) years at an
         exercise price of $1.00 per share. The investors in the Units have
         piggyback registration rights which included certain officers and
         directors: Lynn Richardson, the wife of John Richardson, the Chief
         Executive Officer of the Company (2 Units); Karl Gerhart, a director of
         the Company (1 Unit); and J. Jeffrey Fox, a director of the Company
         (1/5 Unit).

                  In July 2004, the Company entered into a Revolving Credit
         Agreement with Sundaresh Ramayya, a director of the Company, pursuant
         to which Mr. Ramayya has agreed to lend to the Company up to $2
         million, but not more than $150,000 under any borrowing request
         submitted by the Company. The Company has agreed to pay interest on any
         outstanding amount at a rate of 4% per annum, payable quarterly, and
         the outstanding principal amount shall be due and payable on the
         maturity date which is on the second anniversary of the Agreement
         (unless accelerated upon an event of default). However, Mr. Ramayya has
         the right to terminate the Revolving Credit Agreement upon 15 days
         prior written notice to the Company at which time the obligation of Mr.
         Ramayya to lend to the Company terminates. There were no fees or
         expenses paid by the Company in connection with the execution of the
         Revolving Credit Agreement and as of August 16, 2004, there is no
         outstanding balance thereunder.

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

                  This section presents a review of the Company's financial
         condition and results of operations and is intended to assist in
         understanding and evaluating major changes in the Company's financial
         position and earnings.

                  In addition to historical information, this discussion and
         analysis contains forward-looking statements. The forward-looking
         statements contained herein are subject to certain risks and
         uncertainties that could cause actual results to differ materially from
         those projected in the forward-looking statements. Readers are
         cautioned not to place undue reliance on these forward-looking
         statements, which reflect management's analysis only as of the date
         hereof. The Company undertakes no obligation to publicly revise or
         update these forward-looking statements to reflect events or
         circumstances that arise after the date hereof.

                                       8
<PAGE>

RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2004

                  Net sales for the six months ended June 30, 2004 decreased by
         11.3% or $163,625 compared to net sales for the six months ended June
         30, 2003. This decrease is due to a decrease in the sale of products
         and services and a decrease in the amount of ongoing engineering fees
         being earned from various contracts.

                  Costs of goods sold for the first six months of 2004 were
         $181,215 or 14.1% of net sales compared to $123,945 or 8.6% of net
         sales for the same period in 2003, an increase of $57,270 or 46.2%.
         This increase in costs of goods sold is related to the increase of
         hardware sales as a percentage of total net sales. Hardware sales were
         14.5% of total net sales in the six months ending June 30, 2004
         compared to 7.15% of total net sales in the six months ending June 30,
         2003. Also, $28,536 of commissions earned by third party vendors were
         classified in cost of goods sold as finders' fees in 2004, as opposed
         to $12,375 in commissions classified as a direct reduction to sales in
         2003. Due to the immateriality of the amount, the Company has not
         reclassified its 2003 statements to conform to the 2004 format.

                  Gross profit for the first six months of 2004 was $1,100,600
         compared to $ 1,321,495 for the first six months of 2003, a decrease of
         $220,895 or 16.7%. This decrease is primarily due to the overall
         decrease in net sales and increase in costs of goods sold.

                  Selling, general and administrative expenses for the first six
         months of 2004 were $962,843 or 75.1% of net sales compared to
         $1,165,448 or 80.6% of net sales for the same period in 2003. This
         decrease of $202,605 or 17.4%, was primarily due to a decrease in the
         number of employees.

                  Research and development costs for the first six months of
         2004 were $620,027 or 48.4% of net sales compared to $892,322 or 61.7%
         of net sales in 2003. This is primarily due to a decrease in the number
         of employees in 2004 and due to the Company not utilizing any contract
         employees for research and development purposes during 2004.
         Specifically, salary expense decreased by $247,361 in 2004 due to the
         decrease in the number of employees. Other research and development
         expenses also decreased compared to 2003. This decrease was due to
         discontinuation of third party software developers that had been
         employed through an outside agency.

                  Loss from operations for the six months ended June 30, 2004
         was $482,270 compared to a loss of $736,275 for the six months ended
         June 30, 2003, a decrease of $254,005. This decrease is predominantly
         due to the previously discussed decrease in operating expenses.

                  Net interest expense for the first six months of 2004 was
         $14,000 or 1.1% of net sales, compared to net interest income of $624
         or 0.04% of net sales for the first six months of 2003. This $14,624
         change is attributable to the interest paid on the outstanding line of
         credit balance during first six months of 2004. The Company had not
         utilized their credit line during the first six months of 2003.

                  Other income for the first six months of 2004 was $26,282 or
         2.1% of net sales compared to $26,283 or 1.8% of net sales for the six
         months ended June 30, 2003. During the first six months of 2004, the
         Company sold all of its remaining available for sale securities
         resulting in a loss of $115,135. During the first six months of 2003,
         the Company sold available for sale securities, resulting in a loss of
         $176,006.

                  No benefit for income taxes was recorded for the six months
         ended June 30, 2004. In contrast, a $238,647 benefit for income taxes
         was recognized for the six months ended June 30, 2003. The change is
         primarily due to the Company incurring net operating losses for 2002,
         2003 and the first six months of 2004. These related net operating loss
         carry forwards will, however, be available to off-set taxable income in
         future periods. The Company has approximately $1.2 million of deferred
         tax assets available that have been fully reserved at June 30, 2004.

                  The net loss for the six months ended June 30, 2004 was
         $585,123 or $0.10 per basic and diluted share as compared to a net loss
         of $646,727 or $0.11 per basic and diluted share for the first six
         months ended June 30, 2003. This decrease is primarily attributable to
         the lower operating costs in the six months ended June 30, 2004 versus
         the six months ended June 30, 2003, as previously noted.

                                       9
<PAGE>

RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 2004

                  Net sales for the three months ended June 30, 2004 decreased
         by 7.2% or $43,537 compared to net sales for the three months ended
         June 30, 2003. This decrease is due to a decrease in the sale of
         products and services.

                  Costs of goods sold for the three months ended June 30, 2004
         were $59,003 or 10.6% of net sales compared to $78,112 or 13.0% of net
         sales for the same period in 2003, a decrease of $19,109 or 24.5%. This
         decrease in costs of goods sold is primarily due to the fact that
         during the three months ended June 30, 2003, the Company had incurred
         $18,530 in third party contractor expenses for the implementation of
         software. There was no such expense during the three months ended June
         30, 2004.

                  Gross profit for the three months ending June 30, 2004 was
         $499,934 compared to $ 524,362 for the three months ending June 30,
         2003, a decrease of $24,428 or 4.7%. This decrease is primarily due to
         the overall decrease in net sales in the three months ending June 30,
         2004 compared to net sales in the three months ending June 30, 2003.

                  Selling, general and administrative expenses for the three
         months ending June 30, 2004 were $470,434 or 84.2% of net sales
         compared to $560,655 or 93.1% of net sales for the same period in 2003.
         This decrease of $90,221 or 16.1%, was primarily due to a decrease in
         the number of employees.

                  Research and development costs for the three months ending
         June 30, 2004 were $289,638 or 51.8% of net sales compared to $431,889
         or 71.7% of net sales for the same period in 2003. This represents a
         decrease of $142,251 or 32.9%, in research and development costs in the
         three months ending June 30, 2004 over the same period in 2003. This is
         primarily due to a decrease in salary expense by $102,736 in 2004
         because of a reduction in the number of employees and due to the
         Company's discontinuation of third party software developers that had
         been employed through an outside agency.

                  Loss from operations for the three months ended June 30, 2004
         was $260,138 compared to a loss of $468,182 for the three months ended
         June 30, 2003, a decrease of $208,044 or 44.4%. This decrease is
         predominantly due to the previously discussed decrease in operating
         expenses.

                  Net interest expense for the three months ending June 30, 2004
         was $7,743 or 1.4% of net sales, compared to $2,124 or 0.04% of net
         sales for the three months ending June 30, 2003. This increase of
         $5,619 is attributable to the interest paid on the outstanding line of
         credit balance during the three months ended June 30, 2004. The Company
         had not utilized their credit line during the three months ended June
         30, 2003.

                  Other income for the three months ended June 30, 2004 of
         $13,141 or 2.4% of net sales compared to $13,141 or 2.2% of net sales
         for the three months ended June 30, 2003. During the three months ended
         June 30, 2003 the Company sold its available for sale securities
         resulting in a loss of $176,006. No such sales occurred in 2004.

                  No benefit for income taxes was recorded for the three months
         ended June 30, 2004. In contrast, a $143,325 benefit for income taxes
         was recognized for the three months ended June 30, 2003. The change is
         primarily due to the Company incurring net operating loss for 2002,
         2003 and thus far in 2004. These related net operating loss carry
         forwards will, however, be available to off-set taxable income in
         future periods. The Company has approximately $1.2 million of deferred
         tax assets available that have been fully reserved at June 30, 2004.

                  The net loss for the three months ended June 30, 2004 was
         $254,740 or $0.04 per basic and diluted share as compared to a net loss
         of $489,846 or $0.08 per basic and diluted share for the three months
         ended June 30, 2003. This decrease is primarily attributable to lower
         operating expenses in the three months ended June 30, 2004 versus the
         three months ended June 30, 2003, as previously noted.

                                       10
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

                  At June 30, 2004, the Company had current assets of $793,021
         as compared to $1,164,963 at December 31, 2003, a decrease of $371,942
         or 31.9%. This decrease is due primarily to a decrease of $188,727 in
         receivables resulting from collections on other receivables and
         accounts receivable and sales of securities that were valued at
         $201,016 at December 31, 2003. Additionally amounts were invested in
         other assets in the amount of $57,000. Current liabilities increased by
         $78,067 from December 31, 2003 to June 30, 2004. This increase is due
         to increased borrowings on the line of credit as of June 30, 2004 over
         that of December 31, 2003.

OPERATING ACTIVITIES

                  Cash used in operating activities was $317,445 for the six
         months ended June 30, 2004 as compared to cash provided by operating
         activities which was $156,652 for the six months ended June 30, 2003.
         The decrease in cash provided by operations in the six months ended
         June 30, 2004 was due primarily to the amount of accounts receivable
         and other receivables that were collected on balances outstanding at
         December 31, 2003 versus such amounts in the prior year, lower net
         sales than in the same period in the prior year and payments for
         accrued income taxes, accrued other expenses and payments for trade
         payables.

INVESTING ACTIVITIES

                  Cash provided by investing activities was $202,292 for the six
         months ended June 30, 2004 as compared to cash used, which was $(4,960)
         for the six months ended June 30, 2003. This change is primarily due to
         the proceeds of $260,362 received from the sale of available for sale
         securities.

FINANCING ACTIVITIES

                  Financing activities provided $140,539 in cash for the six
         months ended June 30, 2004 compared to $24,011 of cash used in
         financing activities for the same period in 2003, an increase of $
         164,550 in cash provided by financing, due to net borrowings of
         $168,068 on the credit line at June 30, 2004.

CAPITAL RESOURCES

                  The Company has a line of credit with its bank. As of June 30,
         2004, the Company had used all the credit available on its line of
         credit, subject to a borrowing formula. At December 31, 2003, the
         Company was in violation of one of the financial covenants in its loan
         document. The Bank waived this violation at December 31, 2003.

                  The Company has no material commitments for capital
         expenditures at June 30, 2004 and believes that its cash from
         operations, existing balances and available credit line will be
         sufficient to satisfy the needs of its operations and its capital
         commitments for the near future. However, if the need arose, the
         Company is currently seeking to obtain capital from such sources as
         continuing debt financing and equity financing.

                  In March 2004, the Company engaged Noble International
         Investments, Inc. ("Noble") to render certain financial advisory and
         investment banking services to the Company, and at the Company's
         option, to serve as a placement agent with respect to the Company's
         debt and/or equity securities. The Agreement terminates 120 days after
         the date of execution, but the Company has an on-going obligation to
         compensate Noble in the event that a party introduced to the Company by
         Noble invests in the Company's securities during the two year period
         following the date of the agreement.

                                       11
<PAGE>

                  In July 2004, the Company sold units ("Units") in a private
         placement transaction to a limited number of investors. Each Unit
         consisted of 100,000 shares of Common Stock and 100,000 Class A Common
         Stock Purchase Warrants (the "Class A Warrants"), and sold for a
         purchase price of $50,000 per unit. The Company paid no commissions or
         other fees and received proceeds of $360,000 from the offering. The
         Class A Warrants are exercisable for a period of five (5) years at an
         exercise price of $1.00 per share. The investors in the Units have
         piggyback registration rights which included certain officers and
         directors: Lynn Richardson, the wife of John Richardson, the Chief
         Executive Officer of the Company (2 Units); Karl Gerhart, a director of
         the Company (1 Unit); and J. Jeffrey Fox, a director of the Company
         (1/5 Unit).

                  In July 2004, the Company entered into a Revolving Credit
         Agreement with Sundaresh Ramayya, a director of the Company, pursuant
         to which Mr. Ramayya has agreed to lend to the Company up to $2
         million, but not more than $150,000 under any borrowing request
         submitted by the Company. The Company has agreed to pay interest on any
         outstanding amount at a rate of 4% per annum, payable quarterly, and
         the outstanding principal amount shall be due and payable on the
         maturity date which is on the second anniversary of the Agreement
         (unless accelerated upon an event of default). However, Mr. Ramayya has
         the right to terminate the Revolving Credit Agreement upon 15 days
         prior written notice to the Company at which time the obligation of Mr.
         Ramayya to lend to the Company terminates. There were no fees or
         expenses paid by the Company in connection with the execution of the
         Revolving Credit Agreement and as of August 16, 2004, there is no
         outstanding balance thereunder.

ITEM 3.  CONTROLS AND PROCEDURES.

                  We maintain disclosure controls and procedures that are
         designed to ensure that information required to be disclosed in our
         Exchange Act reports is recorded, processed, summarized and reported
         within the time periods specified in the Securities and Exchange
         Commission's rules and forms and that such information is accumulated
         and communicated to our management, including our Chief Executive
         Officer and Principal Accounting Officer, as appropriate, to allow for
         timely decisions regarding required disclosure. In designing and
         evaluating the disclosure controls and procedures, management
         recognizes that any controls and procedures, no matter how well
         designed and operated, can provide only reasonable assurance of
         achieving the desired control objectives, and management is required to
         apply its judgment in evaluating the cost-benefit relationship of
         possible controls and procedures.

                  As required by SEC Rule 13a-15(b), we carried out an
         evaluation as of June 30, 2004, under the supervision and with the
         participation of our management, including our Chief Executive Officer
         and Principal Accounting Officer, of the effectiveness of the design
         and operation of our disclosure controls and procedures as of the end
         of the quarter covered by this report. Based on the foregoing, our
         Chief Executive Officer and Principal Accounting Officer concluded that
         our disclosure controls and procedures were effective at the reasonable
         assurance level.

                  There has been no change in our internal controls over
         financial reporting during our most recent fiscal quarter ended June
         30, 2004 that has materially affected, or is reasonably likely to
         materially affect, our internal controls over financial reporting


                                       12
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

              We are not presently a party to any material legal proceedings nor
         are any material legal proceedings presently threatened against us.

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS - None

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES - None

ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITIES HOLDERS

                  On May 24, 2004, the Company held its Annual Meeting of
         Stockholders where the stockholders of the Company approved the
         following proposals:

                  (a)      Election of Directors. The following individuals were
         elected to the Board of Directors of the Company for a term of one (1)
         year, each receiving 4,943,284 votes in favor of his election
         (representing 75.4% of the shares outstanding): (i) John D. Richardson,
         III; (ii) David Birk, (iii) J. Jeffrey Fox; (iv) Karl D. Gerhart; (v)
         William Nyman; and (vi) Sundaresh Ramayya.

                  (b)      2002 Stock Plan. An amendment to the Company' s 2002
         Stock Plan increasing the number of shares subject to the plan from
         1,300,000 shares to 1,600,000 shares was approved by the stockholders
         of the Company (3,520,775 votes for (representing 53.7 % of the shares
         outstanding),59,120 shares against, and 2,000 shares abstained).

                  (c)      Ratification of the Appointment of Independent
         Accountants. The ratification of the appointment of Beard Miller
         Company LLP as independent accountants of the Company was approved by
         the stockholders of the Company (4,943,784 votes for (representing 75.4
         % of the shares outstanding), 2,700 votes against and 200 shares
         abstained).

ITEM 5 - OTHER INFORMATION - None

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

         a.       Exhibits

                  a.       Exhibits

                  31.      Certificate Pursuant to Section 302 of the
                           Sarbanes-Oxley Act of 2002

                  32.      Certificate Pursuant to Section 906 of the
                           Sarbanes-Oxley Act of 2002.

         b.       Reports on Form 8-K.

                  The following Current Reports on Form 8-K were filed during
                  the three months ended June 30, 2004. - None

                                       13
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following person on behalf of
the Registrant and in the capacities and on the dates indicated:


Dated:   August 16, 2004
         Robesonia, Pennsylvania

                                       CIMNET, INC.


                                       BY: /s/ JOHN D. RICHARDSON
                                           -------------------------------------
                                           John D. Richardson
                                           Chairman of the Board,
                                           Chief Executive Officer and
                                           Principal Accounting Officer

                                       14