United
      States Securities and Exchange Commission


Washington,
      D.C. 20549




FORM
      10-QSB




Quarterly
      Report of Small Business Issuers under Section 13 or 15(d) of the Securities
      Exchange Act of 1934


for
      the
      Quarterly Period Ended March 31, 2007




Commission
      File No. 000-51752




**DND
      Technologies, Inc.**


(Exact
      name of registrant as specified in its charter)




Nevada
              (State
                or other jurisdiction of incorporation or
              organization)
            84-1405298
              (I.R.S.
                Employer Identification No.)375
                E. Elliot Rd., Bldg. 6
              Chandler,
                Arizona
              (Address
                of principal executive offices)
            85225
              (Zip
                Code)Issuer's
                telephone number, including area code:(480)
                892-7020_________________________________________________________________
              (Former
                name, former address, and former fiscal year, if changed since last
                report)The
                issuer has (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
                shorterperiod
                that the registrant was required to file such reports), and (2) been
                subject to such filing requirements for the past 90 days.
              
              The
                registrant is not a shell company (as defined in Rule 12b-2 of the
                Exchange Act).Number
                of shares outstanding of each of the issuer's classes of common
                equity:Class
            Outstanding
                as of June 25, 2007Common
                stock, $0.001 par value
            26,234,653The
                issuer is not using the Transitional Small Business Disclosure format.












**DND
      TECHNOLOGIES, INC.**





**Table
      of Contents**






PagePART
                  IFINANCIAL
                  INFORMATION
              1Item1.Consolidated
                  Unaudited Financial Statements
              1Condensed
                  Consolidated Unaudited Balance Sheet
              1Condensed
                  Consolidated Unaudited Statements of Operations
              2Condensed
                  Consolidated Unaudited Statements of Stockholders’ Deficit
              3Condensed
                  Consolidated Unaudited Statements of Cash Flows
              4Notes
                  to Condensed Consolidated Unaudited Financial Statements
              5Item2.Management's
                  Discussion and Analysis
              10Item3.Controls
                  and Procedures
              20PART
                  IIOTHER
                  INFORMATION
              21Item5.Other
                  Information
              21Item6.Exhibits
              21SIGNATURES
              22









**PART
      I.**  **FINANCIAL
      INFORMATION**


**Item
      1.**  **Financial
      Statements (Unaudited)**





**DND
      TECHNOLOGIES, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS**




**March
                  31,****2007**
              
              **December
                  31,****(Unaudited)**
              
              **2006**
 ASSETSCURRENT
                  ASSETS:Cash
                  and cash equivalents
              
              $
              46,238
              
              $
              6,206Accounts
                  receivable, net
              
              
              259,650
              
              
              463,307Inventories,
                  net
              
              
              464,190
              
              
              317,677Prepaid
                  expenses
              
              
              38,083
              
              
              31,748Total
                  current assets
              
              
              808,161
              
              
              818,938PROPERTY
                  AND EQUIPMENT, Net of accumulated depreciation
              
              
              93,152
              
              
              103,153LICENSE
                  AGREEMENTS, Net of accumulated amortization
              
              
              78,572
              
              
              83,929OTHER
              
              
              21,816
              
              
              21,816TOTAL
                  ASSETS
              
              $
              1,001,701
              
              $
              1,027,836LIABILITIES
                  AND STOCKHOLDERS' DEFICITCURRENT
                  LIABILITIES:Notes
                  payable, current portion
              
              $
              968,844
              
              $
              1,081,176Capital
                  leases payable, current portion
              
              
              15,003
              
              
              14,183Accounts
                  payable and accrued expenses
              
              
              1,747,111
              
              
              1,805,972Deposits
                  from customers
              
              
              424,475
              
              
              115,353Payables,
                  Lam Research Corporation
              
              
              3,555,317
              
              
              3,555,317License
                  and royalty payable, Axcelis
              
              
              2,629,049
              
              
              2,598,523Amounts
                  due to related party
              
              
              235,043
              
              
              276,802Total
                  current liabilities
              
              
              9,574,842
              
              
              9,447,326LONG
                  TERM LIABILITIES:Capital
                  leases payable, long term portion
              
              
              8,277
              
              
              11,211STOCKHOLDERS'
                  DEFICIT:Preferred
                  stock, par value, $.001 per share;authorized,
                  10,000,000 shares;issued
                  and outstanding, -0- shares
              
              
              -
              
              
              -Common
                  stock, par value, $.001 per share;authorized,
                  50,000,000 shares;issued
                  and outstanding, 26,234,653 shares
              
              
              26,235
              
              
              26,235Paid-in
                  capital
              
              
              2,393,680
              
              
              2,386,795Accumulated
                  deficit
              
              
              (11,001,333
              )
              
              (10,843,731
              )Total
                  stockholders' deficit
              
              
              (8,581,418
              )
              
              (8,430,701
              )TOTAL
                  LIABILITIES AND STOCKHOLDERS' DEFICIT
              
              $
              1,001,701
              
              $
              1,027,836
  See
        accompanying notes.




1






**DND
                TECHNOLOGIES, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**


**UNAUDITED**




**2007**
              
              **2006**REVENUE:Systems
                  and chillers
              
              $
              216,883
              
              $
              940,867Parts,
                  assemblies and consumables
              
              
              388,571
              
              
              1,015,721Field
                  service and training
              
              
              14,594
              
              
              31,782Total
                  revenue
              
              
              620,048
              
              
              1,988,370OPERATING
                  EXPENSES:Cost
                  of revenues
              
              
              420,661
              
              
              1,375,354Reserve
                  for slow moving and obsolete inventory
              
              
              (69,011
              )
              
              (22,636
              )Research
                  and development
              
              
              32,578
              
              
              62,830Sales
                  and marketing, including license fees,royalties
                  and commissions
              
              
              90,793
              
              
              397,950General
                  and administrative
              
              
              278,885
              
              
              477,568Total
                  operating expenses
              
              
              753,906
              
              
              2,291,066INCOME
                  (LOSS) FROM OPERATIONS
              
              
              (133,858
              )
              
              (302,696
              )OTHER
                  INCOME (EXPENSE):Interest
                  expense
              
              
              (23,744
              )
              
              (114,327
              )OTHER
                  INCOME (EXPENSE)
              
              
              (23,744
              )
              
              (114,327
              )Income
                  (loss) before income tax expense
              
              
              (157,602
              )
              
              (417,023
              )INCOME
                  TAX
              
              
              
              
              
              800NET
                  INCOME (LOSS)
              
              $
              (157,602
              )
              $
              (417,823
              )NET
                  INCOME (LOSS) PER COMMON SHARE:Basic
                  and diluted
              
              $
              (.01
              )
              $
              (.02
              )WEIGHTED
                  AVERAGE NUMBER OF COMMON SHARESOUTSTANDING
                  AND SUBSCRIBED:Basic
                  and diluted
              
              
              26,234,653
              
              
              26,234,653




See
      accompanying notes.


2


**DND
      TECHNOLOGIES, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' DEFICIT**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2007**


**UNAUDITED**




Common
                Stock
            
            Paid-In
                Capital
            
            Accumulated
                Deficit
            
            TotalShares
            
            AmountBALANCE,JANUARY
                1, 2007
            
            
            26,234,653
            
            $
            26,235
            
            $
            2,386,795
            
            $
            (10,843,731
            )
            $
            (8,430,701
            )ISSUANCE
                OF STOCKOPTIONS
                FOR
              DIRECTORCOMPENSATION
            
            
            -
            
            
            -
            
            
            6,885
            
            
            -
            
            
            6,885NET
                (LOSS)
            
            
            
            
            
            
            
            
            
            
            
            (157,602
            )
            
            (157,602
            )BALANCE,MARCH
                31, 2007
            
            
            26,234,653
            
            $
            26,235
            
            $
            2,393,680
            
            $
            (11,001,333
            )
            $
            (8,581,418
            )





See
      accompanying notes.




3




**DND
      TECHNOLOGIES, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**


**UNAUDITED**





**2007**
            
            **2006**CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                (loss)
            
            $
            (157,602
            )
            $
            (417,823
            )Adjustments
                to reconcile net (loss) to net cash provided byoperating
                activities:Depreciation
                and Amortization
            
            
            10,001
            
            
            18,214Amortization
                of licenses
            
            
            5,357
            
            
            6,704Issuance
                of stock options for director compensation
            
            
            6,885
            
            
            19,620Legal
                expenses and late fees paid by the issuance of debt
            
            
            0
            
            
            80,164Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            203,657
            
            
            330,467Inventories
            
            
            (146,512
            )
            
            289,794Prepaid
                expenses and other assets
            
            
            (6,336
            )
            
            (101,792
            )Accounts
                payable and accrued expenses
            
            
            (28,335
            )
            
            (418,991
            )Deposits
                from customers
            
            
            309,122
            
            
            318,749Amounts
                due to related parties
            
            
            (41,759
            )
            
            (38,841
            )Net
                cash provided by operating activities
            
            
            154,478
            
            
            86,265CASH
                FLOWS FROM FINANCING ACTIVITIES:Principal
                payments on long-term debt
            
            
            (114,446
            )
            
            (302,735
            )Principal
                payments on debt, related party
            
            
            0
            
            
            (21,250
            )Net
                cash used by financing activities
            
            
            (114,446
            )
            
            (323,985
            )NET
                INCREASE IN CASH AND CASH EQUIVALENTS
            
            
            40,032
            
            
            (237,720
            )CASH
                AND CASH EQUIVALENTS, BEGINNING OF YEAR
            
            
            6,206
            
            
            392,298CASH
                AND CASH EQUIVALENTS, END OF YEAR
            
            $
            46,238
            
            $
            154,578


SUPPLEMENTARY
                DISCLOSURE OFCASH
                FLOW INFORMATION:Cash
                paid for interest
            
            $
            20,760
            
            $
            52,768Cash
                paid for taxes
            
            $
            0
            
            $
            0





See
      accompanying notes.




4





**DND
      TECHNOLOGIES, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2007**


**UNAUDITED**




1.
            GENERAL




**Basis
      of Presentation and**  **Principles
      of Consolidation** - The
      interim consolidated financial statements of DND Technologies, Inc. and
      Subsidiaries (the "Company") are condensed and do not include some of the
      information necessary to obtain a complete understanding of the financial data.
      Management believes that all adjustments, consisting of normal recurring
      adjustments, which are, in the opinion of management , necessary
      for a fair presentation of results have been included in the unaudited
      consolidated financial statements for the interim period presented. Operating
      results for the three months ended March 31, 2007 are not necessarily indicative
      of the results that may be expected for the year ended December 31, 2007.
      Accordingly, your attention is directed to footnote disclosures found in the
      December 31, 2006 Annual Report and particularly to Note 1, which includes
      a
      summary of significant accounting policies.





These
      financial statements are presented on the basis that the Company is a going
      concern. Going concern contemplates the realization of assets and the
      satisfaction of liabilities in the normal course of business over a reasonable
      length of time. The Company has incurred a loss of approximately $158,000 for
      the three months ended March 31, 2007. Revenues for the three months ended
      March
      31, 2007 are down approximately 69% from the prior year; the Company has
      negative working capital of approximately $8,800,000, and is in default on
      the
      majority of its term debt. In addition, on March 6, 2006, the Company received
      a
      notice of termination of its license agreement with Lam Research Corporation
      (“Lam”). The termination of the license agreement has impacted sales somewhat
      but management does not expect the termination to have a long term material
      impact on sales. The parts purchased pursuant to the Lam Agreement are not
      typically purchased from Lam, but from certain of the Company's other vendors.
      The parts that the Company historically purchased directly from Lam are for
      the
      support of Rainbow and TCP products, which were not covered by the Lam
      Agreement. Earlier, Lam entered the refurbishing market directly, which has
      had
      some impact on the Company’s revenue. The Company’s most significant cause of
      revenue reduction during this year, however, is defined by the action which
      was
      taken by the Company against Lam. During
      the second quarter of 2006, the Company filed a lawsuit against Lam as a result
      of long-standing contract disputes between Aspect and Lam . **  ** Management
      is confident that the complaint
      is justified, and that
      the Company has suffered substantial damages. The
      lawsuit was removed to federal court and a trial date set in December 2007. The
      Company’s going concern issue and pending litigation with Lam have impacted the
      Company’s sales, as certain of the Company’s customers are now reluctant to
      order systems, believing that there is a risk that any deposit may be lost
      if
      the Company is unable to continue operations. This circumstance greatly hampers
      the Company’s ability to capitalize on the opportunities of a growing market.
      These factors raise substantial doubt as to the Company’s ability to continue as
      a going concern. The consolidated financial statements do not include any
      adjustments relating to the recoverability and classification of recorded asset
      amounts or the amounts and classification of liabilities that might be necessary
      should the Company be unable to continue as a going concern. The Company's
      continuation as a going concern is dependent upon its ability to generate
      sufficient cash flow to meet its obligations on a timely basis, to obtain
      additional financing or refinancing as may be required, settlement of the Lam
      lawsuit on terms favorable to the Company, and ultimately to attain profitable
      operations.





The
      consolidated financial statements include the accounts of DND Technologies,
      Inc.
      and its wholly-owned subsidiaries ASI and ASI Team Asia Ltd. All material
      inter-company accounts and transactions have been eliminated.




5




**Nature
      of Business and History of Company** - DND
      Technologies, Inc. (the "Company") was organized on May 9, 1997, under the
      laws
      of the state of Nevada. The Company operates as a holding company for subsidiary
      acquisitions. The Company's operating subsidiary is Aspect Systems, Inc.
      (located in Arizona and Texas; hereinafter referred to as "ASI").




ASI
      also
      owns 100% of ASI Team Asia Ltd. ASI Team Asia Ltd. is inactive and has no
      significant assets or liabilities and has not had any revenue or
      expenses.




ASI
      is a
      supplier of semiconductor manufacturing equipment and also supplies complete
      after market support of the aforementioned equipment, which currently includes
      Advanced AutoEtch, Rainbow, and TCP plasma etch systems, plus a variety of
      plasma etch and strip products manufactured on the ASI MX-1 and ASI MX-10
      platforms (formerly Matrix System One and Ten), and the Arista and Arista Dual
      platforms (formerly Matrix Bobcat and Cheetah). Elements of support include spare
      parts and
      assemblies, and various engineering services.




**Net
      Income (Loss) Per Share -** Basic
      income (loss) per common share is computed by dividing net income available
      to
      common stockholders by the weighted-average number of common shares outstanding
      during the period. Diluted income per common share is computed by dividing
      net
      income available to common stockholders by the weighted-average number of common
      shares outstanding plus an assumed increase in common shares outstanding for
      potentially dilutive securities, which consist of options. Potentially dilutive
      shares are excluded from the computation in loss periods, as their effect would
      be anti-dilutive. The dilutive effect of options to acquire common stock is
      measured using the treasury stock method. ** The
      dilutive effect of potentially issuable securities was 4,075,883 shares and
      4,639,216 shares for the three months ended March 31, 2007 and 2006,
      respectively.




**Concentration
      of Risk** -
      Financial instruments which potentially subject the Company to concentrations
      of
      credit risk consist principally of cash and trade accounts receivable.




Concentration
      of credit risk with respect to trade receivables is limited due to the large
      number of customers comprising the Company's customer base and their dispersion
      across different geographic areas. The Company routinely assesses the financial
      strength of its customers. At March 31, 2007, the Company had three customers
      whose balances exceeded 10% of gross accounts receivable, at 17%, 14% and 11%,
      respectively.




**Significant
      Customers -** For
      the
      three months ended March 31, 2007, the Company had one customer whose revenues
      exceeded 10% of total revenues (28%). For the three months ended March 31,
      2006,
      the Company had three customers whose revenues exceeded 10% of total revenues
      (21%, 14% and 11%). Revenues in 2007 and 2006 outside the United States
      include  Europe
      10% and 9%, and Asia 7% and 7%, respectively.




**Significant
      Suppliers** - For
      the three months ended March 31, 2007 and 2006, approximately 0% and
      7% **,** respectively, of gross inventory purchases were purchased from Lam Research
      Corporation (“Lam”). On March 6, 2006, the Company received a notice of
      termination of its license agreement with Lam. However, the parts purchased
      pursuant to the Lam Agreement are not typically purchased from Lam, but from
      certain of the Company's other vendors. The parts that the Company historically
      has purchased directly from Lam are for the support of Rainbow and TCP products,
      which were not covered by the Lam Agreement. On August 1, 2006, Lam notified
      ASI
      by letter that it would no longer sell spare parts to ASI due to the pending
      litigation.




**Use
      of Estimates** - The
      preparation of consolidated financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make certain estimates and assumptions that affect the reported
      amounts and timing of revenues and expenses, the reported amounts and
      classification of assets and liabilities, and disclosures of contingent assets
      and liabilities. These estimates and assumptions are based on the Company’s
      historical results as well as management’s future expectations. The Company’s
      actual results could vary materially from management’s estimates and
      assumptions.




6




**Disclosure
      About Fair Value of Financial Instruments** - The
      Company estimates that the fair value of all financial instruments as of March
      31, 2007, as defined by FASB 107, does not differ materially from the aggregate
      carrying values of its financial instruments recorded in the accompanying
      consolidated balance sheet. The estimated fair value amounts have been
      determined by the Company using available market information and appropriate
      valuation methodologies. Considerable judgment is required in interpreting
      market data to develop the estimates of fair value, and accordingly, the
      estimates are not necessarily indicative of the amounts that the Company could
      realize in a current market exchange.




**Recently
      Issued Accounting Pronouncements** - In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
      for Financial Assets and Financial Liabilities,” which permits entities to
      choose to measure many financial instruments and certain other items at fair
      value. SFAS No. 159 also includes an amendment to SFAS No. 115,
“Accounting for Certain Investments in Debt and Equity Securities” which applies
      to all entities with available-for-sale and trading securities. This Statement
      is effective as of the beginning of an entity’s first fiscal year that begins
      after November 15, 2007. The Company is assessing the impact of SFAS
      No. 159 and has not determined whether it will have a material impact on
      its results of operations or financial position.




In
      September 2006, the FASB issued SFAS No. 157, “Fair Value
      Measurements.” The Statement defines fair value, establishes a framework for
      measuring fair value in generally accepted accounting principles and expands
      disclosures about fair value measurements, and does not require any new fair
      value measurements. This Statement applies under other accounting pronouncements
      that require or permit fair value measurements. The Statement is effective
      for
      the fiscal years beginning after November 15, 2007. The Company is
      assessing SFAS No. 157 and has not determined the impact the adoption of
      SFAS No. 157 will have on its results of operations or financial
      position.





**Reclassifications** -
      Certain 2006 amounts have been reclassified to conform to 2007
      presentations.




2.
            ACCOUNTS
                RECEIVABLE




A
      summary
      of accounts receivable and allowance for doubtful accounts is as
      follows:




Accounts
                receivable
            
            $
            286,716Allowance
                for doubtful accounts
            
            
            (27,066
            )Net
                accounts receivable
            
            $
            259,650






7







3.
              INVENTORIES




A
      summary
      of inventories and allowance for obsolescence is as follows:




Parts
                and materials
            
            $
            2,435,800Work-in-process
            
            
            106,249Allowance
                for obsolescence
            
            
            (2,077,859
            )Net
                inventories
            
            $
            464,190




4.
            LICENSE
                AGREEMENT AND PAYABLES, LAM RESEARCH
                CORPORATION




The
      Company is currently in default on its payments due to Lam Research Corporation
      (“Lam”); accordingly, the full amount has been classified as a current liability
      in the consolidated balance sheet. On March 6, 2006, the Company was notified
      that Lam had terminated the agreement. During
      the second quarter of 2006, the Company filed a lawsuit against Lam as a result
      of long-standing contract disputes between Aspect and Lam. **  ** Management
      is convinced that the complaint is justified, and that the Company
      has suffered substantial damages.  The lawsuit was removed to federal
      court and a trial date set for December 2007 .
      As a
      result, the Company recognized a full impairment of the license agreement in
      the
      amount of $2,705,013 at December 31, 2005. The Company’s going concern issue and
      pending litigation with Lam have impacted the Company’s sales, as certain of the
      Company’s customers are now reluctant to order systems from the Company,
      believing that there is a risk that any deposit may be lost if the Company
      is
      unable to continue operations. This circumstance greatly hampers the Company’s
      ability to capitalize on the opportunities of a growing market.




5.
            LICENSE
                AND ROYALTY PAYABLE, AXCELIS TECHNOLOGIES,
                INC.




In
      November 2003, the Company entered into an agreement with Axcelis acquiring
      an
      exclusive license to all future manufacturing, sales, service, and parts support
      for certain dry strip semi-conductor manufacturing equipment now marketed under
      the ASI trade names MX-1 and MX-10 (formerly Matrix System One and System Ten).
      The agreement provides for the one time payment of a license fee of $150,000
      plus 18% of net revenues (from these sales) per quarter until a $2,750,000
      fee
      has been paid and a declining royalty (from 10% down to 2%) on related sales
      through December 31, 2010.




In
      August
      2004, the Company entered into an additional agreement with Axcelis acquiring
      an
      exclusive license to manufacture, sell and provide services and parts support
      for certain reactive ion etch semiconductor manufacturing equipment for wafer
      sized up to 200mm now marketed under the ASI trade name Arista and Arista Dual
      (formerly Matrix Bobcat and Cheetah). The agreement provides for a quarterly
      payment equal to 18% of net revenues from the sale of this product by the
      Company, beginning with the fourth quarter of 2004 and ending December 31,
      2011,
      or until $750,000 (the license fee) has been paid, whichever occurs first,
      and
      payment of a declining royalty (from 10% down to 2%) on related sales over
      a
      period of time that ends December 31, 2011.




The
      Company is currently in default on its payments; accordingly, the full amount
      has been classified as a current liability in the consolidated balance sheet.




6.
            NOTES
                PAYABLE




The
                Company's term loan dated May 14, 2004 to Merrill Lynch was renegotiated
                during July 2006 and again during March 2007. Under the new agreement,
                the
                Company is required to make monthly payments, commencing March 2007,
                in
                the amount of $24,958 plus interest (at prime + 4%), and a final
                balloon
                payment is due April 30, 2007. The loan continues to be secured by
                a first
                lien on the Company's total assets ($1,001,701 as of March 31, 2007)
                and
                has been guaranteed by Doug Dixon, Chairman and CEO, and the Company.
            
            $
            479,494On
                July 22, 2005 the Company entered into a Bridge Loan Agreement with
                Cornell Capital Partners LP (“Cornell”). The loan calls for interest at
                12%. On May 1, 2006 the loan was renegotiated, under the new agreement,
                the Company is required to make 12 monthly payments, commencing May
                1,
                2006, in the amount of $12,500 to Cornell and a final balloon payment
                in
                the amount of $204,107 on May 1, 2007.
            
            
            200,000Unsecured
                demand note due to an individual with interest accruing at
                7%
            
            
            289,350Total
            
            $
            968,844




7.
            ACCOUNTS
                PAYABLE AND ACCRUED EXPENSES




A
      summary
      of accounts payable and accrued expenses is as follows:




Trade
                accounts payable
            
            $
            666,393Accrued
                commissions
            
            
            120,976Accrued
                payroll
            
            
            181,867Product
                warranty provision
            
            
            203,589Accrued
                interest
            
            
            556,476Sales
                and state income taxes payable
            
            
            17,810Total
                Accounts Payable and AccruedExpenses
            
            $
            1,747,111




8.
            MANAGEMENT
                PLANS




The
      consolidated financial statements do not include any adjustments relating to
      the
      recoverability and classification of recorded asset amounts or the amounts
      and
      classification of liabilities that might be necessary should the Company be
      unable to continue as a going concern. The Company’s continuation as a going
      concern is dependent upon its ability to generate sufficient cash flow to meet
      its obligations on a timely basis, to obtain additional financing or refinancing
      as may be required, and ultimately to attain profitable operations.




Management’s
      plan to eliminate the going concern situation include, but are not limited
      to,
      the renegotiation of payment terms on the Axcelis payable, improved cash flow
      management, aggressive cost reductions, settlement of the Lam lawsuit on terms
      favorable to the Company, and the creation of additional sales and profits
      across its product lines.




8




9.
            SUBSEQUENT
                EVENTS




During
      March 2007, the remaining two employees at the Company’s Texas location were
      moved to consulting status and are paid on an as needed basis.




During
      April 2007, the Company became delinquent in rental payments at its Texas
      location. As such, the landlord is withholding entrance to the location and
      inventory until such time that the rental payments are current. The inventory
      in
      the Texas location is substantially reserved for in our allowance for
      obsolescence.




During
      April 2007, three key members of management agreed to defer their salary
      indefinitely, and another key member of management has agreed to temporarily
      suspend repayment of debt owed to him by the Company, in order to allow the
      Company the use of the funds for operational needs.




The
      Company was unable to pay the final balloon payments due to Cornell and Merrill
      Lynch as indicated in Note 6. As of the filing date of this report, the Company
      has not received any demand for payment from either lender.




9




**Item
      2.**  **Management's
      Discussion and Analysis** **of
      Financial Condition and Results of Operations**




Aspect
      Systems, Inc., a wholly-owned subsidiary of DND Technologies, Inc., is a global
      provider of specialized equipment, parts and support services to the
      semiconductor industry. ASI is the original equipment manufacturer of Advanced
      AutoEtch equipment previously designed and manufactured by Lam Research Corp.
      Through exclusive license agreements negotiated with Axcelis Technologies,
      ASI
      has also become the original equipment manufacturer of plasma etch and strip
      products manufactured on the ASI MX-1 and ASI MX-10 (formerly Matrix System
      One
      and Ten), and the Arista and Arista Dual (formerly Matrix Bobcat and Cheetah)
      platforms. Additionally, ASI offers new and refurbished support products
      including a wide array of sub-assemblies, both consumable and non-consumable
      repair and process related parts, and remanufactured temperature control units
      that are designed to maintain critical operating temperatures for the plasma
      systems. Engineering and training services are also made available to its
      international customer base. The most significant portion of ASI revenue,
      however, is normally derived from the marketing and sale of remanufactured
      Rainbow and TCP plasma etch systems and the ASI MX and Arista system products.
      ASI has a website located at www.aspectsys.com .
      Information on this website is not a part of this report.




Even
      though our cash flow problems caused by significant indebtedness have hampered
      our ability to fill sales orders, we have observed a significant increase in
      market demand for our subsidiary's products during the past two years. The
      global expansion of chip production companies into emerging parts of the world
      with lower labor costs, particularly China, has caused all semiconductor
      companies to examine more closely how to reduce costs, including through the
      extended use of tool sets. This shift toward ways to reduce costs has lent
      itself to, and our management believes it will continue to lend itself to,
      increasing demand for the products of companies such as ASI. In 2004 we achieved
      record revenues, and management believes we could have matched, or exceeded,
      these revenues in 2005 and into 2006 if our cash flow difficulties had not
      limited our ability to produce our products. Nevertheless we expect demand
      for
      our products to grow unless a significant and prolonged downturn occurs in
      the
      semiconductor industry in the future. Our backlog of orders as of March 31,
      2007
      was approximately $1.3 million.




We
      continue to strive to manage our cash flow in order to meet the demands of
      custom orders, debt obligations and expense commitments. Our plan of
      continuously improving our production and reporting systems will aid in this
      effort. With expanding revenue comes the related problem of attaining sufficient
      cash flow to purchase the required parts to assemble our systems. Our business
      periodically faces significant ongoing cash flow issues particularly when we
      receive substantial orders because of the amount of time between our purchase
      of
      parts, assembly and delivery of products and payment for those products. When
      equipment orders are postponed or payment from customers is delayed, we are
      forced to defer repayment of obligations to creditors or service providers
      and
      forego additional sales opportunities. We continue to pursue various financing
      alternatives but have not been successful in obtaining badly needed capital.
      As
      a result, our cash flow shortage has caused us to suffer significant shipping
      delays and loss of revenues from orders we could not fill on a timely
      basis.




Management's
      discussion and analysis of financial condition and results of operations are
      based upon the Company's financial statements. These statements have been
      prepared in accordance with accounting principles generally accepted in the
      United States. These principles require management to make certain estimates,
      judgments and assumptions that affect the reported amounts of assets,
      liabilities, revenues and expenses, and related disclosure of contingent assets
      and liabilities. On an on going basis, we evaluate our estimates based on
      historical experience and various other assumptions that are believed to be
      reasonable under the circumstances, the results of which form the basis for
      making judgments about the carrying values of assets and liabilities that are
      not readily apparent from other sources. Actual results may differ from these
      estimates under different assumptions or conditions.




10




**Critical
      Accounting Policies and Estimates**




In
      consultation with our Board of Directors, we have identified five accounting
      principles that we believe are key to an understanding of our financial
      statements. These important accounting policies require management's most
      difficult, subjective judgments.




**1.**
            **Going
                Concern**




These
      consolidated financial statements are presented on the basis that the Company
      is
      a going concern. Going concern contemplates the realization of assets and the
      satisfaction of liabilities in the normal course of business over a reasonable
      length of time. The Company has incurred a loss of approximately $158,000
      through March 31, 2007 with sales down approximately 69% from the prior period,
      has negative working capital of approximately $8,800,000, and is in default
      on
      its payments on the majority of its term debt. In addition, on March 6, 2006,
      the Company received a notice of termination of its license agreement with
      Lam.
      Lam has also entered the refurbishing market directly, which has had some impact
      on the Company’s revenue. Our most significant cause of revenue reduction during
      this year, however, has resulted from the action which was taken by the Company
      against Lam. During the second quarter of 2006, the Company filed a lawsuit
      against Lam as a result of long-standing contract disputes between Aspect and
      Lam . **  ** Management
      is convinced that the complaint
      is justified, and that the Company has suffered substantial damages. The
      lawsuit was removed to federal court, depositions are scheduled to occur in
      July
      2007, and a trial date has been set in December 2007. The Company's going
      concern issue and pending litigation with Lam have impacted our sales, as
      certain of our customers are now reluctant to order systems from us, believing
      that there is a risk that any deposit may be lost if we are unable to continue
      operations. This circumstance greatly hampers our ability to capitalize on
      the
      opportunities of a growing market. These factors raise substantial doubt as
      to
      the Company’s ability to continue as a going concern.




Management’s
      plans to eliminate the going concern situation include, but are not limited
      to,
      the renegotiation of payment terms on the Axcelis debt, improved cash flow
      management, aggressive cost reductions, and the creation of additional sales
      and
      profits across its product lines. In addition, management believes that it
      will
      be able to significantly reduce, or eliminate, its payables to Lam based on
      the
      outcome of the pending litigation, but there is no assurance that this will
      occur.




**2.**
            **Inventory**




Inventory
      is valued at the lower of cost or market. Cost includes raw materials, freight,
      labor and manufacturing overhead. Inventory with no sales or usage within the
      prior 12 months and inventory on hand, in excess of a 12-month supply, is
      considered excessive and slow-moving and, accordingly, fully reserved. We review
      our inventory reserves on a quarterly basis and adjust them for the full
      carrying value of obsolete, excessive and slow-moving inventory.




**3.**
            **License
                Agreements**




The
      Company has license agreements, which are being amortized using the
      straight-line method over the life of the contracts with Axcelis Technologies,
      Inc. ("Axcelis") (7 years).




**4.**
            **Revenue
                Recognition**




The
      Company recognizes revenue when persuasive evidence of an arrangement exists,
      title transfer has occurred, the price is fixed or readily determinable, and
      collectibility is probable. Sales are recorded net of sales discounts. The
      Company recognizes revenue in accordance with Staff Accounting Bulletin No.
      104,
      "Revenue Recognition," ("SAB 104"). Our revenues are recorded under two
      categories:




11




Product
      sales - The Company recognizes revenue from product sales when the goods are
      shipped and title passes to its customers.




Service
      income - The Company recognizes revenue from service income when services are
      performed.




**5.**
            **Impairment
                of Long-Lived Assets**




The
      Company continually reviews the recoverability of the carrying value of
      long-lived assets using the methodology prescribed in Statement of Financial
      Accounting Standards (SFAS) 144, "Accounting for the Impairment and Disposal
      of
      Long-Lived Assets." The Company also reviews long-lived assets and the related
      intangible assets for impairment whenever events or changes in circumstances
      indicate that the carrying value of such assets may not be recoverable. Upon
      such an occurrence, recoverability of these assets is determined by comparing
      the forecasted undiscounted net cash flows to which the assets relate, to the
      carrying amount. If the asset is determined to be unable to recover its carrying
      value, then intangible assets, if any, are written down first, followed by
      the
      other long-lived assets to fair value. Fair value is determined based on
      discounted cash flows, appraised values or management's estimates, depending
      on
      the nature of the assets. No impairment was recognized in the three months
      ended
      March 31, 2007.




*Three
      Months Ended March 31, 2007 Compared To Three Months Ended March 31,
      2006.*




**Selected
      Financial Information**




**Three
                Months Ended****03/31/2007**
            
            **03/31/2006**
            
            **Increase**
              **(Decrease)**Statements
                of OperationsTotal
                Revenue
            
            $
            620,048
            
            $
            1,988,370
            
            $
            (1,368,322
            )Cost
                of Revenue:Costs
                of revenues
            
            
            420,661
            
            
            1,375,354
            
            
            (954,693
            )Reserve
                for slow moving andobsolete
                inventory
            
            
            (69,011
            )
            
            (22,636
            )
            
            (46,375
            )Research
                and development
            
            
            32,578
            
            
            62,830
            
            
            (30,252
            )Sales
                and marketing, includinglicensing
                fees, royalties andcommissions
            
            
            90,793
            
            
            397,950
            
            
            (307,157
            )General
                and administrative
            
            
            278,885
            
            
            477,568
            
            
            (198,683
            )Total
                Operating Expenses
            
            
            753,906
            
            
            2,291,066
            
            
            (1,537,160
            )Income
                (Loss) from Operations
            
            
            (133,858
            )
            
            (302,696
            )
            
            168,838Other
                Income (Expense):Interest
                Expense
            
            
            (23,744
            )
            
            (114,327
            )
            
            90,583Income
                (Loss) Before Income Tax Expense
            
            
            (157,602
            )
            
            (417,023
            )
            
            259,421Income
                Tax Expense
            
            
            0
            
            
            800
            
            
            (800
            )Net
                Income (Loss)
            
            $
            (157,602
            )
            $
            (417,823
            )
            $
            260,221Net
                Income (Loss) Per ShareBasic
                and diluted
            
            
            (0.01
            )
            
            (0.02
            )
            
            0.01






12




**Results
      of Operations**




Our
      revenue decrease of $1,368,322, or 69%, to $620,048 in the three months ended
      March 31, 2007 from $1,988,370 in the three months ended March 31, 2006, was
      primarily due to a decrease in systems/chiller sales of $723,984 and a decrease
      in the parts, assemblies, and consumables category of $627,150. System sales
      are
      down due to the first three months of 2007 having three less system sales than
      the same period in 2006 and a change in the product mix which resulted in a
      lower per unit sales price during the first quarter of 2007. The reduction
      in
      the number of systems sold was due to a combination of our inability to take
      new
      orders due to cash flow problems and delays in filling orders. The decrease
      in
      parts, assemblies, and consumables sales is primarily due to our tight cash
      flow
      situation and the increased funding needs for system sales. For example, we
      have
      had to defer some parts, assemblies, and consumables purchases, and therefore
      the related sales, to future periods. Our sales break down by segment is as
      follows:




**March
                31, 2007**
            
            **March
                31, 2006**
            
            **Increase**
              **(Decrease)**Systems
                and chillers
            
            $
            216,883
            
            $
            940,867
            
            $
            (723,984
            )Parts,
                assemblies and consumables
            
            
            388,571
            
            
            1,015,721
            
            
            (627,150
            )Field
                service and training
            
            
            14,594
            
            
            31,782
            
            
            (17,188
            )$
            620,048
            
            $
            1,988,370
            
            $
            (1,368,322
            )




**Cost
      of Revenues**




Our
      cost
      of revenues decreased $954,693 or 69% to $420,661 in the three months ended
      March 31, 2007 from $1,375,354 in the three months ended March 31, 2006. This
      decrease is directly related to the 69% decrease in total revenue for the three
      months ended March 31, 2007. Our cost of revenues as a percentage of revenues
      for the three months ended March 31, 2007 and 2006 was 68% and 69%,
      respectively.




**Reserve
      for Slow Moving and Obsolete Inventory**




Our
      reserve for slow moving and obsolete inventory is the change in our analysis
      of
      the need for a slow moving and obsolete inventory reserve. Based on our analysis
      in the three months ended March 31, 2007, we recorded a $69,011 decrease to
      the
      reserve due to an analysis of inventory items. In the three months ended March
      31, 2006, we recorded a $22,636 decrease to the reserve due to an analysis
      of
      inventory items.




**Research
      and Development**




Research
      and development costs decreased $30,252 or 48%, to $32,578 in the three months
      ended March 31, 2007 from $62,830 in the three months ended March 31, 2006.
      The
      decrease is primarily related to $15,241 of product development expenses
      incurred in 2006. We normally do not incur significant research and development
      expenses.




**Sales
      and Marketing**




Sales
      and
      marketing costs decreased $307,157 to $90,793 in the three months ended March
      31, 2007 from $397,950 in the three months ended March 31, 2006. This decrease
      is due to: a) the absence of outside commission expenses during the three months
      ended March 31, 2007 (these costs were $45,040 during the three months ended
      March 31, 2006), b) a decrease in payroll and employee benefits in the amount
      of
      $71,033 or 61% to $46,612 during the three months ended March 31, 2007 from
      $117,645 during the three months ended March 31, 2006 as headcount decreased,
      and c) a decrease of $194,882 to $35,883 in the Axcelis royalty and license
      expense during the three months ended March 31, 2007 from $230,765 during the
      three months ended March 31, 2006 which was due to the reduction in sales of
      Axcelis products.




13




**General
      and Administrative**




**Three
                Months Ended****03/31/2007**
            
            **03/31/2006**
            
            **Increase**
              **(Decrease)**General
                and AdministrativeSalaries
                and wages
            
            $
            107,391
            
            $
            193,986
            
            $
            (86,595
            )Professional
                fees
            
            
            72,899
            
            
            147,208
            
            
            (74,309
            )Occupancy
                Expense, less amount allocated to Cost of Revenue
            
            
            59,519
            
            
            45,751
            
            
            13,768Issuance
                of stock options for director compensation
            
            
            6,885
            
            
            19,620
            
            
            (12,735
            )Depreciation,
                less amount allocated to Cost of Revenue
            
            
            513
            
            
            5,128
            
            
            (4,615
            )Other
                general and administrative expenses
            
            
            31,678
            
            
            65,875
            
            
            (34,197
            )Total
                General and Administrative
            
            $
            278,885
            
            $
            477,568
            
            $
            (198,683
            )




Salaries
      and wages decreased $86,595 or 45% to $107,391 in the three months ended March
      31, 2007 as compared to $193,986 in the three months ended March 31, 2006.
      This
      decrease is primarily the result of a decrease in general and administrative
      headcount and management’s decision to not immediately replace the employees.




Professional
      fees decreased $74,309 or 50%, to $72,899 in the three months ended March 31,
      2007 from $147,208 in the three months ended March 31, 2006, primarily due
      to
      delayed payments associated with our quarterly filings in the first quarter
      of
      2007 and a reduction in legal expenses associated with the Lam lawsuit as a
      result of the negotiated contingent legal fee which was agreed upon for this
      litigation.




Depreciation
      expense decreased in the three months ended March 31, 2007 primarily due to
      certain assets becoming fully depreciated and/or retired.




Occupancy
      expense represents our costs to lease, occupy, and maintain our leased
      facilities in Arizona and Texas.  These costs, which consist primarily of
      rent, repair and maintenance, utilities, security, insurance and janitorial
      services, are allocated between cost of revenue and operating expenses based
      upon the square footage utilized by each category. Occupancy costs increased
      due
      to an adjustment of our common area maintenance expenses at our Texas
      facility.




Other
      general and administrative expenses decreased $34,197 or 52%, to $31,678 in
      the
      three months ended March 31, 2007 from $65,875 in the three months ended March
      31, 2006. The decreased expenses are primarily attributable to decreased
      expenses related to a smaller employee base during the three months ended March
      31, 2007.




14




**Interest
      Expense**




Interest
      expense for the three months ended March 31, 2007 ($23,744) has decreased over
      the comparable period of 2006 ($114,327) by $90,583 due primarily to the
      repayment of certain loans.




**Net
      Income (Loss)**




As
      a
      result of the foregoing, we had a net loss of $157,602 for the three months
      ended March 31, 2007, compared to a net loss of $417,823 for the three months
      ended March 31, 2006.




**Capital
      Resources**




**Three
                Months Ended**Working
                Capital
            
            **03/31/2007**
            
            **03/31/2006**
            
            **Favorable**
              **(Unfavorable)**Current
                Assets
            
            $
            808,161
            
            $
            2,979,915
            
            $
            (2,171,754
            )Current
                Liabilities
            
            
            (9,574,842
            )
            
            (10,175,792
            )
            
            600,950Deficit
                Working Capital
            
            $
            (8,766,681
            )
            $
            (7,195,877
            )
            $
            (1,570,804
            )Long-term
                Debt
            
            $
            (8,277
            )
            $
            (23,280
            )
            $
            15,003Stockholders'
                (Deficit)
            
            $
            (8,581,418
            )
            $
            (6,955,674
            )
            $
            (1,625,744
            )




During
      the three months ended March 31, 2007 and 2006, we were in default of our
      payment terms on the majority of our term debt. As a result, the approximately
      $2.5 million of term debt due beyond twelve months was classified as a current
      liability in the March 31, 2007 consolidated balance sheet.




Included
      in current liabilities is a total of $2,629,049 that is owed to Axcelis for
      license and royalty fees.  Also included in current liabilities is a total
      of $3,555,317 in inventory payments and license and royalty fees owed to Lam. On
      March
      6, 2006, ASI received a termination notice from Lam. During the second quarter
      of 2006, the Company filed a lawsuit against Lam as a result of long-standing
      contract disputes between Aspect and Lam . **  ** Management
      is confident that the complaint
      is justified, and that
      the Company has suffered substantial damages. The
      lawsuit has been removed to federal court and a trial date has been set for
      December 2007.





On
      May 1,
      2006, we received an agreement from Cornell Capital to extend the repayment
      terms of their bridge loan agreement. Under the new agreement, we were required
      to make 12 monthly payments, commencing May 1, 2006, in the amount of $12,500
      to
      Cornell and a final balloon payment in the amount of $204,107 on May 1, 2007.
      We
      have not made certain of these required payments nor have we made the balloon
      payment that was due on May 1, 2007. We are still delinquent, but we continue
      to
      make payments as we are able and management intends to continue to make the
      past
      due monthly payments in the belief that Cornell will remain patient and willing
      to work with us toward the eventual satisfaction of this debt, but there can
      be
      no assurance that Cornell will not seek immediate repayment of all past due
      amounts.




The
      Company's term loan dated May 14, 2004 to Merrill Lynch was renegotiated as
      a
      forbearance agreement during March 2007. Under the new agreement, the Company
      was required to make monthly payments, commencing March 2007, in the amount
      of
      $24,958 plus interest (at prime + 4%), and a final balloon payment was due
      April
      30, 2007. The loan continues to be secured by a first lien on the Company's
      total assets ($808,161 as of March 31, 2007) and has been guaranteed by Doug
      Dixon, Chairman and CEO, and the Company. We did not make the required balloon
      payment that was due on April 30, 2007 but continue to make monthly principal
      payments each month in an amount equal to the monthly payments required under
      the forbearance agreement. We are in discussions with Merrill Lynch which
      management believes will result in a further extension of the forbearance
      agreement for an as yet undefined period into the future, but there can be
      no
      assurance that this will occur.




15




**Statements
      of Cash Flows Select Information**




**Three
                Months Ended****03/31/2007**
            
            **03/31/2006**Net
                Cash Provided (Used) By:Operating
                Activities
            
            $
            154,478
            
            $
            86,265Investing
                Activities
            
            
            -0-
            
            
            -0-Financing
                Activities
            
            
            (144,446
            )
            
            (323,985
            )




**Operating
      Activities**




For
      the
      three months ended March 31, 2007, cash provided by operating activities of
      $154,478 was primarily attributed to net loss from operations of $(204,078)
      offset by a decrease in accounts receivable of $203,657 and an increase in
      customer deposits of $309,122. These amounts were partially offset by an
      increase in inventory of $146,512.




For
      the
      three months ended March 31, 2006, cash provided by operating activities of
      $86,265 was primarily attributed to a decrease in accounts receivable in the
      amount of $330,467, a $289,794 decrease in inventories as well as an increase
      of
      $318,749 in customer deposits. These amounts were offset by our net loss of
      $417,823, our increase of prepaid expenses and other assets in the amount of
      $101,792, and a reduction in our accounts payable and accrued expenses of
      $418,991. During the three months ended March 31, 2006, our non-cash reconciling
      items included depreciation and amortization expense of $18,214 and $6,704,
      respectively and the issuance of stock options for director compensation in
      the
      amount of $19,620. We also paid $80,164 of legal expenses and late fees through
      the issuance of debt.




**Investing
      Activities**




During
      the three months ended March 31, 2007 and 2006, no cash was used by investing
      activities.




We
      currently have no material commitments for capital expenditures.




**Financing
      Activities**




Financing
      activities in the three months ended March 31, 2007 used $114,446 in cash flows
      as compared to a provision of $323,985 in the three months ended March 31,
      2006.




During
      the three months ended March 31, 2007, we made principal payments in the amount
      of $114,446 on our long-term debt.




In
      the
      three months ended March 31, 2006, $302,735 and $21,250 was used for the
      repayment of long-term debt and related party debt, respectively.




**Liquidity
      and Capital Resources**




To
      date,
      we have financed our business with cash from our operating activities, a bank
      line of credit that has been restructured into a term loan, a loan for $200,000
      (which was repaid in March 2005), two additional term loans totaling $525,000
      (of which one for $225,000 was paid in January 2006 and as of March 31, 2007,
      $100,000 has been paid on the other), a $125,000 loan from a related party
      (which was repaid in July 2006) and three loans totaling $80,000 from a related
      party (all were taken and repaid in 2006). The Company's term loan dated May
      14,
      2004 to Merrill Lynch had a balance of $479,494 as of March 31, 2007, and was
      renegotiated as a forbearance agreement during March 2007. Under the new
      agreement, the Company was required to make monthly payments, commencing March
      2007, in the amount of $24,958 plus interest (at prime + 4%), and a final
      balloon payment was due April 30, 2007. The loan continues to be secured by
      a
      first lien on the Company's total assets ($808,161 as of March 31, 2007) and
      has
      been guaranteed by Doug Dixon, Chairman and CEO, and the Company. We did not
      make the required balloon payment that was due on April 30, 2007 but continue
      to
      make monthly principal payments each month in an amount equal to the monthly
      payments required under the forbearance agreement. We are in discussions with
      Merrill Lynch which management believes will result in a further extension
      of
      the forbearance agreement for an as yet undefined period into the future, but
      there can be no assurance that this will occur.




16




On
      November 8, 2002, we entered into a non-exclusive license for several of Lam’s
      patents and other intellectual property, which was later amended on June 25,
      2004. The Company and Lam are in mutual default on this agreement and no
      payments have been made to Lam since 2005.




In
      November 2003, we entered into an agreement with Axcelis and acquired an
      exclusive license to all future manufacturing, sales, service, and parts support
      for certain dry strip semiconductor manufacturing equipment now marketed under
      the trade names MX-1 and MX-10 (formerly Matrix System One and System Ten).
      This
      agreement provides for the one time payment of a license fee of $150,000 plus
      18% of net revenues (from these sales) per quarter until a $2,750,000 license
      fee has been paid. Of the $2,750,000 license fee, approximately $1,927,000
      has
      been expensed and $1,624,000 of the expensed amount remains to be paid. This
      agreement also calls for a royalty fee to be paid on all related sales through
      December 31, 2010 on a declining calendar schedule from 10% to 2%; the balance
      to be paid on this is approximately $823,000.




On
      August
      2, 2004, we entered into an additional agreement with Axcelis acquiring an
      exclusive license to manufacture, sell and provide services and parts support
      for certain reactive ion etch semiconductor manufacturing equipment for wafer
      sizes up to 200mm now marketed under the ASI trade name Arista and Arista Dual
      (formerly Matrix Bobcat and Cheetah). This agreement provides for a quarterly
      payment equal to 18% of net revenues from the sale of this product by the
      Company, beginning with the fourth quarter of 2004 and ending December 31,
      2011,
      or until $750,000 (the license fee) has been paid, whichever occurs first.
      Of
      the $750,000 license fee, approximately $117,000 has been expensed and the
      full
      amount remains to be paid. **** This
      agreement also calls for a royalty fee to be paid on all related sales through
      December 31, 2011 on a declining calendar schedule from 10% down to 2%; the
      balance to be paid on this is approximately $64,000.




As
      of
      March 31, 2007, we continued to remain past due on certain payments to both
      Lam
      and Axcelis. Past due payments to Lam totaled approximately $1,478,000 as of
      March 31, 2007, and past due payments to Axcelis totaled approximately
      $2,146,000 on that date. Although our current tight cash flow has prevented
      these payments from being made, we have assured Axcelis that our delinquent
      payments will be made as soon as possible and management has no reason to
      believe as of the date of this filing that Axcelis will terminate any of its
      agreements with the Company. The Company is in litigation with Lam and
      management believes that Lam is in breach of its non-exclusive license
      agreement, and as a result, is seeking to write off the remaining amounts owed
      to Lam. If the Company is able to write off all or a significant portion of
      the
      approximately $3.6 million due under this Agreement, our liquidity would
      improve. However, there is no assurance that we will be successful in the
      litigation, or that we will be ultimately able to write off all or part of
      the
      associated debt. On August 1, 2006, Lam notified ASI by letter that it would
      no
      longer sell spare parts to ASI due to the pending litigation. Management
      believes that the impact of this will be minimal, as most spare parts can be
      obtained from sources other than Lam, but there are a few spare parts that
      can
      only be obtained from Lam.




17




On
      July
      22, 2005, we entered into a promissory note with Cornell Capital for $300,000.
      The loan originally called for interest to accrue at 12% with payments in the
      amount of $20,000 to be made weekly beginning October 21, 2005 and with the
      final payment of $34,121 due on January 27, 2006. On May 1, 2006, we received
      an
      agreement from Cornell to extend the repayment terms of the bridge loan
      agreement. Under the new agreement, we are required to make 12 monthly payments,
      commencing May 1, 2006, in the amount of $12,500 to Cornell and a final balloon
      payment in the amount of $204,107 on May 1, 2007. **** We
      have
      not made certain of these required payments nor have we made the balloon payment
      that was due on May 1, 2007. We are still delinquent, but we continue to make
      payments as we are able and management intends to continue to make the past
      due
      monthly payments in the belief that Cornell will remain patient and willing
      to
      work with us toward the eventual satisfaction of this debt, but there can be
      no
      assurance that Cornell will not seek immediate repayment of all past due
      amounts.





The
      Company's current tight cash flow and the previously stated effects of the
      lawsuit filed against Lam have prevented us from making required payments on
      the
      majority of our debt. As of March 31, 2007, our total debt of approximately
      $7,200,000 is comprised of approximately $3,600,000 owed to Lam, $2,600,000
      owed
      to Axcelis, $480,000 owed to Merrill Lynch, $200,000 owed to Cornell Capital
      Partners and $289,000 owed to a related party.




Our
      future cash requirements and the adequacy of available funds will depend on
      many
      factors, including the pace at which we expand our business generally, and
      our
      inventory in particular, the general state of the economy, which impacts the
      amount of money that may be spent for computer related purchases, and
      maintaining sufficient gross profit margins to service our substantial
      indebtedness. As of March 31, 2007, we had $46,238 in cash on hand.  
Our amount of cash on hand can vary significantly from day-to-day due to the
      nature of our business, which consists of significant cash expenditures to
      purchase the parts and components needed to assemble the systems that comprise
      the majority of our revenues and an often significant delay between these
      expenditures and payment from our customers for the systems, which does not
      occur until after delivery. As a result, we manage our cash flow closely to
      meet
      our required production shipping dates, debt obligations and expense
      commitments, and will continue to do so until we have either established a
      cash
      reserve large enough to self finance the cost of producing systems in advance
      of
      receiving any payments or have outside financing to accomplish the same result.
      Our debt obligations remain a priority in our cash flow planning, and we do
      not
      have plans or commitments for significant capital expenditures in the near
      future.




**CAUTIONARY
      NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS**




*The
      Company's Form 10-KSB, any Form 10-QSB or any Form 8-K of the Company or any
      other written or oral statements made by or on behalf of the Company may contain
      forward-looking statements which reflect the Company's current views with
      respect to future events and financial performance. The words "believe,"
      "expect," "anticipate," "intends," "estimate," "forecast," "project," and
      similar expressions identify forward-looking statements. All statements other
      than statements of historical fact are statements that could be deemed
      forward-looking statements, including any statements of the plans, strategies
      and objectives of management for future operations; any statements concerning
      proposed new products, services, developments or industry rankings; any
      statements regarding future economic conditions or performance; any statements
      of belief; and any statements of assumptions underlying any of the
      foregoing.*  *Such
      "forward-looking statements" are subject to risks and uncertainties set forth
      from time to time in the Company's SEC reports and are generally set forth
      below
      and particularly discussed in the Company's Form 10-KSB for the year ended
      December 31, 2006.*




*Readers
      are cautioned not to place undue reliance on such forward-looking statements
      as
      they speak only of the Company's views as of the date the statement was made.
      The Company undertakes no obligation to publicly update or revise any
      forward-looking statements, whether as a result of new information, future
      events or otherwise.*




18




**Risk
      Factors**




**You
      should consider the following discussion of risks as well as other information
      regarding our operations. The risks and uncertainties described below are not
      the only ones. Additional risks and uncertainties not presently known to us
      or
      that we currently deem immaterial also may impair our business operations.**




·
            Lam
                has terminated its agreement with us and we have filed suit against
                Lam.
                There is no assurance that we will be successful in the litigation,
                or
                that we will ultimately be able to write off all or part of the associated
                debt. We are in default on approximately $3,600,000 due to Lam and
                there
                can be no assurance that we will not have to pay all or part of this
                amount.





·
            The
                going concern and ongoing litigation with Lam have impacted our sales
                as
                certain customers are now reluctant to order systems from us as systems
                require a significant up-front deposit and some customers believe
                that
                there is a risk that any deposit may be lost if we are unable to
                continue
                operations.





·
            We
                were past due on approximately $2,146,000 in payments to Axcelis
                as of
                March 31, 2007. While Axcelis has to date been willing to provide
                us with
                additional time to make payments, Axcelis could terminate our license
                agreements with it upon ninety days written notice. We would have
                that
                notice period in which to make the past due payments and avoid
                termination, although management believes it is unlikely that we
                could
                become current on our obligations within 90 days.





·
            We
                are in default on our term loan with Merrill Lynch, which is secured
                by a
                first lien on all of our assets.





·
            We
                are in default on our promissory note to Cornell Capital
                Partners.





·
            Our
                auditors have identified certain weaknesses in our internal control
                over
                financial reporting.





·
            Future
                sales of common stock by Cornell Capital Partners and its affiliates
                may
                adversely affect our stock price.





·
            We
                depend on Dennis Key, our CFO and CEO of ASI, and his relationships
                within
                the semiconductor industry. His loss would seriously disrupt our
                operations. Our CEO, Douglas Dixon, is gradually decreasing his
                involvement with the Company in anticipation of retirement. We anticipate
                that Mr. Key will continue to maintain Mr. Dixon's relationships
                within
                the semiconductor industry.





·
            Demand
                for our products is subject to cyclical downturns in the semiconductor
                industry.





·
            We
                are subject to the risks associated with the intensely competitive
                and
                capital-intensive nature of the semiconductor industry, and we may
                not be
                able to compete effectively in markets where our competitors have
                more
                resources.





·
            We
                are subject to risks relating to product concentration and lack of
                product
                revenue diversification.





·
            The
                semiconductor industry is based on rapidly changing technology, and
                we
                rely primarily on our licensors to develop products our customers
                find
                satisfactory.





·
            We
                may experience supply shortages, which would adversely affect our
                ability
                to meet customer demands.






19






·
            We
                are exposed to the risks of operating a global
                business.





·
            We
                are subject to risks relating to lengthy sales cycles, which may
                require
                the expenditure of substantial funds and management
                effort.





·
            We
                are exposed to risks associated with a highly concentrated customer
                base.





·
            Our
                independent accountants have expressed uncertainty about our ability
                to
                continue as a going concern.





·
            Our
                ability to raise additional financing is
                uncertain.





·
            Environmental,
                health and safety laws may restrict our operations, particularly
                within
                the European Union.





·
            There
                is a limited market for our common stock.





·
            Our
                common stock is subject to penny stock regulation.





·
            We
                are subject to increasing costs of compliance with the Sarbanes-Oxley
                Act
                of 2002 and must maintain high margins to pay for these ongoing expenses
                required of public companies.





**ITEM
      3.**  **CONTROLS
      AND PROCEDURES**





(a)  Under
      the
      supervision and with the participation of our management, including our
      principal executive officer and principal financial officer, we conducted an
      evaluation of the design and operation of our disclosure controls and
      procedures, as such term is defined under Rules 13a-14(c) and 15d-14(c)
      promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
      Act"), as of March 31, 2007. Based on that evaluation, our principal executive
      officer and our principal financial officer concluded that our disclosure
      controls and procedures were not effective to ensure that information required
      to be disclosed in reports filed or submitted under the Exchange Act is
      accumulated and communicated to the Company’s management, including its chief
      executive and principal financial officer, as appropriate to allow timely
      decisions regarding required disclosure. Although the evaluation did not detect
      any material weaknesses in the Company’s system of internal accounting controls
      over financial reporting, management identified certain significant deficiencies
      with respect to inadequate reconciliation of certain financial statement
      accounts and a lack of sufficient review of those accounts and related journal
      entries. The Company is addressing its staffing levels and its reconciliation
      and review process and will make recommendations to the Board in the second
      quarter of 2007.





Notwithstanding
      management’s assessment that our internal control over financial reporting
      was ineffective as of March 31, 2007 and the significant deficiencies described
      above, management believes that the financial statements included in this
      Quarterly Report on Form 10-QSB correctly present our financial condition,
      results of operations and cash flows for the quarters covered thereby in all
      material respects.




(b)  There
      have been no changes in our internal control over financial reporting identified
      in connection with the evaluation that occurred during the last fiscal quarter
      that have materially affected, or that are reasonably likely to materially
      affect, our internal control over financial reporting. However, as disclosed
      in
      our Form 10-QSB filed on May 16, 2006, our management received a letter from
      the
      Company's independent auditors on May 10, 2006 that identified certain
      weaknesses in our internal control over financial reporting to address primarily
      four issues: 1) Our subsidiary’s Vice President of Operations is now reviewing
      all standard unit cost changes to prevent adjustments to the valuation of
      inventory items without proper approval. In addition, with the transfer of
      Texas
      accounting transactions to Arizona, the software package which allowed negative
      inventory balances to occur in the past has been discontinued. 2) Due to our
      limited accounting headcount, which is sometimes typical of smaller companies,
      and which impacts our ability to segregate duties to some degree, we will
      continue to monitor our financial data very closely through the use of various
      trended subsidiary reports, statements, and a detailed and departmentalized
      chart of accounts to ensure all transactions are properly recorded. 3) Although
      our commission accrual process remains the same, increased emphasis will be
      placed on the review of the existing systems group gross profit report which
      details commission expense by system. 4) Upper management will increase their
      communication of any unusual transactions and subsequent events to the personnel
      responsible for financial accounting and disclosure to ensure the proper
      accounting and disclosure on a timely basis. ****




20




Beginning
      with the Company’s first fiscal year ending after December 15, 2007,
      Section 404 of the Sarbanes-Oxley Act of 2002 will require us to include
      management's report on our internal control over financial reporting in our
      Annual Report on Form 10-KSB. The internal control report must contain
      (1) a statement of management's responsibility for establishing and
      maintaining adequate internal control over our financial reporting, (2) a
      statement identifying the framework used by management to conduct the required
      evaluation of the effectiveness of our internal control over financial
      reporting, and (3) management's assessment of the effectiveness of our
      internal control over financial reporting as of the end of our most recent
      fiscal year, including a statement as to whether or not our internal control
      over financial reporting is effective. For the year ended December 31, 2008,
       a statement that our registered independent public accounting firm has
      issued an attestation report on management's assessment of our internal control
      over financial reporting will be required.




In
      order
      to achieve compliance with Section 404 within the prescribed period,
      management is planning to commence a Section 404 compliance project to
      assess the adequacy of our internal control over financial reporting, remediate
      any control deficiencies that may be identified, validate through testing that
      controls are functioning as documented, and implement a continuous reporting
      and
      improvement process for internal control over financial reporting. At this
      time,
      management is assessing the proper parameters of a Section 404 compliance
      project in light of emerging guidance from the SEC on such parameters.




**PART
      II - OTHER INFORMATION**




**ITEM
      5. OTHER INFORMATION**


On
        May 1,
        2007, Ronny Baker, the Company's Controller and principal accounting officer,
        retired and Karl Jackson was appointed Controller and took over Mr. Baker's
        responsibilities as the Company's principal accounting officer. Prior to
        being
        appointed Controller, Mr. Jackson was the Accounting Manager of Aspect Systems,
        Inc., a position he held from May 2004 until May 2007. Prior to joining ASI
        and
        since May 2000, Mr. Jackson served as Controller of Eason & Waller
        Manufacturing. Mr. Jackson holds a B.S. in Accounting from Arizona State
        University and an MBA from Golden Gate University.




**ITEM
      6. EXHIBITS**




Exhibits:




31.1  Rule
      13a-14(a)/15d-14(a) Certification of Principal Executive Officer




31.2  Rule
      13a-14(a)/15d-14(a) Certification of Principal Financial Officer




32  Section
      1350 Certifications




21




SIGNATURES





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




DND
              TECHNOLOGIES, INC., a Nevada corporationDate: June
              27, 2007
            By:
            /s/ Douglas
              N. DixonTitle Douglas
              N. Dixon, Chief Executive
              Officer




By:
            /s/ G.
              Dennis KeyG.
              Dennis Key, Chief Financial Officer




22