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 June 30, 2004

                          Commission File No. 333-42936

                             DND TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                             <C>
                        Nevada                                               84-1405298
   (State or other jurisdiction of incorporation or             (I.R.S. Employer Identification No.)
                    organization)

              375 E. Elliot Rd., Bldg. 6                                       85225
                  Chandler, Arizona                                          (Zip Code)
       (Address of principal executive offices)
</TABLE>

         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 shorter period
that the registrant was required to file such reports), and (2) been subject to
such filing requirements for the past 90 days.

--------------------------------------------------------------------------------
 Number of shares outstanding of each of the issuer's classes of common equity:

            Class                              Outstanding as of August 16, 2004
            -----                              ---------------------------------
Common stock, $0.001 par value                            23,000,000
--------------------------------------------------------------------------------

      The issuer is not using the Transitional Small Business Disclosure format.

<PAGE>

                             DND TECHNOLOGIES, INC.

                                Table of Contents
                                                                            Page

PART I     FINANCIAL INFORMATION.........................................    3

Item 1.    Consolidated Unaudited Financial Statements...................    3

Consolidated Unaudited Balance Sheet.....................................    4

Consolidated Unaudited Statements of Operations..........................    6

Consolidated Unaudited Statements of Stockholders' (Deficit).............    8

Consolidated Unaudited Statements of Cash Flows..........................    9

Item 2.    Management's Discussion and Analysis of Financial Condition
and Results of Operations ...............................................   26

Item 3.    Controls and Procedures.......................................   35

PART II    OTHER INFORMATION.............................................   37

Item 1.  Legal Proceedings ..............................................   37

Item 6.    Exhibits and Reports on Form 8-K..............................   37

SIGNATURES ..............................................................   38

<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)


                                       3
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2004
                                   (UNAUDITED)

ASSETS

CURRENT ASSETS:
Cash and cash equivalents                                             $  393,101
Accounts receivable, net of
  allowance for doubtful accounts                                      1,503,911
Inventories, net of allowance for obsolescence                         1,555,464
Prepaid expenses                                                         184,701
                                                                      ----------
Total current assets                                                   3,637,177
                                                                      ----------

PROPERTY AND EQUIPMENT, Net of
  accumulated depreciation                                               341,512
                                                                      ----------

OTHER ASSETS:
License agreements                                                     3,627,839
Loan fees                                                                 11,450
Deposits                                                                  20,366
                                                                      ----------
Total other assets                                                     3,659,655
                                                                      ----------

TOTAL ASSETS                                                          $7,638,344
                                                                      ==========

                                                                     (Continued)


                                       4
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                     CONSOLIDATED BALANCE SHEET (CONTINUED)
                                  JUNE 30, 2004
                                   (UNAUDITED)

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Notes payable, current portion                                      $   489,350
Note payable, Merrill Lynch, current portion                            270,402
Capital leases payable, current portion                                  21,960
Lawsuit payable, current portion                                         90,000
Accounts payable and accrued expenses                                 1,939,619
Deposits from customers                                               1,026,549
Accounts payable, Lam Research Corporation, current portion             503,864
License payable, Lam Research Corporation, current portion              500,902
License and royalty payable, Axcelis                                    223,244
Amounts due to related parties                                          438,806
                                                                    -----------
Total current liabilities                                             5,504,696
                                                                    -----------

COMMITMENTS AND CONTINGENCIES

LONG-TERM LIABILITIES, NET OF CURRENT PORTION:
Capital lease payable                                                    23,921
Accounts payable, Lam Research Corporation                              537,006
Note payable, Merrill Lynch                                             835,789
License payable, Lam Research Corporation                             3,221,416
Lawsuit payable                                                          50,000
                                                                    -----------
Total long-term liabilities, net of current portion                   4,668,132
                                                                    -----------

STOCKHOLDERS' DEFICIT:
Preferred stock                                                               0
Common stock, par value, $.001 per share;
  authorized, 50,000,000 shares;
  issued and outstanding, 23,000,000 shares                              23,000
Paid-in capital                                                       1,957,160
Common stock subscribed                                                  55,000
Accumulated deficit                                                  (4,569,644)
                                                                    -----------
Total stockholders' deficit                                          (2,534,484)
                                                                    -----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                         $ 7,638,344
                                                                    ===========

See accompanying notes.

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


                                       5
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
            FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                  Three Months                   Six Months
                           --------------------------    --------------------------
                               2004           2003           2004           2003
                               ----           ----           ----           ----
<S>                        <C>            <C>            <C>            <C>
REVENUE:
Systems and Chillers       $ 2,074,235    $   900,963    $ 3,808,101    $ 1,043,464
Parts, assemblies
  and consumables            1,619,561      1,393,612      3,126,785      2,904,790
Field service and
  training                      43,738        160,093         93,423        203,384
                           -----------    -----------    -----------    -----------
Total revenue                3,737,534      2,454,668      7,028,309      4,151,638
                           -----------    -----------    -----------    -----------

COST OF REVENUE:
Cost of revenues -
  recurring operations       2,526,313      1,588,759      4,456,468      2,645,233
Reserve for slow moving
  and obsolete inventory      (800,668)       (49,232)      (800,668)       (66,202)
                           -----------    -----------    -----------    -----------
Total cost of revenue        1,725,645      1,539,527      3,655,800      2,579,031
                           -----------    -----------    -----------    -----------

GROSS PROFIT                 2,011,889        915,141      3,372,509      1,572,607
                           -----------    -----------    -----------    -----------

OPERATING EXPENSES:
Research and development        16,656         13,987         31,843         30,108
Sales and marketing            551,328        257,210        967,860        493,872
General and
  administrative               566,056        450,168        997,653        879,515
                           -----------    -----------    -----------    -----------
Total operating expenses     1,134,040        721,365      1,997,356      1,403,495
                           -----------    -----------    -----------    -----------

INCOME FROM
  OPERATIONS                   877,849        193,776      1,375,153        169,112
                           -----------    -----------    -----------    -----------

OTHER INCOME (EXPENSE)
Interest expense               (84,333)      (112,166)      (178,456)      (202,421)
Lawsuit settlement                   0              0       (140,000)             0
Other income                         0           (223)             0              0
                           -----------    -----------    -----------    -----------
Other expense, net             (84,333)      (112,389)      (318,456)      (202,421)
                           -----------    -----------    -----------    -----------

INCOME (LOSS) BEFORE
  INCOME TAX EXPENSE           793,516         81,387      1,056,697        (33,309)

INCOME TAX EXPENSE
  (BENEFIT)                          0          2,932            800              0
                           -----------    -----------    -----------    -----------

NET INCOME (LOSS)          $   793,516    $    78,455    $ 1,055,897    $   (33,309)
                           ===========    ===========    ===========    ===========
</TABLE>

                                                                     (Continued)


                                       6
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF OPERATIONS - Continued
            FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003
                                   (UNAUDITED)

                             Three Months              Six Months
                       -----------------------   -----------------------
                          2004         2003         2004         2003
                          ----         ----         ----         ----

NET INCOME (LOSS)
  PER COMMON SHARE:
  Basic                $      .03   $      .01   $      .05   $     (.01)
                       ==========   ==========   ==========   ==========
  Diluted              $      .03   $      .01   $      .04   $     (.01)
                       ==========   ==========   ==========   ==========

WEIGHTED AVERAGE
  NUMBER OF COMMON
  SHARES OUTSTANDING
  AND SUBSCRIBED:
     Basic             23,000,000   22,000,000   23,000,000   22,000,000
                       ==========   ==========   ==========   ==========
     Diluted           26,340,986   22,000,000   26,340,986   22,000,000
                       ==========   ==========   ==========   ==========

See accompanying notes.

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


                                       7
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                     FOR THE SIX MONTHS ENDED JUNE 30, 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                        Stock Subscribed           Common Stock
                      ---------------------   -----------------------     Paid-in     Accumulated
                       Shares      Amount       Shares       Amount       Capital       Deficit         Total
                       ------      ------       ------       ------       -------       -------         -----
<S>                   <C>         <C>          <C>          <C>         <C>           <C>            <C>
BALANCE,
  DECEMBER 31, 2003   1,100,000   $  55,000    23,000,000   $  23,000   $ 1,957,160   $(5,625,541)   $(3,590,381)

NET INCOME                    0           0             0           0             0     1,055,897      1,055,897
                      ---------   ---------   -----------   ---------   -----------   -----------    -----------

BALANCE,
  JUNE 30, 2004       1,100,000   $  55,000    23,000,000   $  23,000   $ 1,957,160   $(4,569,644)   $(2,534,484)
                      =========   =========   ===========   =========   ===========   ===========    ===========
</TABLE>

See accompanying notes.

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


                                       8
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
                                   (UNAUDITED)

                                                        2004            2003
                                                        ----            ----

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                   $ 1,055,897     $   (33,309)
Adjustments to reconcile net income (loss)
  to net cash provided by operating
  activities:
  Depreciation                                           89,469          93,403
  Amortization                                          272,490         218,145
  Provision for slow moving and
    obsolete inventories                             (1,027,997)         66,202
  Loss on disposal of fixed asset                         2,349               0
  Settlement of lawsuit                                 140,000               0
  Changes in operating assets
    and liabilities:
    Accounts receivable                                (450,350)       (755,142)
    Other receivables                                         0         (10,155)
    Inventories                                        (440,845)       (914,548)
    Prepaid expenses and other assets                  (140,071)        (34,920)
    Accounts payable and accrued expenses               214,858       1,187,914
    Deposits from customers                             821,549               0
    Accrued expenses and amounts due
      to related parties                                 23,109         515,910
                                                    -----------     -----------
Net cash provided by operating activities               560,458         333,500
                                                    -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES -
  Purchases of property and equipment                   (21,356)              0
                                                    -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayment on line of credit                          (4,963)              0
Principal payments on long-term debt                   (298,839)       (308,951)
                                                    -----------     -----------
Net cash used by financing
  activities                                           (303,802)       (308,951)
                                                    -----------     -----------

NET INCREASE IN CASH AND CASH EQUIVALANTS               235,300          24,549

CASH AND CASH EQUIVALENTS,
  BEGINNING OF PERIOD                                   157,801         199,880
                                                    -----------     -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD            $   393,101     $   224,429
                                                    ===========     ===========

                                                                     (Continued)


                                       9
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                 FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
                                   (UNAUDITED)

                                                         2004             2003
                                                         ----             ----

SUPPLEMENTARY DISCLOSURE
   OF CASH FLOW INFORMATION:
Cash paid for interest                                 $169,494         $215,564
                                                       ========         ========
Cash paid for taxes                                    $      0         $      0
                                                       ========         ========

SCHEDULE OF NON-CASH INVESTING
   AND FINANCING ACTIVITIES:
Common stock issued for
  accounts payable                                     $      0         $160,000
                                                       ========         ========
Cancellation of capital lease
  and return of asset to vendor                        $  9,202         $      0
                                                       ========         ========
Settlement of lawsuit                                  $140,000         $      0
                                                       ========         ========
Reduction of accounts payable,
  Lam Research Corporation                             $952,239         $      0
                                                       ========         ========

See accompanying notes.

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


                                       10
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2004
                                   (UNAUDITED)

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Presentation - The interim consolidated financial statements of DND
      Technologies, Inc. and Subsidiary (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 necessary for a fair presentation of results have been
      included in the unaudited consolidated financial statements for the
      interim periods presented. Operating results for the six months ended June
      30, 2004, are not necessarily indicative of the results that may be
      expected for the year ended December 31, 2004. Accordingly, your attention
      is directed to footnote disclosures found in the December 31, 2003 Annual
      Report and particularly to Note 1, which includes a summary of significant
      accounting policies.

      Nature of Business and History of Company - DND Technologies, Inc. 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 Lam AutoEtch, Rainbow, and TCP plasma etch
      systems, plus a variety of plasma etch and strip products manufactured on
      the Matrix System One and Ten platforms. Elements of support include spare
      parts and assemblies, and various engineering services.


                                       11
<PAGE>

      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
      incurred significant operating losses in 2003 and 2002 and has negative
      working capital and a stockholders' deficit. These factors raise
      uncertainty as to the Company's ability to continue as a going concern.

      Principles of Consolidation - 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.

      Cash and Cash Equivalents - For purposes of the statement of cash flows,
      the Company considers all highly liquid debt instruments purchased with an
      original maturity of three months or less to be cash equivalents.

      Accounts Receivable - Accounts receivable are reported at the customers'
      outstanding balances less any allowance for doubtful accounts. Our
      repayment terms for parts sales are net 30 days. System sales terms vary
      and ASI does require advance payments on certain orders of large systems.
      Interest is not accrued on overdue accounts receivables.

      Allowance For Doubtful Accounts - The allowance for doubtful accounts on
      accounts receivable is charged to income in amounts sufficient to maintain
      the allowance for uncollectible accounts at a level management believes is
      adequate to cover any probable losses. Management determines the adequacy
      of the allowance based on historical write-off percentages and information
      collected from individual customers. Accounts receivable are charged off
      against the allowance when collectibility is determined to be permanently
      impaired (bankruptcy, lack of contact, age of account balance, etc.)

      Inventory - Inventory is valued at the lower of cost or market. Cost is
      determined on the first-in, first-out method. Cost includes raw materials,
      freight, labor and manufacturing overhead.


                                       12
<PAGE>

      License Agreements - The Company has license agreements, which are being
      amortized using the straight-line method over the life of the contract
      with Lam Research Corporation ("Lam") (8 years) and Axcelis Technologies,
      Inc. ("Axcelis") (7 years) (see Notes 5 and 6).

      Property and Equipment - Property and equipment are stated at cost. Major
      renewals and improvements are charged to the asset accounts while
      replacements, maintenance and repairs, which do not improve or extend the
      lives of the respective assets, are expensed. At the time property and
      equipment are retired or otherwise disposed of, the asset and related
      accumulated depreciation accounts are relieved of the applicable amounts.
      Gains or losses from retirements or sales are credited or charged to
      income.

      Depreciation is provided for by the accelerated and straight-line methods
      over the following estimated useful lives:

      Office furniture, fixtures and equipment                       5-7 Years
      Leasehold improvements                                     Term of lease
      Machinery and equipment                                          7 Years
      Laboratory tools                                                 7 Years

      Long-Lived Assets - The Company reviews its long-lived assets for
      impairment whenever events or changes in circumstances indicate that the
      historical cost-carrying value of an asset may no longer be appropriate.
      The Company assesses recoverability of the carrying value of an asset by
      estimating the future net cash flows expected to result from the asset,
      including eventual disposition. If the future net cash flows are less than
      the carrying value of the asset, an impairment loss is recorded equal to
      the difference between the asset's carrying value and fair value. The
      Company did not record any impairment in the six months ended June 30,
      2004.

      Product Warranty Provision - ASI provides a warranty provision on sales of
      its systems to cover anticipated repairs and/or replacement. The warranty
      on selected systems ranges from ninety days to twelve months from date of
      acceptance, not to exceed fourteen months from the ship date.

      Preferred Stock - The Company has approved the creation of a Preferred
      Stock. As of this date no shares have been authorized and no terms or
      rights attributable to this stock have been created.


                                       13
<PAGE>

      Revenue Recognition Policy - 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. 101,
      "Revenue Recognition in Financial Statements." Revenues are recorded under
      two categories:

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

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

      Shipping and Handling Costs - The Company's policy is to classify shipping
      and handling costs as part of cost of goods sold in the statement of
      operations.

      Advertising - The Company expenses all advertising as incurred. For the
      six months ended June 30, 2004 and 2003, the Company charged to operations
      $0 and $3,300, respectively.

      Research and Development Costs - Costs incurred in research and
      development are expensed as incurred.

      Income Taxes - Provisions for income taxes are based on taxes payable or
      refundable for the current year and deferred taxes on temporary
      differences between the amount of taxable income and pretax financial
      income and between the tax bases of assets and liabilities and their
      reported amounts in the financial statements. Deferred tax assets and
      liabilities are included in the financial statements at currently enacted
      income tax rates applicable to the period in which the deferred tax assets
      and liabilities are expected to be realized or settled as prescribed in
      FASB Statement No. 109, "Accounting for Income Taxes". As changes in tax
      laws or rates are enacted, deferred tax assets and liabilities are
      adjusted through the provision for income taxes.

      Concentration of Risk - Financial instruments which potentially subject
      the Company to concentrations of credit risk consist principally of cash
      and trade accounts receivable. The Company places its temporary cash
      investments in reputable financial institutions. At June 30, 2004,
      approximately $446,846 represents deposits in excess of Federally insured
      limits.


                                       14
<PAGE>

      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 June 30,
      2004, the Company had one customer whose balance was 9% of net accounts
      receivable.

      Significant Customers - For the six months ended June 30, 2004 and 2003,
      the Company had one customer and two customers, respectively, whose
      revenues exceeded 10% of total revenues (2004 - 11%; 2003 - 22% and 19%).

      Revenues in 2004 outside the United States included Europe (17%) and Asia
      (8%).

      Significant Suppliers - For the six months ended June 30, 2004,
      approximately 23% of gross inventory purchases were purchased from Lam
      Research Corp. The Company expects to have significant purchases of
      inventory from Lam in the coming year.

      Disclosure About Fair Value of Financial Instruments - The Company
      estimates that the fair value of all financial instruments as of June 30,
      2004, as defined in 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 January 2003 the FASB
      issued Interpretation 46 "Consolidation of Variable Interest Entities, an
      interpretation of ARB No. 51". This Interpretation requires a Company to
      consolidate the financial statements of a "Variable Interest Entity"
      ("VIE"), sometimes also known as a "special purpose entity", even if the
      entity does not hold a majority equity interest in the VIE. The
      Interpretation requires that if a business enterprise has a "controlling
      financial interest" in a VIE, the assets, liabilities, and results of the
      activities of the VIE should be included in consolidated financial
      statements with those of the business enterprise, even if it holds a
      minority equity position. This Interpretation was effective immediately
      for all VIE's created after January 31, 2003; for the first fiscal year or
      interim period beginning after June 15, 2003 for VIE's in which a Company
      holds a variable interest that it acquired before February 1, 2003. In
      December 2003, the FASB issued a revision to FIN 46 ("FIN46R") to clarify
      some of the provisions of FIN 46. The Company currently has no


                                       15
<PAGE>

      entities which have the characteristics of a variable interest entity.
      Furthermore, the Company's adoption of the remaining provisions of FIN 46R
      in the quarter ending June 30, 2004 did not have an impact on the
      Company's financial statements.

      In December 2003, the FASB issued SFAS 132R. This Statement revises
      employers' disclosures about pension plans and other postretirement
      benefit plans. It does not change the measurement or recognition of those
      plans required by FASB Statements No. 87, "Employers' Accounting for
      Pensions", No. 88, "Employers' Accounting for Settlements and Curtailments
      of Defined Benefit Pension Plans and for Termination Benefits", and No.
      106, "Employers' Accounting for Postretirement Benefits Other Than
      Pensions." This Statement retains the disclosure requirements contained in
      FASB Statement No. 132, "Employers' Disclosures About Pensions and Other
      Postretirement Benefits", which it replaces. It requires additional
      disclosures to those in the original Statement No. 132 about the assets,
      obligations, cash flows, and net periodic benefit cost of defined benefit
      pension plans and other defined benefit postretirement plans. The Company
      adopted the provisions of SFAS No. 132R on January 1, 2004.

      The Company does not believe that any of these recent accounting
      pronouncements will have a material impact on their financial position or
      results of operations.

      Reclassifications - Certain 2003 amounts have been reclassified to conform
      to 2004 presentations.

2.    ACCOUNTS RECEIVABLE

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

      Accounts receivable                                       $1,537,911
      Allowance for doubtful accounts                               34,000
                                                                ----------

      Net accounts receivable                                   $1,503,911
                                                                ==========

      At June 30, 2004, $67,135 of the Company's accounts receivable balances
      were over 90 days past due.

      Allowance For Doubtful Accounts:

      Balance, January 1, 2004                                     $34,000
      Additions for the year                                             0
      Collection of accounts previously written off                      0
                                                                   -------

      Balance, June 30, 2004                                       $34,000
                                                                   =======


                                       16
<PAGE>

3.    INVENTORIES

      The inventories are comprised of the following:

      Parts and materials                                     $ 3,764,773
      Work-in-process                                             841,155
      Allowance for obsolescence                               (3,050,464)
                                                              -----------

                                                              $ 1,555,464
                                                              ===========

4.    PROPERTY AND EQUIPMENT

      Property and equipment and accumulated depreciation at June 30, 2004
      consist of:

      Office, furniture, fixtures and equipment                 $  354,344
      Leasehold improvements                                       440,151
      Machinery and equipment                                      323,938
      Laboratory tools                                              25,833
                                                                ----------
                                                                 1,144,266
      Less accumulated depreciation                                802,754
                                                                ----------

      Total property and equipment                              $  341,512
                                                                ==========

5.    LICENSE AGREEMENT AND PAYABLE, LAM RESEARCH CORPORATION

      In November 2002, ASI entered into an asset purchase and licensing
      agreement with Lam. Under the agreement, ASI purchased approximately $2.1
      million of inventory (see Note 11) from Lam and entered into a licensing
      agreement requiring payments totaling $5,376,000 (payable in 96 equal
      monthly installments of $56,000). ASI has recorded the payable after
      imputing interest at 6%.

      Estimated amortization of the license agreement is as follows:

      December 31, 2004                                         $  523,551
      December 31, 2005                                            523,551
      December 31, 2006                                            523,551
      December 31, 2007                                            523,551
      December 31, 2008                                            523,551
      Thereafter                                                 1,134,359
                                                                ----------

                                                                $3,752,114
                                                                ==========


                                       17
<PAGE>

      Future minimum payments under the agreement are as follows:

                                                   Total        Principal
                                                 Payments        Portion
                                                 --------        -------

      December 31, 2004                          $  672,000     $  486,134
      December 31, 2005                             672,000        477,594
      December 31, 2006                             672,000        507,050
      December 31, 2007 and thereafter            2,800,000      2,471,996
                                                 ----------     ----------

                                                 $4,816,000     $3,942,774
                                                 ==========     ==========

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

      In November 2003, the Company entered into an agreement with Axcelis
      Technologies, acquiring an exclusive license to all future manufacturing,
      sales, service, and parts support for certain dry strip semi-conductor
      manufacturing equipment marketed under the trade names "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 on related
      sales ranging from 10% to 2% through December 31, 2010.

      Estimated amortization of the license fee is as follows:

      December 31, 2004                                           $ 21,428
      December 31, 2005                                             21,428
      December 31, 2006                                             21,428
      December 31, 2007                                             21,428
      December 31, 2008                                             21,428
      Thereafter                                                    41,074
                                                                  --------

                                                                  $148,214
                                                                  ========

      The license and royalty payable at June 30, 2004 consisted of the
      following:

      License payable                                             $143,514
      Royalty payable                                               79,730
                                                                  --------

      Total License and Royalty Payable                           $223,244
                                                                  ========

7.    NOTE PAYABLE, MERRILL LYNCH

      On May 14, 2004, the Company entered into an agreement with Merrill Lynch
      which provides for the dismissal of all litigation between the companies
      and the restructure of the


                                       18
<PAGE>

      outstanding balance of the line of credit and the existing term loan into
      a new term loan. On June 18, 2004, the Order regarding Joint Stipulation
      to Dismiss with Prejudice was filed in the US District Court of Arizona.

      The term loan bears interest at 2.00% plus the Prime Rate as published in
      the Wall Street Journal per annum. The loan is due December 2005 with
      amortized payments over 45 months and a balloon payment due at maturity.
      The loan also required a loan fee of $11,450. The loan is secured by a
      first lien on the Company's accounts receivable and inventories and has
      been guaranteed by Doug Dixon and the Company.

      Estimated amortization of the loan fee is as follows:

      December 31, 2004                                            $ 3,368
      December 31, 2005                                              8,082
                                                                   -------

                                                                   $11,450
                                                                   =======

      Future minimum payments under the term loan are as follows:

                                                   Total        Principal
                                                  Payments       Portion
                                                  --------       -------

      December 31, 2004                          $  327,807     $  270,402
      December 31, 2005                             860,392        835,789
                                                 ----------     ----------

                                                 $1,188,199     $1,106,191
                                                 ==========     ==========

8.    NOTES PAYABLE, OTHER

      A note payable, bearing interest at 12% was due            $200,000
      in November 2003, required monthly interest
      payments of $2,000 and is secured by a second
      lien on the receivables and inventory of ASI . The
      note includes options to purchase shares of the
      Company's common stock (200,000 shares @ $0.20
      per share and 200,000 shares at $1.00 per share).
      Legal representatives of the Cartier estate have
      agreed to accept two equal payments of $100,000
      each, payable on September 30, 2004 and December
      31, 2004.

      Various unsecured demand notes due to an individual
      with interest accruing at 7%                                 289,350
                                                                  --------

         Total (all current)                                      $489,350
                                                                  ========

9.    CAPITAL LEASES PAYABLE


                                       19
<PAGE>

      The Company leases various assets under capital leases. The leases require
      thirteen to sixty monthly payments that vary from $286 to $1,626,
      including interest at 6% to 19%. The leases mature September 2005 through
      October 2008.

      Future minimum lease payments under the leases are a follows:

      December 31, 2004                                          $ 13,558
      December 31, 2005                                            21,642
      December 31, 2006                                             7,008
      Thereafter                                                   11,704
                                                                 --------
       Total                                                       53,912
      Less amount representing interest                            (8,031)
                                                                 --------

      Present value of future minimum lease payments               45,881
      Less current portion                                        (21,960)
                                                                 --------

      Long-term portion                                          $ 23,921
                                                                 ========

10.   LAWSUIT SETTLEMENT

      On April 30, 2004, the Company and a former employee settled
      counter-claims against each other arising from the employee's prior
      association with the Company. The Company has recorded an expense of the
      entire settlement payable to the employee, $140,000. Payments in the
      amount of $10,000 per month begin September 1, 2004 and continue until
      October 1, 2005, without interest.

      Future minimum payments under the agreement are a follows:

      December 31, 2004                                           $ 40,000
      December 31, 2005                                            100,000
                                                                  --------
       Total                                                      $140,000
                                                                  ========

11.   ACCOUNTS PAYABLE, LAM RESEARCH CORPORATION

      On June 25, 2004, the Company signed an amendment to the November 2002
      Asset Purchase and License Agreement with Lam Research Corporation that
      calls for payments of the inventory purchase (See Note 5) to be paid as
      follows:

      The spares inventory payment plan calls for                  $871,596
      30 monthly installment payments of $28,220 beginning
      August 1, 2004 and ending January 1, 2007 with an
      additional payment of $90,000 due by September 30,
      2004.  Additional inventory transfers of $65,000
      are scheduled to take place in August 2004 and will
      be added to this outstanding balance for a


                                       20
<PAGE>

      total of $936,596.

      The product group inventory payment plan calls for           169,274
      18 monthly installments of $9,404 beginning August 1,     ----------
      2004 and ending January 1, 2006.

      Total                                                     $1,040,870
                                                                ==========

      Future minimum payments per the agreement are as follows:

      December 31, 2004                                         $  278,120
      December 31, 2005                                            451,487
      December 31, 2006                                            311,263
                                                                ----------
                                                                $1,040,870
                                                                ==========

12.   AMOUNTS DUE TO RELATED PARTIES

      The due to related parties at June 30, 2004 consists of the following:

      Notes payable to Chairman of Company at 7.0%                $120,000
      Accrued interest on notes payable                             38,646
      Accrued officer's salaries                                   280,160
                                                                  --------

      Total Amount Due To Related Parties                         $438,806
                                                                  ========

13.   INCOME TAXES

      Provision (Benefit)

      The provision for income taxes for the six months ended June 30, 2004
      represents primarily California franchise taxes and consists of the
      following:

                                                                      2004
                                                                      ----

      Current                                                         $800
      Deferred                                                        $  0

      Deferred Tax Components

      Significant components of the Company's deferred tax assets are as follows
      at June 30, 2004:

      Net operating loss carryforwards                        $   719,300
      Timing difference for expense deductions                     53,200
                                                              -----------
                                                                  772,500
      Less valuation allowance                                   (772,500)
                                                              -----------
      Net deferred tax assets                                 $         0
                                                              ===========

       Summary of valuation allowance:

      Balance, January 1, 2004                                $ 1,083,000
      Reduction for the six months ended June 30, 2004           (310,500)
                                                              -----------

      Balance, June 30, 2004                                  $   772,500
                                                              ===========


                                       21
<PAGE>

      In assessing the realizeability of deferred tax assets, management
      considers whether it is more likely than not that some portion or all of
      the deferred tax assets is dependent upon the generation of future taxable
      income during the periods in which those temporary differences become
      deductible. Management considers the scheduled reversal of deferred tax
      liabilities, projected future taxable income and tax planning strategies
      in making this assessment.

14. NET OPERATING LOSSES

      The Company has the following net operating loss carryforwards:

<TABLE>
<CAPTION>
                                                                  Aspect
                                                                 Semiquip
                                                               International
                                                                    Inc.
                                                  DND               and
                                              Technologies        Semiquip
        Year of Loss        Expiration Date       Inc.              Inc.            Total
        ------------        ---------------       ----              ----            -----
<S>                        <C>                 <C>               <C>               <C>
      December 31, 1997    December 31, 2017   $   82,403        $        0        $   82,403
      December 31, 1998    December 31, 2018       17,297                 0            17,297
      December 31, 2000    December 31, 2020      117,915                 0           117,915
      December 31, 2001    December 31, 2021      142,448           134,299           276,747
      December 31, 2002    December 31, 2022    1,507,813                 0         1,273,204
      December 31, 2003    December 31, 2023    2,876,627                 0         2,876,627
                                               ----------        ----------        ----------
                            Subtotal            4,744,503           134,299         4,878,802
         Less estimated use June 30, 2004      (1,148,133)         (134,299)       (1,282,432)
                                               ----------        ----------        ----------

                                               $3,596,370        $        0        $3,596,370
                                               ==========        ==========        ==========
</TABLE>

      $360,063 of DND Technology, Inc.'s loss can only be used to offset income
      derived by that company.

15.   COMMITMENTS AND CONTINGENCIES

      Warranty Reserve


                                       22
<PAGE>

      A summary of warranty reserve is as follows:

      Balance, January 1, 2004                                    $ 46,622
      Additions for the period                                     201,000
      Warranty expenses applied to reserve                          33,478
      Reduction of reserve for expired warranties                   27,960
                                                                  --------

      Balance, June 30, 2004                                      $186,184
                                                                  ========

      Real Estate Leases

      The Company leases its Arizona and Texas facilities under operating leases
      which require monthly payments of $14,424 and $9,762 and expire in
      November 2007 and November 30, 2008, respectively. Rent expense in 2004
      and 2003 amounted to $107,167 and $93,709, respectively.

      Future minimum lease payments on the real estate leases are as follows:

      December 31, 2004                                         $  279,000
      December 31, 2005                                            293,000
      December 31, 2006                                            302,000
      December 31, 2007                                            299,000
      December 31, 2008                                            122,000
                                                                ----------

      Total                                                     $1,295,000
                                                                ==========

16.   EMPLOYEE STOCK OPTIONS

      On August 11, 2003, the Board of Directors and stockholders approved the
      DND Technologies, Inc. Stock Option Plan, which permits the Board of
      Directors to grant, for a ten year period, options to purchase up to
      5,000,000 shares of its common stock to directors, employees and
      consultants. The Plan is administered by the Board of Directors. The
      administrators have the authority and discretion, subject to the
      provisions of the Plan, to select persons to whom stock options will be
      granted, to designate the number of shares to be covered by each option,
      to specify the type of consideration to be paid, and to establish all
      other terms and conditions of each option. Options granted under the Plan
      will not have a term that exceeds ten years from date of grant.

      The stock subject to the Plan and issuable upon exercise of options
      granted under the Plan are shares of the Company's


                                       23
<PAGE>

      common stock, $.001 par value, which may be either unissued or treasury
      shares.

      The exercise price is no less than 100% of the fair market value of the
      shares at the date of the grant of the options, as specified by the Board
      of Directors.

      Vesting terms of the options range from immediate to four years.

      The Company has elected to account for stock-based compensation under APB
      Opinion No. 25, under which no compensation expense has been recognized
      for stock options granted to employees at fair market value.

      A summary of the option activity for the six months ended June 30, 2004,
      pursuant to the terms of the Plan is as follows:

      Options outstanding at January 1, 2004              4,774,226   $ .06
      Granted                                                     0   $ .00
      Exercised                                                   0   $ .00
      Cancelled and expired                                 165,000   $ .06
                                                          ---------

      Options outstanding at June 30, 2004                4,609,226
                                                          =========

      4,204,226 shares are exercisable at June 30, 2004.

      Information regarding stock options outstanding as of June 30, 2004 is as
      follows:

      Price                                                           $.06
      Weighted average exercise price                                 $.06
      Weighted average remaining contractual life        9 years, 1 months

      The weighted average fair value of options granted in the year ended
      December 31, 2003 were estimated as of the date of grant using the
      Black-Scholes stock option pricing model, based on the following weighted
      average assumptions:

      Dividend yield                                                  $ -0-
      Expected volatility                                               50%
      Risk-free interest rate                                         4.37%
      Expected life                                                10 years

      For purposes of proforma disclosures, the estimated fair value of the
      options is amortized to expense over the options' vesting periods. The
      Company's proforma information follows:


                                       24
<PAGE>

      Net income:
                    As reported                                   $1,055,899
       Proforma                                                   $1,045,220

      Net Income per common stock share:
       Basic:
         As reported                                                    $.05
         Proforma                                                       $.05
       Diluted:
         As reported                                                    $.04
         Proforma                                                       $.04

17.   MANAGEMENT PLANS IN REGARDS TO GOING CONCERN

      Management's plans include, but are not limited to, final execution of the
      negotiated long-term payment plan for the Merrill Lynch line of credit,
      increasing revenue by continuing to expand the legacy product lines,
      obtaining additional equity or debt financing from investors, and
      increasing revenue by capturing greater market share through aggressive
      sales efforts.

18.   SUBSEQUENT EVENT

      On August 2, 2004, the Company entered into an additional agreement with
      Axcelis Technologies, Inc. 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 formerly
      marketed by Matrix Integrated Systems, Inc., and Axcelis Technologies,
      Inc. under the trade names of "Bobcat 209" or "Cheetah" (limited to such
      equipment that includes at least one reactive ion etch chamber). 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 on related sales from 10% down to 2% over a period of
      time that ends December 31, 2011.


                                       25
<PAGE>

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

      Aspect Systems, Inc, ("ASI") a wholly owned subsidiary of DND
Technologies, Inc, ("DND" or the Company) is a supplier and provider of
after-market support of semiconductor manufacturing equipment which currently
includes Lam AutoEtch, Rainbow, and TCP plasma etch systems, and plasma etch and
strip products manufactured on the Matrix System One and Ten platforms. Elements
of support range from a full line of spare parts and assemblies to various
engineering services. ASI also offers a wide variety of sub-assembly repair
services and reconditioning/refurbishing of an array of temperature control
units used in the semiconductor industry.

      Management's discussion and analysis of results of operations and
financial condition are based upon the Company's financial statements. These
statements have been prepared in accordance with accounting principles generally
accepted in the United States of America. 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.

                   Critical Accounting Policies and Estimates

      In consultation with our Board of Directors, we have identified ten
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 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 significant operating losses in 2002
and 2003 and has negative working capital and a stockholder's deficit. These
factors raise uncertainty 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 following:

            1.    Obtain additional equity or debt financing from investors.

            2.    Increase revenue by capturing greater market share through
                  aggressive sales efforts in a recovering market economy.

            3.    Expand the ASI product base by obtaining rights to other
                  legacy products, thereby increasing revenue.

      2.    Accounts Receivable

      Accounts receivable are reported at the customers' outstanding balances
less any allowance for doubtful accounts. Interest is not accrued on overdue
accounts receivable. The Company's subsidiary, Aspect Systems, Inc. ("ASI"),
does require advance payments on certain orders of large systems.

      3.    Allowance for Doubtful Accounts

      The allowance for doubtful accounts on accounts receivable is charged to
income in amounts sufficient to maintain the allowance for uncollectible
accounts at a level management believes is adequate to cover any probable
losses. Management determines the adequacy of the allowance based on historical
write-off percentages and information collected from individual customers.


                                       26
<PAGE>

      Accounts receivable are charged off against the allowance when
collectibility is determined to be permanently impaired (bankruptcy, lack of
contact, age of account balance, etc.).

      4.    Inventory

      Inventory is valued at the lower of cost or market. Cost includes raw
materials, freight, labor and manufacturing overhead.

      5.    License Agreements

      The Company has license agreements, which are being amortized using the
straight-line method over the life of the contract with Lam Research Corporation
("Lam") (8 years) and Axcelis Technologies, Inc. ("Axcelis") (7 years).

      6.    Property and Equipment

      Depreciation is provided for by the accelerated and straight-line methods
over the following estimated useful lives.

            Office furniture, fixtures and equipment             5 - 7 Years
            Leasehold improvements                               Term of Lease
            Machinery and equipment                              7 Years
            Laboratory tools                                     7 Years

      7.    Product Warranty Provision

      ASI provides a warranty provision on sales of its parts and systems to
cover anticipated repairs and/or replacement. The Company provides a warranty on
its systems ranging from ninety days to twelve months from date of acceptance,
not to exceed fourteen months from the ship date.

      8.    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. 101,
"Revenue Recognition in Financial Statements," (SAB 101). Our revenues are
recorded under two categories:

            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.

      9.    Income Taxes

      Provisions for income taxes are based on taxes payable or refundable for
the current year and deferred taxes on temporary differences between the amount
of taxable income and pretax financial income and between the tax bases of
assets and liabilities and their reported amounts in the financial statements.
Deferred tax assets and liabilities are included in the financial statements at
currently enacted income tax rates applicable to the period in which the
deferred tax assets and liabilities are expected to be realized or settled as
prescribed in FASB Statement No. 109, "Accounting for Income Taxes." As changes
in tax laws or rates are enacted, deferred tax assets and liabilities are
adjusted through the provision for income taxes.

      10.   Employee Stock Options

      The Company accounts for stock-based compensation under APB Opinion No.
25, under which no compensation expense has been recognized for stock options.


                                       27
<PAGE>

Selected Financial Information

<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                   6/30/2004       6/30/2003       Increase
                                                   ---------       ---------       --------
                                                  (Unaudited)     (Unaudited)     (Decrease)
                                                  -----------     -----------     ----------
<S>                                               <C>             <C>             <C>
Statements of Operations
        Total Revenue                             $ 3,737,534     $ 2,454,668     $ 1,282,866
                                                  -----------     -----------     -----------
        Cost of Revenue:
          Costs of revenues                         2,526,313       1,588,759         937,554
          Reserve for slow moving and
             Obsolete inventory                      (800,668)        (49,232)       (751,436)
                                                  -----------     -----------     -----------
        Total Cost of Revenues                      1,725,645       1,539,527         186,118
                                                  -----------     -----------     -----------
          Percentage of Sales                              46%             63%
        Gross Profit                                2,011,889          15,141       1,096,748
                                                  -----------     -----------     -----------
          Percentage of Sales                              54%             37%
        Operating Expenses:
          Research and development                     16,656          13,987           2,669
          Sales and marketing                         551,328         257,210         294,118
          General and administrative                  566,056         450,168         115,888
                                                  -----------     -----------     -----------
        Total Operating Expenses                    1,134,040         721,365         412,675
                                                  -----------     -----------     -----------
        Income (Loss) from Operations                 877,849          93,776         684,073
                                                  -----------     -----------     -----------
        Other Income (Expense):
          Interest Expense                            (84,333)       (112,166)         27,833
          Other Income                                      0            (223)            223
                                                  -----------     -----------     -----------
        Total Other Income (Expense)                  (84,333)       (112,389)         28,056
                                                  -----------     -----------     -----------
        Income (Loss) Before Income Tax Expense       793,516          81,387         712,129
        Income Tax Expense                                  0           2,932          (2,932)
                                                  -----------     -----------     -----------
        Net Income (Loss)                         $   793,516     $    78,455     $   715,061
                                                  ===========     ===========     ===========
        Net (Loss) Per Share
          Basic                                           .03             .01             .02
          Diluted                                         .03             .01             .02
</TABLE>

Results of Operations

Three Months Ended June 30, 2004 Compared To Three Months Ended June 30, 2003.

Revenues

      Our revenue increase of $1,282,866, or 52%, was due to an increase in
sales from customers who are purchasing additional capital equipment capacity to
meet the demands of a recovering economy. Our sales increase by segment is as
follows:

<TABLE>
<CAPTION>
                                     June 30, 2004     June 30, 2003        Increase
                                      (Unaudited)       (Unaudited)        (Decrease)
                                     -------------     -------------      ------------
<S>                                   <C>               <C>               <C>
      Systems and chillers            $  2,074,235      $    900,963      $  1,173,272
      Parts, assemblies
         and consumables                 1,619,561         1,393,612           225,949
      Field service and training            43,738           160,093          (116,355)
                                      ------------      ------------      ------------

                                      $  3,737,534      $  2,454,668      $  1,282,866
                                      ============      ============      ============
</TABLE>


                                       28
<PAGE>

Cost of Revenues - Recurring Operations

      Our cost of revenues for recurring operations increased $937,554 or 59%.
This increase is primarily the result of costs associated with increased
revenues in 2004. Our cost of revenues as a percentage of revenues increased
from 64% in 2003 to 67% in 2004. This increase in percentage is primarily due to
lower than expected margins earned on the sale of certain customized systems as
a consequence of planning inefficiencies and higher than expected cost for parts
and system cores that were required to meet aggressive delivery schedule demands
from our customers. We expect to reduce costs through better planning and
improved cost projections on customized systems.

Cost of Revenues - Reserve for Slow Moving and Obsolete Inventory

      Our cost of revenues - reserve for slow moving and obsolete inventory is
the change due to analysis of slow-moving and obsolete inventory. Based on our
analysis in the second quarter of 2004, we recorded a $962,758 decrease in our
reserve primarily as a result of signing an amendment to the November 2002 Lam
Asset Purchase and License Agreement and re-valuing the corresponding inventory.
This amount was offset by a $162,090 increase to the reserve due to an analysis
of all other inventory items. Thus the net change was a decrease of $800,668.

Research and Development

      Research and development costs increased $2,669 or 19% in the three months
ended June 30, 2004. The increase is related to a $2,000 increase in payroll and
employee benefits. We normally do not incur significant research and development
expenses.

Sales and Marketing

      Sales and marketing costs increased $294,118 or 114% in the three months
ended June 30, 2004. The increase is primarily related to the Axcelis license
and royalties of $166,000 which began in December 2003 and commissions of
$109,000 which are increasing with the increase in system sales.

General and Administrative

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                            6/30/2004         6/30/2003          Increase
                                                            ---------         ---------          --------
                                                           (Unaudited)       (Unaudited)        (Decrease)
                                                           -----------       -----------        ----------
<S>                                                        <C>               <C>               <C>
General and Administrative
       Salaries and wages                                  $    225,972      $    150,529      $     75,443
       Professional fees                                        101,961           136,422           (34,461)
       Rent, less amount allocated to Cost of Revenue            45,859            44,656             1,203
       Other general and administrative expenses                192,264           118,561            73,703
                                                           ------------      ------------      ------------
         Total General and Administrative                  $    566,056      $    450,168      $    115,888
                                                           ============      ============      ============
</TABLE>

      Salaries and wages increased approximately $75,443 or 50% in the three
months ended June 30, 2004 as compared to the three months ended June 30, 2003.
This increase resulted from the hiring of two new employees of $26,000; pay
reductions for certain managerial personnel not applicable to fiscal 2004 as
they were in fiscal 2003 of $18,000; and general pay increases and adjustments
to the payroll accrual of $31,000.

      Professional fees decreased in 2004 in the amount of $34,461 primarily due
to the integration of our accounting and inventory/production control systems
that was completed in the first quarter of 2003, which cost $22,000. Consulting
related to financing activities decreased by $33,000 and other consulting
decreased by $15,000. These decreases were offset by increased legal expenses of
$28,000 related to litigation ultimately settled by the Company.


                                       29
<PAGE>

Net Income

      We had net income of $793,516 for the three months ended June 30, 2004,
compared to net income of $78,455 for the three months ended June 30, 2003. The
substantial increase in net income is primarily the result of a $800,668 net
decrease in our reserve for slow moving and obsolete inventory, plus the
additional gross profit dollars realized from increased sales, which was offset
by increases in commissions and royalties.

Selected Financial Information

<TABLE>
<CAPTION>
                                                            Six Months Ended
                                                      6/30/2004          6/30/2003           Increase
                                                      ---------          ---------           --------
                                                     (Unaudited)        (Unaudited)         (Decrease)
                                                     -----------        -----------         ----------
<S>                                                  <C>                <C>                <C>
Statements of Operations
        Total Revenue                                $ 7,028,309        $ 4,151,638        $ 2,876,671
                                                     -----------        -----------        -----------
        Cost of Revenue:
          Costs of revenues                            4,456,468          2,645,233          1,811,235
          Reserve for slow moving and
            Obsolete inventory                          (800,668)           (66,202)          (734,466)
                                                     -----------        -----------        -----------
        Total Cost of Revenues                         3,655,800          2,579,031          1,076,769
                                                     -----------        -----------        -----------
          Percentage of Sales                                 52%                62%
        Gross Profit                                   3,372,509          1,572,607          1,799,902
                                                     -----------        -----------        -----------
          Percentage of Sales                                 48%                38%
        Operating Expenses:
          Research and development                        31,843             30,108              1,735
          Sales and marketing                            967,860            493,872            473,988
          General and administrative                     997,653            879,515            118,138
                                                     -----------        -----------        -----------
        Total Operating Expenses                       1,997,356          1,403,495            593,861
                                                     -----------        -----------        -----------
        Income (Loss) from Operations                  1,375,153            169,112          1,206,041
                                                     -----------        -----------        -----------
        Other Income (Expense):
          Interest Expense                              (178,456)          (202,421)            23,965
          Lawsuit Settlement                            (140,000)                 0           (140,000)
                                                     -----------        -----------        -----------
        Total Other Income (Expense)                    (318,456)          (202,421)          (116,035)
                                                     -----------        -----------        -----------
        Income (Loss) Before Income Tax Expense        1,056,697            (33,309)         1,090,006
        Income Tax Expense (Benefit)                         800                  0                800
                                                     -----------        -----------        -----------
        Net Income (Loss)                            $ 1,055,897        $   (33,309)       $ 1,089,206
                                                     ===========        ===========        ===========
        Net (Loss) Per Share
          Basic                                              .05               (.01)               .06
          Diluted                                            .04               (.01)               .05
</TABLE>

Results of Operations

Six Months Ended June 30, 2004 Compared To Six Months Ended June 30, 2003.

      Our revenue increase of $2,876,671, or 69%, was due to an increase in
sales from customers who are purchasing additional capital equipment capacity to
meet the demands of a recovering economy. Our sales increase by segment is as
follows:


                                       30
<PAGE>

                                June 30, 2004    June 30, 2003       Increase
                                 (Unaudited)      (Unaudited)       (Decrease)
                                -------------    -------------     ------------

 Systems and chillers            $ 3,808,101      $ 1,043,464      $ 2,764,637
 Parts, assemblies
    and consumables                3,126,785        2,904,790          221,995
 Field service and training           93,423          203,384         (109,961)
                                 -----------      -----------      -----------
                                 $ 7,028,309      $ 4,151,638      $ 2,876,671
                                 ===========      ===========      ===========

Cost of Revenues - Recurring Operations

      Our cost of revenues for recurring operations increased $1,811,235 or 68%.
This increase is directly related to the 69% increase in total revenue for the
six months ended June 30, 2004. Our cost of revenues as a percentage of revenues
for the six months ended June 30, 2004 was 63.4% as compared to 63.7% for the
six months ended June 30, 2003.

Cost of Revenues - Reserve for Slow Moving and Obsolete Inventory

      Our cost of revenues - reserve for slow moving and obsolete inventory is
the change due to analysis of slow-moving and obsolete inventory. Based on our
analysis in the second quarter of 2004, we recorded a $962,758 decrease in our
reserve primarily as a result of signing an amendment to the November 2002 Lam
Asset Purchase and License Agreement and re-valuing the corresponding inventory.
This amount was offset by $162,090 increase to the reserve due to an analysis of
all other inventory items. Thus the net change was a decrease of $800,668.

Research and Development

      Research and development costs increased $1,735 or 6% in the six months
ended June 30, 2004. The increase primarily related to a $2,700 increase in
payroll/benefits. We normally do not incur significant research and development
expenses.

Sales and Marketing

      Sales and marketing costs increased $473,988 or 96% in the six months
ended June 30, 2004. The increase is primarily related to the Axcelis license
and royalties of $234,000 which began in December 2003 and commissions of
$195,000 which are increasing with the increase in system sales.

General and Administrative

<TABLE>
<CAPTION>
                                                                 Six Months Ended
                                                            6/30/2004         6/30/2003          Increase
                                                            ---------         ---------          --------
                                                           (Unaudited)       (Unaudited)        (Decrease)
                                                           -----------       -----------        ----------
<S>                                                        <C>               <C>               <C>
General and Administrative
       Salaries and wages                                  $    396,556      $    310,236      $     86,320
       Professional fees                                        183,076           240,315           (57,239)
       Rent, less amount allocated to Cost of Revenue           104,632            89,992            14,640
       Other general and administrative expenses                313,389           238,972            74,417
                                                           ------------      ------------      ------------
            Total General and Administrative               $    997,653      $    879,515      $    118,138
                                                           ============      ============      ============
</TABLE>

      Salaries and wages increased approximately $86,320 or 28% in the six
months ended June 30, 2004 as compared to the six months ended June 30, 2003.
This increase is primarily the result of the hiring of additional employees in
fiscal 2004 of $48,000; pay reductions for selected managerial personnel not
applicable to fiscal 2004 as they were in fiscal 2003 of $36,000; general pay
increases and adjustments to the payroll accrual of $31,000; and a decrease for
the loss of one employee in 2004 of ($24,000).


                                       31
<PAGE>

      Professional fees decreased in 2004 in the amount of $57,239 primarily due
to the integration of our accounting and inventory/production control systems
that was completed in the first quarter of 2003, which cost $32,000; a decrease
in accounting fees of $22,000 due to our improvements in delivering financial
information to our outside independent auditor thus decreasing our reliance on
outside consultants; a decrease of $52,000 in consulting fees, with $33,000
coming from non-recurring fiscal 2003 expenses and $15,000 from a credit taken
in fiscal 2004 to reverse a September 2003 accrual no longer needed. These
decreases were offset by increased legal fees of $42,000 related to litigation
ultimately settled by the Company.

      Other general and administrative expenses increased $74,417. The increased
expenses are attributable to travel costs of $28,000 incurred in 2004 for our
new CEO to work in both our Arizona and Texas locations, and the purchase of
supplies and delayed maintenance of our facilities (due to our cash flow
problems in 2003) amounting to $45,000.

Lawsuit Settlement

      The Company settled litigation with a former employee which provided for
the payment of $140,000 in installments of $10,000 per month beginning September
2004. (See further discussion below under liquidity and capital resources.)

Net Income

      We had net income of $1,055,897 for the six months ended June 30, 2004,
compared to a net loss of $33,309 for the six months ended June 30, 2003. The
large increase in net income is primarily the result of a $800,668 decrease in
our reserve for slow moving and obsolete inventory, plus improved operating
efficiencies achieved through a higher level of business activity, offset by an
increase in commissions and royalties due to the increased sales for the six
months ended June 30, 2004.

Capital Resources

<TABLE>
<CAPTION>
                                               Six Months Ended
                                               ----------------
Working Capital                           6/30/2004         6/30/2003          Increase
---------------                           ---------         ---------          --------
                                         (Unaudited)       (Unaudited)        (Decrease)
                                         -----------       -----------        ----------
<S>                                      <C>               <C>               <C>
Current Assets                           $ 3,637,177       $ 5,296,606       $(1,659,429)
Current Liabilities                       (5,504,696)       (6,889,214)        1,384,518
                                         -----------       -----------       -----------
            Deficit Working Capital      $(1,867,519)      $(1,592,608)      $  (274,911)
                                         ===========       ===========       ===========
Long-term Debt                           $(4,668,132)      $(3,805,557)      $  (862,575)
                                         ===========       ===========       ===========
Stockholders' (Deficit)                  $(2,534,484)      $  (942,431)      $ 1,592,053
                                         ===========       ===========       ===========
</TABLE>

Statements of Cash Flows Select Information

                                                        Six Months Ended
                                                   6/30/2004         6/30/2003
                                                   ---------         ---------
                                                  (Unaudited)       (Unaudited)
                                                  -----------       -----------

Net Cash Provided (Used) By:
Operating Activities                              $   560,458       $   333,500
Investing Activities                              $   (21,356)      $         0
Financing Activities                              $  (303,802)      $  (308,951)

Operating Activities

      For the six months ended June 30, 2004, cash provided by operating
activities of $560,458 was primarily attributed to an increase in income from
operations, net of non-cash items, totaling $532,208 and an increase in accounts
payable and accrued expenses of $214,858 and an increase in deposits from
customers in the amount of $821,549, which also relate to our increase in
overall activity. These increases were partially offset by an increase in


                                       32
<PAGE>

accounts receivable of $450,350, and an increase in inventories of $440,845. The
increase in accounts receivable relates principally to the increased sales in
the second quarter of 2004. The increase in inventories relates to our increased
production relating to our increased sales and backlog during the same quarter.

      For the six months ended June 30, 2003, cash provided by operating
activities of $333,500 was primarily due to an increase in income from
operations, net of non-cash items, totaling $344,441 and an increase in accounts
payable and accrued expenses of $1,187,914 and an increase in accrued expenses
and amounts due to related parties of $515,910, which related directly to our
cash flow problems during this period which forced us to delay payments. These
increases were partially offset by the increase in accounts receivable of
$755,142 relating to increased sales in the second quarter and increase in
inventories of $914,548, which related to additional shipments received from
Lam.

Investing Activities

      During the six months ended June 30, 2004, cash was used by investing
activities for minor purchases of equipment. No cash was used or provided by
investing activities in the six months ended June 30, 2003.

      The Company currently has no material commitments for capital
expenditures.

Financing Activities

      Financing activities in the six months ended June 30, 2004 used $298,839
as compared to $308,951 in the six months ended June 30, 2003 for the repayment
of long-term debt. In the six months ended June 30, 2004 we also experienced a
net repayment on our line of credit in the amount of $4,963.

      We have $2,538,528 and $4,668,132 of term-debt payments due within the
next year and next two to five years, respectively. Our ability to repay this
debt is contingent upon continued improvement of cash flow from operations, and
upon our ability to continue the expansion of our product line and market share.

Liquidity and Capital Resources

      Our liquidity has been negatively impacted by operating losses we
experienced in 2002 and 2003. We attribute these losses primarily to the general
decline in the economy of the United States, which we believe substantially
decreased discretionary spending by consumers. As a result, consumers purchased
fewer products in the computer and semiconductor industries. With the
improvement in the economy beginning in the first six months of 2004, we are now
experiencing improved liquidity with the sale of a greater number of products,
and the related significant increase in customer deposits.

      To date, we have financed our business with cash from our operating
activities, a bank line of credit and a loan for $200,000. This loan for
$200,000 was made by Jean Charles Cartier in October of 2002, with a
twelve-month term and at an interest rate of 12% per annum. Mr. Cartier also
received warrants to acquire 200,000 shares at $0.20 per share and 200,000
shares at $1.00 per share. As of November of 2003, we were in default on our
$200,000 bridge loan due to Mr. Cartier, which is secured by a second lien on
our accounts receivable and inventories. Interest of $24,000 has now been paid,
and the Cartier estate has agreed to accept two equal payments of $100,000 each
on September 30 and December 31 of 2004.

      Our bank line of credit with Merrill Lynch Business Financial Services,
Inc. matured on April 1, 2002. Interest accrued at Libor plus 2.75% or an
effective rate of 5.84% at June 30, 2004. The note is secured by a first lien on
our accounts receivable and inventories that amounted to approximately
$3,059,000 at June 30, 2004 and has been personally guaranteed by the majority
shareholder. Our wholly-owned subsidiary, Aspect Systems, Inc., has been in
default on payment of this line of credit since it matured on April 1, 2002 and
faced ongoing litigation with Merrill Lynch as a result of nonpayment. On May
14, 2004, we reached a settlement agreement with Merrill Lynch which dismisses
all litigation and restructures repayment of our existing debt into one single
term loan instrument due in approximately 17 months. The restructured term loan
("New Loan") will have an estimated balance of $1,145,000, requires payments for
a term of 17 months at an interest rate of two percent (2%) plus the prime rate
with principal amortized over a 45 month period and a balloon payment upon the
expiration of the term. The New Loan is guaranteed by both DND Technologies,
Inc. and Doug Dixon. The settlement agreement and related New Loan remain
subject to


                                       33
<PAGE>

final execution by the parties but management has no reason to believe that the
settlement agreement will not be executed.

      Our Asset Sale and License Agreement with Lam, dated November 8, 2002,
granted us a non-exclusive license to several of Lam's patents and other
intellectual property, which enables us to sell, import, repair and distribute
products using this licensed intellectual property. To date, we have purchased
approximately $2.1 million in product under the Agreement, and we are required
to pay approximately $5.3 million over the term as a fee for the licensed
intellectual property.

      On June 25, 2004, the Company signed an amendment to the November 2002
Asset Purchase and License Agreement with Lam Research, which, among other
things, restructured the terms of payment for the inventory purchases made as a
part of the original agreement. Under the new terms, the Company will pay a
revised balance of $871,596 for the original inventory purchases in 30 equal
installment payments of $28,220, beginning August 1, 2004 and ending January 1,
2007, with an additional payment of $90,000 due by September 30, 2004.
Additional inventory transfers of $65,000 are scheduled to take place in August
2004, and will be added to this outstanding balance for a total of $936,596.

      On April 30, 2004, the Company and a former employee settled
counter-claims against each other arising from the employee's prior association
with the Company. The Company has recorded an expense of the entire settlement
payable to the employee of $140,000. Payments in the amount of $10,000 per month
begin September 1, 2004 and continue until October 1, 2005, without interest.

      In November 2003, the Company entered into an agreement with Axcelis
Technologies, Inc. and acquired an exclusive license to manufacture, sell, and
provide service and parts support for certain dry strip semiconductor
manufacturing equipment marketed under the trade names "System One" and "System
Ten". The agreement provided for a one time payment of $150,000 plus a quarterly
payment equal to 18% of net revenues from the sale of these products by the
Company until $2,750,000 (the license fee) has been paid and then payment of a
declining royalty on related sales from 10% down to 2% over a period of time
that ends December 31, 2010.

      On August 2, 2004, the Company entered into an additional agreement with
Axcelis Technologies, Inc., 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 formerly
marketed by Matrix Integrated Systems, Inc. and Axcelis Technologies, Inc. under
the trade names of "Bobcat 209" and "Cheetah" (limited to such equipment that
includes at least one reactive ion etch chamber). 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 on related sales from 10% down to 2% over a
period of time that ends December 31, 2011.

      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.

      Our current obligations consist of a total of $200,000 due by the end of
December 2004 to the Cartier estate, approximately $1.1 million due to Merrill
Lynch over the next 17 months, and a total of approximately $8 million due to
Lam and Axcelis over the next several years. Even if we are able to increase
revenue, maintain profit margins, expand our product base and obtain additional
financing, we cannot be certain that we will meet these obligations.

      Because of our tight cash flow, it is likely that during the next 12-month
period we will seek financing from one or more sources such as capital
investment firms or private fund managers. Preparations are underway to present
a corporate profile and backgrounder to this end, followed by an aggressive
search for funding. However, we do not have any commitments for financing or
other plans in place to obtain financing. Additional financing may not be
available on acceptable terms or at all.


                                       34
<PAGE>

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, 2003.

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.

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.

      o     We depend on Douglas Dixon, our CEO of DND, and Dennis Key, our CFO
            and CEO of ASI, and their relationships within the semiconductor
            industry. Their loss would seriously disrupt our operations.

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

      o     We are subject to the risks associated with the intensely
            competitive and capital-intensive nature of the semiconductor
            industry.

      o     Our independent accountants have expressed uncertainty about out
            ability to continue as a going concern, which may hinder our ability
            to obtain future financing.

      o     Our substantial increase in gross profit primarily occurred as a
            result of the decrease in our reserve for obsolete inventory and is
            unlikely to continue at the same magnitude in the third and fourth
            quarters.

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

      o     The semiconductor industry is based on rapidly changing technology.

      o     We may experience supply shortages.

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

      o     We are exposed to risks associated with a highly concentrated
            customer base, with four customers accounting for approximately 57%
            of sales.

      o     We are exposed to risks associated with our acquisition strategy.

      o     Our ability to raise additional financing is uncertain.

      o     There is a limited market for our common stock.

      o     Our common stock is subject to penny stock regulation.

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"), within 90 days of the filing date of this report. Based on that
evaluation, our principal executive officer


                                       35
<PAGE>

and our principal financial officer concluded that the design and operation of
our disclosure controls and procedures were effective in timely alerting them to
material information required to be included in the Company's periodic reports
filed with the SEC under the Securities Exchange Act of 1934, as amended. The
design of any system of controls is based in part upon certain assumptions about
the likelihood of future events, and there can be no assurance that any design
will succeed in achieving its stated goals under all potential future
conditions, regardless of how remote.

      (b) In addition, 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.


                                       36
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      The Settlement Agreement with Merrill Lynch, which was disclosed in our
Form 10-QSB for the quarter ended March 31, 2004, still remains subject to final
execution by the parties. The Company has anticipated signing since June 2004
but is still awaiting execution by Merrill Lynch.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibits:

            10.10 License Agreement, dated August 2, 2004, between Aspect
                  Systems, Inc. and Axcelis Technologies, Inc.

            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

      (b)   Reports on Form 8-K:

            On May 28, 2004, we filed two Current Reports on Form 8-K - one of
            the reports announced the appointment of G. Dennis Key as Aspect
            Systems, Inc.'s CEO and the second report announced our operating
            results for the first quarter of 2004.


                                       37
<PAGE>

                                   SIGNATURES

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

Dated: August 16, 2004

                                    DND TECHNOLOGIES, INC., a Nevada corporation


                                    By:      /s/ Douglas N. Dixon
                                    --------------------------------------------
                                    Douglas N. Dixon, CEO and Director


                                       38