SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-KSB

|X|   Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
      Act of 1934

            For the fiscal year ended December 31, 2004

|_|   Transition Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

            For the transition period from _______________ to _________________.

                          Commission File No. 333-42936

                             DND TECHNOLOGIES, INC.
                 (Name of Small Business Issuer in Its Charter)

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

                 Nevada                                  84-1405298
    (State or other jurisdiction              (IRS Employer Identification No.)
           of incorporation)

       375 E. Elliot Rd., Bldg. 6
            Chandler, Arizona                                85225
(Address of Principal Executive Offices)                   (Zip Code)

         Issuer's telephone number, including area code: (480) 892-7020

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

        Securities registered pursuant to Section 12(b) of the Act: None

        Securities registered pursuant to Section 12(g) of the Act: None

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

      |X| Yes1 |_| No

      Check if  disclosure  of  delinquent  filers  in  response  to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |_|

      The issuer's  total  revenues for the fiscal year ended  December 31, 2004
were $15,799,916.

      As of March 31,  2005,  there were  23,515,000  outstanding  shares of the
issuer's common stock, par value $0.001 per share ("Common Stock"), which is the
only class of common stock of the issuer.  As

<PAGE>

of March 31, 2005, the aggregate market value of the shares of Common Stock held
by non-affiliates of the issuer,  computed based on the closing bid price of the
Common Stock as quoted on the OTC Bulletin Board, was approximately $2,349,000.

                       Documents Incorporated by Reference

      None.

      Transitional Small Business Disclosure Format: |_| Yes  |X| No


                                       ii
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
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<S>                                                                                                              <C>
PART I............................................................................................................1

Item 1.     Business..............................................................................................1
Item 2.     Properties............................................................................................8
Item 3.     Legal Proceedings.....................................................................................8
Item 4.     Submission of Matters to a Vote of Security Holders...................................................8

PART II...........................................................................................................8

Item 5.     Market for Common Equity and Related Stockholder Matters..............................................8
Item 6.     Management's Discussion and Analysis of Financial Condition and Results of Operations................10
Item 7.     Financial Statements.................................................................................21
Item 8.     Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.................21
Item 8A.    Controls and Procedures..............................................................................21

PART III.........................................................................................................21

Item 9.     Directors and Executive Officers; Compliance with Section 16(a) of the Exchange Act..................21
Item 10.    Executive Compensation...............................................................................24
Item 11.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.......25
Item 12.    Certain Relationships and Related Transactions.......................................................26
Item 13.    Exhibits, Financial Statements and Reports on Form 8-K...............................................27
Item 14.    Principal Accountant Fees And Services...............................................................27

CONSOLIDATED FINANCIAL STATEMENTS AND NOTES.....................................................................F-1

Report of Independent Auditors..................................................................................F-1
</TABLE>

<PAGE>

                                     PART I

ITEM 1. BUSINESS

      Unless the context otherwise requires,  "DND",  "Company",  "we", "us" and
"our" refer to DND Technologies, Inc., and its subsidiary, Aspect Systems, Inc.,
combined.

Overview

      DND Technologies,  Inc., a Nevada  corporation  ("DND"),  began operations
under the name "DND Technologies,  Inc." on August 2, 2002, following the merger
of  a  wholly-owned   subsidiary  of  Zurickirch  Corp.,  a  Nevada  corporation
("Zurickirch"),  with Aspect Systems,  Inc., an Arizona  corporation  then named
Aspect Semiquip  International,  Inc.  ("ASI").  Zurickirch was  incorporated in
Nevada on May 9, 1997 as Weston  Caribbean  Corp. On March 9, 2000, its name was
changed to  Zurickirch  Acquisitions,  Inc. and on April 17, 2000,  its name was
changed to Zurickirch  Corp. The merger was effected through an Agreement & Plan
of Reorganization,  under the terms of which DND exchanged  18,000,000 shares of
its  common  stock  for  all  of the  issued  and  outstanding  shares  of  ASI.
Immediately after the merger, Douglas Dixon, CEO of DND, as the sole shareholder
of ASI,  owned  18,000,000  shares of DND,  with  4,000,000  DND shares  held by
others.  Following the merger, ASI became a wholly-owned subsidiary of DND. DND,
through ASI, provides capital equipment to the semiconductor industry for use in
the manufacture of microchip  technology,  and is a manufacturer and supplier of
parts and contract services to the semiconductor industry. In March of 2001, ASI
acquired  Semiquip,   Inc.   Semiquip,   based  in  Texas,  was  a  supplier  of
reconditioned  assemblies,  and a provider of service programs specific to major
semiconductor  fabrication  equipment used in the  manufacture of computer chips
and other semiconductor devices.

      Incorporated in 1990, ASI is a global  provider of specialized  equipment,
parts and support  services to the  semiconductor  industry.  Through  licensing
agreements   negotiated  with  Lam  Research  Corporation  ("Lam")  and  Axcelis
Technologies,   Inc.   ("Axcelis"),   ASI  has  become  the  original  equipment
manufacturer ("OEM") of Lam AutoEtch, Rainbow and TCP plasma etch systems, , and
plasma  etch and  strip  products  manufactured  on the ASI  MX-1 and ASI  MX-10
(formerly  Matrix System One and Ten),  and the Arista and Arista Dual (formerly
Matrix  Bobcat and  Cheetah)  platforms.  ASI also  offers  new and  refurbished
support products including a wide array of  sub-assemblies,  both consumable and
non-consumable  repair and process  related  parts,  remanufactured  temperature
control units that are designed to maintain critical operating  temperatures for
the plasma systems. Engineering and training services are also made available to
its  international  customer base. The most significant  portion of ASI revenue,
however,  is derived from the  marketing and sale of Rainbow and TCP plasma etch
systems and the ASI MX and Arista system products.

      ASI has a website located at http://www.aspectsys.com.

Semiconductor Industry Background

      Semiconductor  chips,  also  known  as  integrated  circuits,  are used in
personal computers,  telecommunication  equipment, digital consumer electronics,
wireless communication  products and other applications.  Types of semiconductor
chips   include   memory  chips   (which   store  and   retrieve   information),
microprocessors (general purpose logic devices programmable to take instructions
from  software) and "system on chip"  devices  (which have both logic and memory
features).  Most semiconductor  chips are built on wafers of silicon that may be
as much as twelve  inches in  diameter.  Each  semiconductor  chip is made up of
millions of tiny  transistors  or  "switches"  to control the  functions  of the
device.  The  transistors  are created by forming  electrically  active  regions
beneath the  silicon  surface to inhibit or prohibit  electrical  current  flow.
Later, metal interconnections are formed on top of the silicon that connects the
transistor components together.

<PAGE>

      Semiconductor chip  manufacturers  utilize many different types of process
tools in the making of  integrated  circuits.  There are over 300 process  steps
utilizing  over 50 different  types of process tools required in the making of a
single  device like a  microprocessor.  Semiconductor  chip  manufacturers  seek
efficiency improvements through increased throughput,  equipment utilization and
higher  manufacturing  yields.  Capacity  is added by  increasing  the amount of
manufacturing  equipment in existing fabrication  facilities and by constructing
new  fabrication  facilities.  During the period from early 1999  through  2000,
semiconductor  manufacturers  met the  increased  demand  for  chips  mostly  by
building  new  fabrication  facilities,   and  by  making  additional  equipment
purchases to expand existing fabrication  facilities.  The significant number of
new and expanded  fabrication  facilities  coupled  with the severe  downturn in
demand for  electronic  devices  from 2001  through  most of 2003,  had a severe
adverse  impact  on  the   semiconductor   industry  and  on  suppliers  to  the
semiconductor  industry.  Beginning in late 2003, demand for semiconductor chips
began to increase,  which has led to increases  in capital  expenditures  during
2004.

      Over the past twenty years, the  semiconductor  industry has grown rapidly
as a result of increasing  demand for personal  computers,  the expansion of the
Internet  and  the  telecommunications   industry,  and  the  emergence  of  new
applications  in consumer  electronics.  More recently,  growth has slowed,  and
there are signs that the industry may be beginning to mature.  While unit demand
for  semiconductor  devices  continues to rise,  the average  selling prices are
declining.  There is increasing  pressure on chipmakers to reduce  manufacturing
costs  while  increasing  the  value of their  products  at the same  time.  The
semiconductor  industry has also been cyclical in nature over its history,  with
periods of rapid expansion followed by periods of over-capacity.

      Several  technological  trends characterize  semiconductor  manufacturing.
Perhaps the most prominent of these trends is increasing  density.  Moore's Law,
first postulated in the mid-1960s and still accurate 40 years later, states that
the  density  of  circuitry  on  an   individual   semiconductor   chip  doubles
approximately  every 18 months.  Today's advanced devices are being manufactured
with  line  widths  as small as 0.13  micron  and  with up to  eight  layers  of
interconnect  circuitry.  By increasing circuit density,  manufacturers can pack
more electronic  components on a chip and thereby provide higher performance and
value.  The next  generation of chips will likely see line widths as small as 90
nanometer   (0.09  micron)  and  below,   requiring   even  more   sophisticated
interconnect wiring to keep pace.

      Another trend worth noting is the  transition to copper wiring in place of
aluminum as the primary conductive material in semiconductor devices. Copper has
a lower electrical resistance value than aluminum, and this provides a number of
performance  advantages.  Because of the superior  properties of copper,  a chip
made  with  copper  may need  only  half as many  metal  layers as one made with
aluminum.  This  provides a  significant  reduction in  manufacturing  cost.  In
addition, copper wiring produces a significant improvement in device performance
and a significant reduction in power requirements as compared to aluminum.

      A similar transition is underway to low-k dielectric insulators, which are
replacing  traditional  silicon  oxide films.  Low-k  dielectrics  are better at
limiting  the  capacitance  that occurs  between  metal lines in a device.  This
quality is important to the goal of smaller line widths and increasing component
density.  However,  low-k materials are also less stable than silicon oxide, and
this poses a host of new  challenges to the  semiconductor  industry in pursuing
its goals of  increased  circuit  density  and, at the same time,  lower cost of
manufacture and higher performance and value of the manufactured product.

      Periodically,   and   historically   every  seven  or  eight  years,   the
semiconductor  industry  adopts a larger  silicon  wafer size to  achieve  lower
manufacturing  costs.  Semiconductor  manufacturers  can produce more chips on a
larger  wafer,  thus  reducing  the  overall  manufacturing  cost per chip.  The
majority of wafer fabrication  facilities today are using wafers with a diameter
of 200 mm (8 inches).  New manufacturing  equipment is required to handle 300 mm
(12 inches)  wafers if a facility  wants to make the  transition to these larger
wafers.  We  currently  supply  equipment  for the 100 mm to 200 mm markets  but
management  intends  to  offer  equipment  for  processing  300 mm  wafers  when
feasible.  The customer base


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<PAGE>

for semiconductor  manufacturing equipment is also changing. Given the magnitude
of the  investment  needed  to build a new  wafer  fabrication  facility  (often
referred to as a "fab"), which today exceeds $1 billion and can be as high as $3
billion or more for a new 300 mm fab, contract semiconductor  manufacturers,  or
foundries,  have emerged.  Foundries provide out-sourced  manufacturing of chips
for chip  designers  and device  manufacturers  who may use foundries for all or
part  of  their   chip   manufacturing   requirements.   Foundries,   which  are
predominantly   located  in  Taiwan  and  Singapore,   have  become  significant
purchasers of  semiconductor  manufacturing  equipment.  New foundries are being
built in China to compete with Taiwan and  Singapore as more chip  production is
being  outsourced.  China is predicted to be one of the fastest  growing regions
for  semiconductor  manufacturing.  The  high  cost  of  building  a new fab has
prompted many companies to seek refurbished  equipment,  which we include in our
product  offerings,  rather than always purchasing new (and  significantly  more
expensive) equipment.

Chip Industry

      Most  chips are built on a silicon  wafer  base and  include a variety  of
circuit components, such as transistors and other devices, that are connected by
multiple  layers  of  wiring  (interconnects).  As the  density  of the  circuit
components is increased to enable greater computing power in the same or smaller
area,  the  complexity of building the chip also  increases,  necessitating  the
formation of smaller  structures and more intricate  wiring schemes.  To build a
chip, the transistors, capacitors and other circuit components are first created
on the surface of the wafer by  performing  a series of processes to deposit and
remove selected film layers. Similar processes are then used to build the layers
of wiring  structures on the wafer. A typical,  simplified  process sequence for
building the wiring portion of copper-based chips involves initially  depositing
a  dielectric  film  layer onto the base  layer of  circuit  components  using a
chemical vapor  deposition  (CVD) system.  An etch system is then used to create
openings  and  patterns  in the  dielectric  layer.  This etch  process  defines
linewidths and other microscopic  features on integrated  circuits,  with plasma
etching  utilizing ions and neutral species that react with exposed  portions of
the wafer  surface  to remove  dielectric,  metal or  polysilicon  material  and
produce the finely  delineated  features and patterns of an integrated  circuit.
These etch processes are repeated  numerous  times during the wafer  fabrication
cycle  and are  required  to  manufacture  every  type of  semiconductor  device
produced  today.  We sell and service a variety of plasma products that are used
to accomplish the goals of these processes.

      Residue is then removed  through a process called "dry strip" or "ashing."
We sell and service certain machines that perform the dry strip process. To form
the metal  wiring,  openings and  patterns  etched in the  dielectric  layer are
subsequently  filled with  conducting  material using physical vapor  deposition
(PVD) and/or electroplating  technologies. A chemical mechanical polishing (CMP)
step then  polishes the wafer to maintain a flat surface for future  processing.
Additional  deposition,  etch and CMP steps are then  performed  to build up the
layers of wiring needed to complete the  interconnection of the circuit elements
to form the chip.  Advanced chip designs require about 500 steps involving these
and other processes to complete the manufacturing of the wafer.

Our Operating Subsidiary

      Organized in 1990, our operating subsidiary, ASI, manufactures, assembles,
markets and services semiconductor wafer fabrication equipment for the worldwide
semiconductor  industry.  Customers  for ASI's  products  include  semiconductor
integrated circuit (or chip) factories or foundries,  which either use the chips
they  manufacture in their own products or sell them to other  companies for use
in advanced electronic components.

      In 2002,  ASI  began  manufacturing  a  proprietary  product  known as the
"Nitrogen  Clean System"  ("NCS"),  which  provides  superior  cleaning of wafer
fabrication  equipment  as  compared  to existing  high  efficiency  particulate
arresting ("HEPA") filtration devices. One of our customers,  Texas Instruments,
field-tested  our NCS against  competing models and elected to purchase our NCS.
The superior  cleaning


                                       3
<PAGE>

ability  of the NCS  reduces  contamination  of wafers and  increases  the yield
obtained from each wafer. This equipment provides in situ continuous cleaning of
the reaction  chamber that reduces  particulates  thereby greatly  extending the
uptime between required  equipment cleaning cycles. The NCS is adaptable to work
with etch or chemical vapor  deposition  equipment  producing any wafer size. We
sold and  installed  our first NCS in 2002,  and, as of March 31,  2005,  we had
approximately 14 installed units, Eleven of these were sold to Texas Instruments
and 3 were sold to ST Microelectronics. We believe that the NCS provides further
diversification  of  our  business,  providing  a  proprietary  product  to  the
semiconductor market.

Our Market Niche and Growth Strategy

      ASI provides new and used equipment, parts and engineering services to the
semiconductor  industry. The semiconductor industry itself has historically been
highly cyclical and capital intensive. Many semiconductor  manufacturers are now
choosing to meet  increased  production  demands by upgrading,  refurbishing  or
reconfiguring   their  existing   equipment,   or  by  purchasing   rebuilt  and
reconfigured current generation products rather than buying new state-of-the-art
equipment, which is substantially more costly, and oftentimes unnecessary to the
attainment of their immediate  goals. As the cost of new equipment  continues to
rise, management believes demand is increasing for our products and services.

      In November, 2002, through a licensing agreement with Lam, ASI was granted
OEM rights to  manufacture  and  support  the Lam  AutoEtch  and TCP plasma etch
products,  adding this new  capability  to the AutoEtch  refurbishing  and after
market support  business upon which ASI had been founded.  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 the  payment  for the  inventory  purchases  made  as a part of the  original
agreement.

      In December,  2003,  through a similar and exclusive  licensing  agreement
with  Axcelis  Technologies,  Inc.,  ASI gained OEM  rights to  manufacture  and
support  plasma  etch and strip  products  manufactured  on the ASI MX-1 and ASI
MX-10  (formerly  Matrix  System One and Ten)  platforms.  ASI is now  accepting
orders for both new and refurbished ASI MX-1 and ASI MX-10 products manufactured
to original manufacturer specifications.  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 the Arista and Arista Dual (formerly Matrix Bobcat and Cheetah) platforms.

      We intend to continue the expansion of our market share through aggressive
promotion of our products and  services,  and by entering  into  contracts  with
other OEMs to acquire manufacturing rights to their legacy products.

Recent Product Line Acquisitions and Product Development

      Our Asset Sale and License  Agreement with Lam dated November 8, 2002 (the
"Lam Agreement"), 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. In June, 2004, we
signed an amendment  to the Lam  Agreement  that  restructured  certain  payment
terms. As of March 31, 2005, we have purchased  equipment for approximately $2.1
million under the Lam Agreement,  and we are required to pay approximately  $5.3
million  (approximately $1.3 million has already been paid) as a royalty for the
licensed intellectual property.  Management expects our relationship with Lam to
continue for the foreseeable future.

      We entered the dry strip product market through our License Agreement with
Axcelis in December 2003. This Agreement  granted us an exclusive license to use
certain technology to manufacture, use, sell, maintain and service Matrix System
One  and  System  Ten  dry  strip  semiconductor


                                       4
<PAGE>

manufacturing  equipment.  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  (from 10% down to 2%) on related sales
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"  and  "Cheetah"  ). The  agreement  provides  for a
quarterly  payment equal to 18% of net revenues from the sale of this product by
the Company,  beginning with the fourth quarter of 2004 and ending  December 31,
2011, or until $750,000 (the license fee) has been paid, whichever occurs first,
and payment of a declining royalty (from 10% down to 2%) on related sales over a
period of time that ends December 31, 2011.

      As part of the chip creation  process,  a light  sensitive,  polymer-based
liquid, called photoresist, is spread in a uniformly thin film on the wafer in a
pattern creating a "stencil" effect.  Photostabilization  uses ultraviolet light
to  harden,  or  "cure,"  the  photoresist  so  that  it is  more  effective  in
maintaining the desired pattern during the subsequent implant processes and etch
steps  (in  which the top layer of the  surface  of the  wafer  not  covered  by
photoresist  is  removed).  After  these  steps,  the  photoresist  is no longer
necessary  and must be removed.  The primary means of removing  photoresist  and
residue is a process  called "dry strip" or  "ashing."  Our dry strip  machines,
also called  ashers,  use  microwave  and rf energy to turn  process  gases into
plasma,  which then acts to "clean"  the  surface of the wafer by  removing  the
photoresist and unwanted residue. Our licensed dry strip products provide a cost
effective  alternative to purchasing the latest generation  equipment to perform
this step in the chip creation process.

Research and Development Activities

      Our R&D expenditures were $96,298 during the 2004 fiscal year, and $58,226
during the 2003 fiscal  year.  These  expenditures  were  targeted at  continued
development of our NCS application, and enhancements to our existing products.

      The market for  semiconductor  capital equipment is characterized by rapid
technological  change and product  innovation.  In the near term, our ability to
maintain  competitive  advantage  depends in part on our ability to maintain our
existing  relationships  with  companies like Lam and Axcelis.  Our  outsourcing
contracts  with  Lam and  Axcelis  allow  us to  obtain  the  benefits  of newer
technologies  without having to invest substantial  portions of our revenue into
R&D activities.

Patents and Trademarks

      We intend to evaluate any  technology we develop on a  case-by-case  basis
and pursue legal  protection for our technology  through patent and trade secret
protection  where we  believe  the  benefits  of such  protection  outweigh  the
associated costs.  Equipment produced through our outsourcing contracts with Lam
and Axcelis is covered by the OEM patent protection  afforded us via the license
agreements.  Our  registered  United  States  patents,  which  are  owned by our
subsidiary, Aspect Systems, Inc., jointly with Air Products and Chemicals, Inc.,
are:  "Partial  clean fluorine  thermal  cleaning  process," Pat. No.  5,868,852
granted on February 9, 1999 with a term ending in February of 2017, and "Diluted
nitrogen  trifluoride  thermal cleaning process",  Pat. No. 5,714,011 granted on
February 3, 1998 with a term ending in February of 2015. Our management believes
that  certain  aspects  of our  proprietary  technologies  are no  longer  fully
protected by our patents.  Our  subsidiary,  ASI, owns the following  registered
trademark:  "ASI Aspect  Systems,  Inc." We believe that this trademark is known
and recognized  within our market and is valuable to our business.  We intend to
vigorously  enforce all  violations  of our trademark as we believe the goodwill
associated with it is important to the development of our business.


                                       5
<PAGE>

Manufacturing

      Our  manufacturing  operation  is capable of, and  routinely  builds,  new
systems, or rebuilds/reconfigures  complete plasma systems, for the markets that
we serve.  Most of the  assembly  and testing of our  products is  conducted  in
cleanroom   environments.   Prior  to  shipping  a  completed  system,  customer
representatives  may perform  acceptance  tests at our  facility.  After passing
these acceptance  tests, the system is vacuum-bagged in a cleanroom  environment
and prepared for shipment.

      Certain of the components and  subassemblies  included in our products are
obtained from a single supplier or a limited group of suppliers. We believe that
alternative  sources could be obtained and  qualified to supply these  products.
Nevertheless,  a prolonged  inability to obtain certain components could have an
adverse  short-term effect on our operating results and could unfavorably impact
our customer relationships.

Distribution Methods

      We sell new and  refurbished  equipment  and  aftermarket  support,  which
includes spare parts sales and technical contract services. In fiscal year 2004,
spare parts and technical  services accounted for approximately 38% of our total
sales. Our revenues in 2004 were derived from sales in both the US and overseas,
with overseas sales accounting for approximately  36% of total revenues.  In the
U.S., we market and sell our products and services  directly over the phone,  by
mail and fax, through in-person sales calls to potential customers, and at trade
shows.  The  number  of  potential  customers  is  limited,  as we only  sell to
manufacturers  of  computer  chips,  and thus we have the  resources  to  handle
marketing  internally.  Our overseas  marketing is conducted  through  marketing
representatives in Europe and Asia that stock spare parts,  employ  technicians,
and call on computer chip manufacturers in their area.

      Sales  of  equipment  are  handled  similarly,  but  are  supplemented  by
independent sales  representatives in the U.S. who visit potential  customers to
market  out  products,  along with other  manufacturers'  non-competing  product
lines.

Marketing, Sales and Service

      Our  marketing  and  sales  efforts  are  focused  on  building  long-term
relationships  with our  customers.  These  efforts are  supported  by a team of
product marketing professionals, direct sales personnel as well as equipment and
process  engineers  that work  closely  with  individual  customers  to  develop
solutions to their processing needs. After-sales support is an essential element
of our marketing and sales programs.  We maintain ongoing support  relationships
with our  customers  and have a  network  of field  service  personnel  in place
throughout the United States. We believe that comprehensive support programs and
close working  relationships  with  customers are essential to  maintaining  our
competitiveness in the marketplace.

Suppliers and Customers

      Our major supplier in 2004 was Lam, which accounted for  approximately 25%
of our  inventory  purchases  last  year.  Management  anticipates  that we will
purchase significant  quantities of inventory from Lam in 2005. We have no other
significant  suppliers,  and are able to change  all  suppliers  other  than Lam
easily and without  material  negative  effects to our  business.  Our customers
include many of the world's leading semiconductor manufacturers including Intel,
Texas Instruments, ST Micro, Motorola,  National Semiconductor,  and On-Semi. In
2004,  no  customer  accounted  for 10% or more of our total  revenue.  In 2003,
revenue  from  Texas  Instruments  and  National  Semiconductor   accounted  for
approximately 17% and 12%,  respectively,  of total revenue.  Although we do not
have formal  contracts with our  customers,  all our parts and systems sales are
covered by customer purchase orders. A material reduction in orders from several
of  our  larger  customers,   due  to  market  or  business  conditions  in  the
semiconductor  industry,  could  adversely  affect our results of operations and
projected   financial   conditions.   Our  business  depends  upon  the  capital
expenditures of semiconductor manufacturers, which


                                       6
<PAGE>

in turn depend on the  current  and  anticipated  market  demand for  integrated
circuits and products utilizing integrated  circuits.  During 2001 and 2002, the
semiconductor  industry experienced a marked decline in demand, but the industry
began to increase capital  expenditures in 2003 and 2004 as the economy began to
improve, although capital expenditures remained lower than levels in the 1990s.

Acquisition Strategy

      An important element of our management  strategy is to review  acquisition
prospects  that would  complement  our  existing  products,  augment  our market
coverage and distribution ability, or enhance our technological capabilities. As
a result,  we may make  acquisitions  of  complementary  companies,  products or
technologies,  or  we  may  reduce  or  dispose  of  certain  product  lines  or
technologies, which no longer fit our long-term strategies.

Competition

      The global  semiconductor  equipment industry is highly competitive and is
characterized  by increasingly  rapid  technological  advancements and demanding
worldwide service requirements.  The Company's ability to compete depends on its
ability to  commercialize  its technology and continually  improve its products,
processes and services,  as well as its ability to market new products that meet
constantly evolving customer requirements.  Significant  competitive factors for
succeeding  in the  semiconductor  manufacturing  equipment  market  include the
equipment's technical capability,  productivity and cost-effectiveness,  overall
reliability, ease of use and maintenance,  contamination and defect control, and
the  level  of  technical  service  and  support  provided  by the  vendor.  The
importance of each of these factors varies depending on the specific  customer's
needs and criteria,  including  considerations  such as the  customer's  process
application,  product  requirements,  timing  of  the  purchase  and  particular
circumstances of the purchasing  decision.  The pace of technological  change is
rapid, with customers continually moving to smaller critical dimensions,  larger
wafer sizes, and adopting new materials for use in semiconductor  manufacturing.
When  funds are  restricted,  many  customers  will  choose  to repair  existing
equipment or to acquire refurbished tool sets, rather than purchasing the latest
generation equipment.  Sometimes,  existing technology can be adapted to the new
requirements;  however,  these  requirements  sometimes  create  the need for an
entirely  new  technical  approach.  The  rapid  pace  of  technological  change
continually creates  opportunities for existing  competitors and start-ups,  and
can quickly diminish the value of existing technologies.

      Although  competition  exists  for  each of the  Company's  products,  and
competitors  range from small  companies  that compete with a single  product to
companies with a large and diverse line of  semiconductor  processing  products,
our management  believes that competition  from these companies is minimal.  For
example, two of our competitors are Lam Research Corp. and Axcelis Technologies,
Inc.,  both  multi-national   companies  with  significantly  greater  financial
resources,  but Lam and Axcelis  historically  have not been strong  competitors
with us because of their focus  primarily  on other  markets.  Competitors  in a
given  technology  tend to have  different  degrees  of market  presence  in the
various  regional  markets.  Management  believes  that the  Company is a strong
competitor  and that its  competitive  position  is based on the  ability of its
products and  services to continue to address  customer  requirements  on a cost
effective basis and provide services in a timely manner.

Government and Environmental Regulations

      Other  than  minimal  environmental  regulation,  we are  not  subject  to
governmental  regulation  of our  business.  We are  currently  not aware of any
pending notices of violation,  fines,  lawsuits or  investigations  arising from
environmental matters that would have any material effect on our business. As we
do no manufacturing, only assembly, of our products, we are subject to a minimal
number of  governmental  regulations  related  to the  management  of  hazardous
materials,  including  disposal  of  certain  fluids  and  gases  as part of the
assembly  process.  We believe that we are in compliance with these  regulations
and that we have  obtained all  necessary  environmental  permits to conduct our
business.  We


                                       7
<PAGE>

currently have  arrangements  with local and state authorities that permit us to
dispose of these fluids and gases at minimal cost. Nevertheless,  the failure to
comply with present or future regulations could result in fines being imposed on
us,  suspension of  production,  and cessation of our operations or reduction in
our customers' acceptance of our products. These regulations could require us to
alter our  current  operations,  to acquire  significant  equipment  or to incur
substantial other expenses to comply with environmental regulations. Our failure
to control the use, sale,  transport or disposal of hazardous  substances  could
subject us to future liabilities.

Employees

      DND currently has two employees, our CEO and CFO. ASI had approximately 53
full-time employees as of December 31, 2004.

ITEM 2. PROPERTIES

      DND, through its subsidiary ASI,  currently  leases its principal  Arizona
facility,  located  at 375 East  Elliot  Road,  Chandler,  Arizona  85225.  This
facility consists of 23,264 square feet of office and warehouse space on a lease
from Teachers  Insurance and Annuity  Corporation,  a New York  corporation that
runs  through  November  30,  2007.  ASI  also  leases  a  smaller  facility  in
Richardson,  Texas located at 650 International Parkway, Suite 180. The facility
consists of 19,855 square feet on a lease from TMT Richardson  Business  Center,
Inc.,  a Delaware  corporation,  that runs through  November  30,  2008.  Rental
payments  for  both  facilities  for the  year  ended  December  31,  2004  were
approximately  $397,000.  The Company is not affiliated with any of its lessors.
The Company's  management  believes that all facilities  occupied by the Company
are adequate for present requirements,  and that the Company's current equipment
is in good condition and is suitable for the operations involved.

ITEM 3. LEGAL PROCEEDINGS

      None.

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

      None.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      DND currently has 23,515,000 shares of common stock outstanding.

      Our  common  stock is  currently  traded on the  National  Association  of
Securities  Dealers  Automated  Quotation System Over the Counter Bulletin Board
("OTCBB") under the symbol  "DNDT.OB."  There is limited trading activity in our
securities,  and there can be no  assurance  a regular  trading  market  for our
common stock will be  sustained.  We began  trading on the OTCBB on December 15,
2001.  There was no trading  activity in our stock from  December 15, 2001 until
May of 2002. The following table sets forth, for the periods indicated,  the bid
price range of our common stock.


                                       8
<PAGE>

                 Period                   Average Low            Average High
                 ------                   -----------            ------------
        Fourth Quarter 2004                   $0.13                  $0.28
        Third Quarter 2004                    $0.12                  $0.30
        Second Quarter 2004                   $0.07                  $0.20
        First Quarter 2004                    $0.05                  $0.20
        Fourth Quarter 2003                   $0.05                  $0.08
        Third Quarter 2003                    $0.05                  $0.11
        Second Quarter 2003                   $0.02                  $0.08
        First Quarter 2003                    $0.05                  $0.51

      Such market quotations  reflect the high and low bid prices as reported by
the OTCBB. The quotations reflect inter-dealer  prices,  without retail mark-up,
markdown or commissions and may not necessarily  represent actual  transactions.
There is an absence of an established  trading marking for the Company's  common
stock, as the market is limited,  sporadic and highly volatile, which may affect
the prices listed above.

Number of Shareholders

      The number of beneficial shareholders of record of the Common Stock of the
Company as of the close of business on March 31, 2005 was approximately 34.

Dividend Policy

      To date, the Company has paid no cash  dividends on its Common Stock,  and
does not expect to pay cash dividends in the next term.  The Company  intends to
retain  future  earnings  to  provide  funds  for  operation  and  growth of its
business.

Disclosure of Equity Compensation Plans

      The Company  maintains  the 2003 Stock  Option Plan (the  "Option  Plan"),
pursuant to which it may grant  equity  awards to eligible  persons.  The Option
Plan allows the Board of Directors to grant  options to purchase up to 5,000,000
shares  of common  stock to  employees,  officers,  directors,  consultants  and
advisors of the Company.  As of December 31, 2004, options to purchase 4,999,226
shares had been  granted  under the Option  Plan,  and 540,000 of these  granted
options were cancelled and expired during 2004.


                                       9
<PAGE>

<TABLE>
<CAPTION>
                                      Number of securities to           Weighted-average           Number of securities
                                      be issued upon exercise          exercise price of          remaining available for
                                      of outstanding options,         outstanding options,     future issuance under equity
        Plan Category                 warrants and rights (#)       warrants and rights ($)         compensation plans
                                      -----------------------       -----------------------    ----------------------------
<S>                                           <C>                             <C>                          <C>
Equity compensation plans                     4,234,266                       $0.06                        765,734
approved by shareholders

Equity compensation plans not                       N/A                         N/A                            N/A
approved by shareholders

Total                                         4,234,266                       $0.06                        765,734
</TABLE>

Recent Sales of Unregistered Securities

None.

ITEM 6. 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 new and
used   semiconductor   equipment  and  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 ASI
MX-1 and ASI MX-10  (formerly  Matrix  System  One and Ten),  and the Arista and
Arista Dual (formerly Matrix Bobcat and Cheetah) platforms.  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  three
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. Inventory

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

      2. License Agreements


                                       10
<PAGE>

      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).

      3. 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.

Selected Financial Information

<TABLE>
<CAPTION>
                                                                Year Ended
                                                                                               Increase
                                                      12/31/2004           12/31/2003         (Decrease)
                                                      ----------           ----------         ----------
<S>                                                  <C>                 <C>                 <C>
Statements of Operations
        Total Revenue                                $ 15,799,916        $  8,736,526        $  7,063,390
                                                     ------------        ------------        ------------
        Cost of Revenue:
             Costs of revenues                         10,237,166           5,499,564           4,737,602
             Reserve for slow moving and
                  Obsolete inventory                     (770,642)          2,401,221          (3,171,863)
                                                     ------------        ------------        ------------
        Total Cost of Revenues                          9,466,524           7,900,785           1,565,739
                                                     ------------        ------------        ------------
             Percentage of Sales                               60%                 90%
        Gross Profit                                    6,333,392             835,741           5,497,651
                                                     ------------        ------------        ------------
             Percentage of Sales                               40%                 10%
        Operating Expenses:
             Research and development                      96,298              58,226              38,072
             Sales and marketing                        2,517,649           1,147,977           1,369,672
             General and administrative                 1,986,934           1,992,588              (5,654)
             Lawsuit Settlement                           140,000                   0             140,000
                                                     ------------        ------------        ------------
        Total Operating Expenses                        4,740,881           3,198,791           1,542,090
                                                     ------------        ------------        ------------
        Income (Loss) from Operations                   1,592,511          (2,363,050)          3,955,561
                                                     ------------        ------------        ------------
        Other Income (Expense):
             Interest Expense                            (356,689)           (373,208)             16,519
                                                     ------------        ------------        ------------
        Income (Loss) Before Income Tax Expense         1,235,822          (2,736,258)          3,972,080
        Income Tax Expense (Benefit)                          800                   0                 800
                                                     ------------        ------------        ------------
        Net Income (Loss)                            $  1,235,022        $ (2,736,258)       $  3,971,280
                                                     ============        ============        ============
        Net (Loss) Per Share
             Basic                                            .05                (.12)                .17
             Diluted                                          .05                 N/A                 N/A
</TABLE>

Results of Operations

Year Ended December 31, 2004 Compared To Year Ended December 31, 2003.


                                       11
<PAGE>

      Our revenue  increase  of  $7,063,390,  or 81%,  was due to an increase in
sales from customers who are purchasing additional capital equipment to meet the
demands of a recovering economy. Our sales increase by segment is as follows:

<TABLE>
<CAPTION>
                                                                                   Increase
                                      December 31, 2004   December 31, 2003       (Decrease)
                                      -----------------   -----------------       ----------
<S>                                      <C>                 <C>                 <C>
      Systems and chillers               $ 9,682,656         $ 2,626,534         $ 7,056,122
      Parts, assemblies
         and consumables                   5,897,285           5,746,576             150,709
      Field service and training             219,975             363,416            (143,441)
                                         -----------         -----------         -----------
                                         $15,799,916         $ 8,736,526         $ 7,063,390
                                         ===========         ===========         ===========
</TABLE>

Cost of Revenues - Recurring Operations

      Our cost of revenues for recurring operations increased $4,737,602 or 86%.
This  increase is directly  related to the 81% increase in total revenue for the
year ended  December 31, 2004.  Our cost of revenues as a percentage of revenues
for the year ended  December  31,  2004 was 65% as  compared to 63% for the year
ended December 31, 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 in our analysis of the need for a slow-moving and obsolete  inventory
reserve.  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 which provided us
a credit against  payables to them for inventories  previously  shipped to us in
2003.  This  amount was offset by a $192,116  increase  to the reserve due to an
analysis of all other  inventory  items. In the year ended December 31, 2003, we
increased our reserve by $2,401,221  for slow moving and obsolete  inventory,  a
large portion of which was received from Lam.

Research and Development

      Research and development  costs increased $38,072 or 65% in the year ended
December 31, 2004.  The increase is primarily  related to a $11,900  increase in
payroll/benefits  and a $19,300  increase in outside  engineering  expenses.  We
normally do not incur significant research and development expenses.

Sales and Marketing

      Sales and marketing costs  increased  $1,369,672 or 119% in the year ended
December  31, 2004.  The  increase is  primarily  related to the increase in the
Axcelis license and related  royalties of $856,000 which began in December 2003,
commissions  also increased  approximately  $380,000 and are increasing with the
increase in system sales, and Lam royalty expense increased $87,000 which is due
to the fact that  royalty  payments in fiscal 2003 were made for only ten months
versus twelve months in 2004.

General and Administrative

<TABLE>
<CAPTION>
                                                                      Year Ended
                                                                                              Increase
                                                             12/31/2004      12/31/2003      (Decrease)
                                                             ----------      ----------      ----------
<S>                                                          <C>             <C>             <C>
General and Administrative
       Salaries and wages                                    $  990,840      $  799,971      $  190,869
       Professional fees                                        284,396         506,748        (222,352)
       Occupancy Expense, less amount allocated to Cost
       of Revenue                                               220,008         215,115           4,893
       Depreciation, less amount allocated to Cost of
       Revenue                                                  116,686         125,358          (8,672)
       Other general and administrative expenses                375,004         345,396          29,608
                                                             ----------      ----------      ----------
            Total General and Administrative                 $1,986,934      $1,992,588      $   (5,654)
                                                             ==========      ==========      ==========
</TABLE>


                                       12
<PAGE>

      Salaries and wages  increased  $190,869 or 24% in the year ended  December
31, 2004 as compared  to the year ended  December  31,  2003.  This  increase is
primarily the result of an increase of $103,000 from new employee  salaries,  an
increase of $67,000 from selected  managerial  personnel who took pay reductions
in 2003 but did not take reductions in 2004, $75,000 from general pay increases,
increased  overtime and vacation  accrual,  $41,250 from  executive  bonuses for
2004, and a decrease of $96,000 from employees who left the Company in 2004.

      Professional  fees  decreased  in 2004 in the  amount of  $222,352  or 44%
primarily due to a decrease in expenses related  primarily to the integration of
our accounting and  inventory/production  control  systems that was completed in
2003 ($41,000),  a decrease in investor relations expense ($53,000),  a decrease
in legal expense from litigation  ultimately  settled by the Company ($ 58,000),
and a decrease in accounting related expense ($41,000).

      Other general and  administrative  expenses  increased  $29,608 or 9%. The
increased expenses are attributable to travel costs of $30,000 incurred in 2004,
primarily  for our  subsidiary's  new CEO to work in both our  Arizona and Texas
locations,  the purchase of supplies and delayed  maintenance  of our facilities
(due to our cash flow  problems in 2003)  amounting to $29,000,  other  employee
benefits,  primarily  relocation  expenses,  of $23,000,  and an increase in the
miscellaneous  category of $46,000.  These increases were offset by decreases in
bad debt expense  ($24,000),  depreciation  expense  ($17,000),  and stock grant
expense of ($55,000).

Lawsuit Settlement

      In April 2004,  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  $1,235,022  for the year ended  December  31,  2004,
compared to a net loss of $2,736,258 for the year ended December 31, 2003.  This
$3,971,280 increase in net income is primarily the result of a $770,642 decrease
(see  further  discussion  under  Cost  of  Revenues-Slow  Moving  and  Obsolete
Inventory) in our reserve for slow moving and obsolete inventory,  compared to a
$2,401,221 increase in our reserve for slow moving and obsolete inventory during
2003,  plus an 81%  increase  in revenue  and  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 year ended December
31, 2004.

Capital Resources

<TABLE>
<CAPTION>
                                                   Year Ended
                                                   ----------
                                                                                 Favorable
Working Capital                            12/31/2004        12/31/2003        (Unfavorable)
                                           ----------        ----------        -------------
<S>                                      <C>                <C>                <C>
Current Assets                           $  5,899,359       $  2,442,282       $  3,457,077
Current Liabilities                        (7,718,663)       (10,202,594)         2,483,931
                                         ------------       ------------       ------------
            Deficit Working Capital      $ (1,819,304)      $ (7,760,312)      $  5,941,008
                                         ============       ============       ============
Long-term Debt                           $ (4,082,730)      $    (35,962)      $ (4,046,768)
                                         ============       ============       ============
Stockholders' (Deficit)                  $ (2,355,359)      $ (3,590,381)      $  1,235,022
                                         ============       ============       ============
</TABLE>


                                       13
<PAGE>

Statements of Cash Flows Select Information

                                                         Year Ended
                                                 12/31/2004       12/31/2003
                                                 ----------       ----------

Net Cash Provided (Used) By:
Operating Activities                              $ 917,085       $ (77,486)
Investing Activities                              $ (58,552)      $ (14,647)
Financing Activities                              $(699,846)      $  50,054

Operating Activities

      For  the  year  ended  December  31,  2004,  cash  provided  by  operating
activities  of $917,085 was primarily  attributed  to income from  operations of
$1,235,022,  an increase in accounts payable and accrued expenses of $2,236,205,
and an increase in deposits from customers in the amount of $897,919, which also
relate to our  increase in overall  activity.  These  increases  were  partially
offset by an increase in accounts  receivable of $1,393,468 due to a significant
increase  in  fourth  quarter  revenues,  and  an  increase  in  inventories  of
$3,047,830.  The increase in  inventories  relates to our  increased  production
relating to increased sales and backlog during the year.

      For the year ended  December 31, 2003,  $77,486 cash was used by operating
activities.  This was primarily due to a decrease in income from  operations and
an increase in accounts payable and accrued expenses of $736,670,  which related
directly to our cash flow problems during this period,  which forced us to delay
some payments. These increases were partially offset by the increase in accounts
receivable of $740,680 and an increase in inventories of $460,609, which related
to additional shipments received from Lam.

Investing Activities

      During  the years  ended  December  31,  2004 and  2003,  cash was used by
investing  activities  for  purchases of equipment in the amounts of $58,552 and
$14,647, respectively.

      The   Company   currently   has  no  material   commitments   for  capital
expenditures.

Financing Activities

      Financing  activities in the year ended  December 31, 2004 used a total of
$699,846 as compared to net cash provided of $50,054 in the year ended  December
31,  2003.  In the year  ended  December  31,  2004,  $742,002  was used for the
repayment of long-term  debt as compared to $581,136 in the year ended  December
31, 2003. In the years ended December 31, 2004 and 2003 we received net proceeds
of $42,156 and 631,190, respectively, from issuance of long-term debt.

      We have  $2,973,908  (which  includes  $967,606  due to Lam,  $788,416  of
royalty  payable to Axcelis,  $420,400 due to related  parties,  $299,495 due to
Merrill  Lynch,  $389,350  of notes  payable,  $90,000  due  under  the  lawsuit
settlement  and $18,641 of current  capital  leases  payable) and  $4,082,730 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,  additional  equity infusions to repay
the  indebtedness  and upon our ability to continue the expansion of our product
line  and  market  share.  Management  will  seek to  renegotiate  repayment  of
indebtedness due in fiscal 2005 or a portion thereof if the Company is unable to
repay it in full but  there is no  assurance  that it will be  successful  or if
successful,  that it will not remain obligated to repay at substantially  higher
than market rate.


                                       14
<PAGE>

Liquidity and Capital Resources

      Our liquidity  has been  negatively  impacted by the  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 half of year 2004, we are now
experiencing  improved  liquidity from the sale of a greater number of products,
and a related significant increase in customer deposits.

      To date,  we have  financed  our  business  with cash  from our  operating
activities,  a bank line of credit that has been  restructured into a term loan,
and a loan for $200,000. This loan for $200,000 was made by Jean Charles Cartier
in October  2002,  with a  twelve-month  term and at an interest rate of 12% per
annum.  As of November 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
agreed to forbear on collection of the outstanding  principal until December 31,
2004. In December,  2004, $100,000 was paid and the balance of $100,000 was paid
in full in March, 2005 and no further amounts are due.

      Our  subsidiary's  restructured  term loan  with  Merrill  Lynch  Business
Financial  Services,  Inc.  (the "New Loan") had a balance of  $1,123,310  as of
December 31,  2004,  requires  payments  over 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, and is secured by a
first lien on our total assets.

      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 (of which  approximately  $4
million remains to be paid) 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,  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, which began on August 1, 2004 and end January 1, 2007, with
an additional payment of $90,000 that was due and paid on September 30, 2004. An
additional  inventory  transfer of $65,000  took place in August  2004,  and was
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
began 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  (from 10% down to 2%) on related sales 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


                                       15
<PAGE>

200mm  formerly  marketed  by  Matrix  Integrated  Systems,   Inc.  and  Axcelis
Technologies,  Inc. under the trade names of "Bobcat " 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 (from 10% down to 2%)
on related sales 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.

      As of December,  2004, our current obligations include $100,000 (which was
paid in March 2005) due to the Cartier  estate,  $689,000 in notes payable,  and
$1,756,000 in term  payments to Lam and Axcelis.  As of the date of this filing,
we believe  that our cash flow is  sufficient  to meet our current  obligations.
However,  there can be no  assurance  that our  results of  operations  will not
change as 2005 progresses,  and if our revenues decline,  we may have difficulty
meeting our current obligations unless we obtain additional financing.

      During the next 12 month  period we intend to seek  financing  from one or
more sources such as capital  investment  firms or private fund managers.  If we
are successful in obtaining financing, we will have additional cash resources to
pursue  growth and other types of  opportunities  that our  management  believes
could enhance our business.  Additional cash resources may also allow us to make
more cost  effective  choices when  acquiring  resources  needed for our ongoing
business  operations.  Although  we do not  have  any  current  commitments  for
financing,  we will soon be engaging in discussions  with such funding  sources.
Additional financing may not be available on acceptable terms or at all.

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 include,  among others,
the Risk Factors below.

      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 common stock. 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.  If any of the following risks actually occur, our business could be
harmed.


                                       16
<PAGE>

      We depend on key  management  personnel  and the loss of any of them would
seriously disrupt our operations.

      Douglas Dixon, our CEO and Chairman of the Board, and Dennis Key, our CFO,
are  vital  to our  continued  operations  due to  their  relationship  with Lam
Research Corp. and their past experience working in the semiconductor  industry.
Their loss would adversely impact our operations.

      The demand for our products is  unpredictable,  and should demand decline,
such decline would result in a decline of operations and a corresponding decline
in profitability of our company.

      Factors  that may cause  demand for our  products,  and by  extension  our
operating results, to fluctuate unpredictably include, but are not limited to:

      o     economic conditions in the electronics and semiconductor industry
            generally and the equipment industry specifically;

      o     the extent that customers use our products and services in their
            business;

      o     the size and timing of orders from customers;

      o     our ability in a timely manner to acquire, develop, introduce and
            market competitive products;

      o     our competitors' introduction of new and improved products;

      o     legal or technical challenges to our products and technology;

      o     changes in import/export regulations;

      o     transportation, communication, demand, information technology or
            supply disruptions based on factors outside our control such as Acts
            of God, wars, terrorist activities and natural disasters;

      o     legislative, tax, or regulatory changes or changes in their
            interpretation;

      o     procurement shortages;

      o     assembly difficulties; and

      o     the failure of our suppliers or outsource providers to perform their
            obligations in a manner consistent with our expectations.

      Cyclical downturns are prevalent in the semiconductor industry.

      Our  business  depends   predominantly  on  the  capital  expenditures  of
semiconductor  manufacturers,  which in turn depend on current  and  anticipated
market  demand for  integrated  circuits  and the  products  that use them.  The
semiconductor  industry has historically  been very cyclical and has experienced
periodic  downturns  that have had a material  adverse  effect on the demand for
semiconductor  processing equipment,  including equipment that we market. During
downturns, our replacement parts are generally in higher demand, due to the cost
effectiveness of repairing  existing  equipment instead of buying new equipment.
However,  during  prolonged  downturns,  our  replacement  parts  business faces
competition from failing semiconductor  manufacturers,  who will frequently sell
their  capital  equipment  at  substantial   discounts  as  part  of  bankruptcy
proceedings.

      During periods of reduced and declining demand, we must be able to quickly
and effectively  align our costs with prevailing market  conditions,  as well as
motivate and retain key employees.  In particular,  our inventory  levels during
periods of reduced  demand have at times  reached  higher-than-necessary  levels
relative to the current  levels of production  demand.  During  periods of rapid
growth,  we must be able to acquire  and  develop  sufficient  capacity  to meet
customer  demand,  and hire and  assimilate  a  sufficient  number of  qualified
people.  We cannot give assurances  that our future sales and operating


                                       17
<PAGE>

results will not be adversely  affected if downturns or slowdowns in the rate of
capital investment in the semiconductor  industry occur in the future. As of the
end of 2004, the  semiconductor  industry has become more  optimistic  about its
levels of capital expenditures.

      The semiconductor industry is intensely competitive and capital-intensive.

      We face substantial  competition in the industry,  both from potential new
entrants into the market and  established  competitors.  Some of these companies
may have greater financial,  marketing, technical or other resources than we do,
as well as broader product lines,  greater  customer  service  capabilities,  or
larger and more established sales  organizations  and customer bases.  Remaining
competitive  in the  market  depends  in part upon our  ability to offer new and
enhanced systems and services, at competitive prices on a timely basis.

      Our customers must incur substantial expenditures to install and integrate
capital equipment into their semiconductor production lines. Once a manufacturer
has selected another vendor's capital  equipment,  the manufacturer is generally
reliant upon that equipment vendor for the specific  production line application
in question. Accordingly, we may experience difficulty in selling a product to a
particular  customer  for a  significant  period of time when that  customer has
selected a system from a  manufacturer  we do not have a  relationship  with. In
addition,  sales of our systems  depend in  significant  part upon a prospective
customer's decision to increase  manufacturing capacity which typically involves
a significant capital commitment.  From time to time, we have experienced delays
in finalizing system sales following initial system qualification.  Due to these
and other factors,  our systems may have a lengthy sales cycle,  during which we
may expend substantial funds and management effort.

      The semiconductor industry is based on rapidly changing technology.

      We rely heavily on the  development  of new and  improved  products by the
companies,  such as Lam and Axcelis, from which we obtain systems and parts, and
we seek to maintain  close  relationships  with our customers in order to remain
responsive to their product needs.  In addition,  we engage in  development  and
improvement of the products we manufacture.  As is typical in the  semiconductor
capital equipment  market,  we have experienced  delays from time to time in the
introduction of and certain technical  difficulties with certain of our products
and product enhancements.

      Our success in acquiring or developing  and then selling  systems  depends
upon a variety of factors. These include product selection, timely and efficient
completion   of  product   design   and   development,   timely  and   efficient
implementation  of assembly  processes,  product  performance in the field,  and
effective  sales  and  marketing.  There  can be no  assurance  that  we will be
successful in selecting,  developing,  acquiring, and marketing new products, or
in enhancing  our existing  products.  In addition,  we could incur  substantial
unanticipated  costs to ensure the  functionality  and reliability of our future
product  introductions  early in their product life cycles. If new products have
reliability or quality problems,  reduced orders, or higher manufacturing costs,
then  delays in  collecting  accounts  receivable  and  additional  service  and
warranty  expenses may result.  Any of these events could  materially  adversely
affect our business, financial condition or results of operations.

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

      We derive a substantial  percentage of our revenues from a limited  number
of  products,  and we expect  these  products to continue to account for a large
percentage of our revenues in the near term.  Continued market acceptance of our
primary products is,  therefore,  critical to our future success.  Our business,
operating  results,  financial  condition,  and cash flows  could  therefore  be
adversely affected by:

      o     a decline in demand for even a limited number of our products;

      o     a failure to achieve continued market acceptance of our key
            products;


                                       18
<PAGE>

      o     a more desirable version of products being offered by a competitor
            in the market we participate in;

      o     technological change that we are unable to address with our
            products; and

      o     we will not have the benefit of relying on revenues derived from
            other operations.

      We may experience supply shortages.

      We use numerous suppliers to obtain parts, components,  sub-assemblies and
final products.  Although we make  reasonable  efforts to ensure that such parts
are available  from multiple  suppliers,  certain key parts may only be obtained
from a single or  limited  source.  These  suppliers  are in some  cases  thinly
capitalized,  independent  companies that generate significant portions of their
business  from us and a small  group of  other  companies  in the  semiconductor
industry.  We seek to reduce our  dependence  on the  limited  group of sources.
However, disruption or termination of certain of those suppliers could occur and
certain of our competitors,  including Lam and Axcelis,  have experienced supply
shortages  in the past.  Such  disruptions  could have an adverse  effect on our
operations.  A prolonged inability to obtain certain parts could have a material
adverse  effect on our business,  financial  condition or results of operations,
and could result in our inability to meet customer demands on time.

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

      In 2004, approximately 36% of our revenues resulted from sales outside the
U.S., with an increasing percentage of sales to customers headquartered in Asia.
Managing our global operations presents challenges,  including periodic regional
economic  downturns,  trade balance  issues,  varying  business  conditions  and
demands,  political  instability,  variations  in  enforcement  of  intellectual
property and  contract  rights in different  jurisdictions,  differences  in the
ability to develop  relationships  with  suppliers  and other local  businesses,
changes in U.S. and  international  laws and  regulations  including U.S. export
restrictions,  fluctuations in interest and currency exchange rates, the ability
to  provide  sufficient  levels of  technical  support in  different  locations,
cultural  differences,  shipping delays and terrorist acts or acts of war, among
other risks.  Many of these challenges are present in China,  which represents a
large  potential  market for  semiconductor  equipment  and where we  anticipate
significant  opportunity for growth.  Global  uncertainties  with respect to: 1)
economic growth rates in various countries;  2) the sustainability of demand for
electronics  products;  3) capital spending by semiconductor  manufacturers;  4)
price weakness for certain  semiconductor  devices; and 5) political instability
in regions where we have operations, such as Asia, may also affect our business,
financial condition and results of operations.

      We  are  exposed  to  risks  as  a  result  of  ongoing   changes  in  the
semiconductor industry.

      Ongoing  changes in the  semiconductor  industry,  including  more complex
technology   requirements,   the  growth  in  Asia,   increasing   pressure   on
semiconductor  manufacturers  to allocate  resources to activities  that enhance
their competitive advantage, the increasing significance of consumer electronics
as a driver for demand for  semiconductors and the related focus on lower costs,
have in turn  resulted in the  increasing  importance of spares and service as a
growing percentage of semiconductor equipment suppliers' business. These changes
are also requiring  semiconductor  manufacturing  equipment suppliers to provide
increasing  levels of process  integration  support.  If we do not  successfully
manage the risks resulting from these changes in the semiconductor industry, our
business,  financial condition and results of operations could be materially and
adversely affected.

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

      Our customer base has historically been highly concentrated. Orders from a
relatively limited number of semiconductor manufacturers have accounted for, and
likely will  continue to account  for, a  substantial  portion of our net sales,
which may lead customers to demand pricing and other terms less favorable to us.
In addition, sales to any single customer may vary significantly from quarter to
quarter.


                                       19
<PAGE>

If current customers delay, cancel or do not place orders, we may not be able to
replace these orders with new orders. As our products are configured to customer
specifications,  changing,  rescheduling  or  canceling  orders  may  result  in
significant and often non-recoverable  costs. The resulting  fluctuations in the
amount  of or terms for  orders  could  have a  material  adverse  effect on our
business, financial condition and results of operations.

      We are exposed to risks associated with acquisitions.

      An important element of our management  strategy is to review  acquisition
prospects  that would  complement  our  existing  products,  augment  our market
coverage and distribution ability, or enhance our technological capabilities. As
a result,  we may make  acquisitions  of  complementary  companies,  products or
technologies,  or  we  may  reduce  or  dispose  of  certain  product  lines  or
technologies, which no longer fit our long-term strategies. Managing an acquired
business,  disposing  of product  technologies  or  reducing  personnel  entails
numerous operational and financial risks, including difficulties in assimilating
acquired operations and new personnel or separating existing business or product
groups,  diversion of management's  attention away from other business concerns,
amortization of acquired  intangible  assets and potential loss of key employees
or customers of acquired or disposed  operations  among others.  There can be no
assurance  that we will be able to  achieve  and  manage  successfully  any such
integration  of  potential   acquisitions,   disposition  of  product  lines  or
technologies,  or reduction in personnel or that our management,  personnel,  or
systems will be adequate to support continued  operations.  Any such inabilities
or inadequacies could have a material adverse effect on our business,  operating
results, financial condition, and cash flows.

      In addition,  any acquisitions could result in changes such as potentially
dilutive issuances of equity  securities,  the incurrence of debt and contingent
liabilities,  and the amortization of related  intangible  assets,  and goodwill
impairment charges, any of which could materially adversely affect our business,
financial  condition,  and results of operations  and/or the price of our common
stock.

      In the past our  auditors  have  expressed  doubt  about  our  ability  to
continue as a going concern.

      Our  independent  auditors  did not  express  doubt  about our  ability to
continue as a going  concern in the audited  financials  filed with this report,
based on our improved results from operations. However, our financial statements
have  contained  going  concern  opinions  in prior  years,  and there can be no
assurance that future  financial  statements will not contain such an opinion if
our results from operations decline.

      Our ability to raise additional financing is uncertain.

      We currently  anticipate  that our available cash resources  combined with
our anticipated  revenues will meet any immediate working capital needs we have.
However,  we face  repayment  obligations of  approximately  $2.5 million during
2005. A shortfall in projected  revenues  primarily  from our contracts with Lam
and Axcelis would  negatively  impact any future expansion of our operations and
our ability to repay our obligations.  Although we have been actively  searching
for available  capital,  we do not have any current  arrangements for additional
outside  sources of  financing  and we cannot  provide any  assurance  that such
financing will be available.

      There is a limited market for our common stock.

      Currently only a very limited  trading market exists for DND common stock.
Our common stock trades on the OTC  Bulletin  Board under the symbol  "DNDT.OB."
The  OTC  Bulletin  Board  is  a  limited  market  and  subject  to  substantial
restrictions   and   limitations  in  comparison  to  the  NASDAQ  system.   Any
broker/dealer  that  makes a market  in our stock or other  person  that buys or
sells our stock could have a significant  influence  over its price at any given
time.  We cannot  assure  our  shareholders  that a market for


                                       20
<PAGE>

our stock will be sustained. There is no assurance that our shares will have any
greater liquidity than shares that do not trade on a public market.

      Our common stock is subject to penny stock regulation.

      Our shares are subject to the  provisions  of Section 15(g) and Rule 15g-9
of the  Securities  Exchange  Act of 1934,  as  amended  (the  "Exchange  Act"),
commonly referred to as the "penny stock" rule. Section 15(g) sets forth certain
requirements for transactions in penny stocks and Rule 15g-9(d)(1)  incorporates
the  definition  of penny stock as that used in Rule 3a51-1 of the Exchange Act.
The Commission  generally defines penny stock to be any equity security that has
a market price less than $5.00 per share,  subject to certain  exceptions.  Rule
3a51-1  provides that any equity security is considered to be penny stock unless
that  security  is:  registered  and  traded on a national  securities  exchange
meeting  specified  criteria set by the Commission;  authorized for quotation on
The NASDAQ Stock Market;  issued by a registered  investment  company;  excluded
from the  definition  on the basis of price (at  least  $5.00 per  share) or the
registrant's  net  tangible  assets;  or  exempted  from the  definition  by the
Commission.  Since our shares are  deemed to be "penny  stocks",  trading in the
shares  will  be  subject  to  additional   sales   practice   requirements   on
broker-dealers who sell penny stocks to persons other than established customers
and accredited investors.

ITEM 7. FINANCIAL STATEMENTS

      The information  required by this Item is submitted as a separate  section
of this Form 10-KSB. See Item 13.

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE

      None.

ITEM 8A. 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 prior to the filing  date of this  report.  Based on that
evaluation,  our principal executive officer 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.

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS; COMPLIANCE WITH SECTION 16(A) OF THE
        EXCHANGE ACT

      The names of our directors and executive officers, their ages, and certain
other information about them are set forth below:


                                       21
<PAGE>

        Name                Age                 Position
----------------------    -------     ------------------------------------------

Douglas N. Dixon             62       CEO, President, and Chairman

G. Dennis Key*               62       CFO, Secretary and Director

Lowell W. Giffhorn*          58       Director, Chair of Audit Committee

Ernie L. Recsetar*           51       Director, Chair of Compensation Committee

Ronny Baker                  59       Controller

*     Directors currently serving as members of the Company's Audit Committee.

      Douglas N. Dixon has been the  CEO/President and Chairman of DND since the
Company's formation,  and was a co-founder of ASI. Mr. Dixon's experience in the
semiconductor  capital equipment industry goes back to 1966 when he started with
Fairchild  Semiconductor.  Later,  Mr. Dixon was  employee  number 25 at Applied
Materials  (today AMAT is the largest  supplier of "chip-gear" in the world) and
went on to be a  co-founder  of  Gemini  Research,  a  chip-gear  firm  that was
acquired by Lam Research in 1988.  Mr. Dixon stayed on with Lam for two years in
sales management  before leaving in 1990 to co-found ASI. Mr. Dixon is a US Navy
Veteran having served with a flight squadron on the aircraft carrier USS Hancock
while stationed near Asia in the 1960s.

      G. Dennis Key is the CFO of DND, and the  President/CFO/CEO  of ASI. Prior
to January 1, 2004,  Mr. Key served as the  President  of the Texas  Division of
Aspect  Semiquip  International,  and then since July of 2003,  as  President of
Aspect Systems, Inc. He served as the Vice President,  Worldwide Sales and Field
Operations for Lam Research, Inc. from 1992 to 1996. Mr. Key was also previously
employed as  Vice-President,  Sales and Marketing of Varian  Corporation 1997 to
1998,  and in a consulting  role as  Vice-President,  Business  Development  for
GlobiTech,  Inc. from  2000-2002.  Mr. Key began serving as a director of DND in
August of 2003,  began  serving as Secretary of DND in January of 2004 and began
serving as DND's CFO in November of 2003.

      Lowell  Giffhorn  has  served  as CFO for  Patriot  Scientific  (PTSC),  a
publicly  traded  company,  since 1996. In August 1999,  Lowell was appointed to
PTSC's  Board of  Directors.  PTSC is a public firm based in San Diego that owns
and develops intellectual property associated with embedded technology. Prior to
joining PTSC, Mr. Giffhorn was CFO of Sym-Tek Systems,  Inc., and Vice President
of Finance for its successor Sym-Tek Inc., a major supplier of capital equipment
to the semiconductor industry. Mr. Giffhorn has more than 25 years of experience
in  strategic  corporate  finance.  Mr.  Giffhorn  obtained a M.B.A  degree from
National  University  in 1975 and he  obtained a B.S.  in  Accountancy  from the
University of Illinois in 1969. Mr. Giffhorn chairs the DND audit committee, and
has served as a director of DND since October of 2002.

      Ernie L.  Recsetar  has been the CEO and  President  of  Stirling  Capital
Corporation since 1995. Mr. Recsetar has participated in the structuring of more
than $15 billion in commercial financings during his approximate 20 year career.
He served as General Counsel to Greyhound Financial  Corporation from 1990-1995;
LINC Group in Chicago;  Corporate  Counsel to Heller  Financial in Chicago;  Tax
Attorney with Arthur Young and Company and  Corporate  Attorney with McBride and
Baker In Chicago.  Mr. Recsetar received his Juris Doctorate (JD) and Masters of
Business Administration (MBA) from Emory University,  Atlanta, Georgia; Bachelor
of Science of Business  Administration  (BS) from the University of Illinois and
Masters of Law of Taxation (LLM) from Kent College of Law, Chicago. Mr. Recsetar
chairs the DND compensation committee, and has served as a director of DND since
September, 2002.

      Ronny Baker has served as Controller of ASI since October of 2001,  and as
Controller of DND since  September,  2002.  Prior to October of 2001,  Mr. Baker
held accounting  positions with ASI and


                                       22
<PAGE>

Semiquip,  Inc.  beginning in October of 2000.  From June 1999 to June 2001, Mr.
Baker was Controller of Dallas Hospitality Co. which managed a conference center
and  cafeteria in an office tower in Dallas.  From 1978 to 1998 and from 1972 to
1978,  Mr. Baker held  various  accounting  positions  with  Southland  Corp and
Monsanto Chemical respectively. Mr. Baker also served in the U.S. Air Force from
1968 to 1972.

      There is no family relationship  between any of our executive officers and
directors.  Our  directors  serve  one-year  terms  until their  successors  are
elected. Our executive officers are elected by our Board of Directors, and serve
one-year terms until their successors are elected.

Committees of the Board of Directors

      Our Board has standing Audit and Compensation Committees.

      Audit  Committee.  The Audit  Committee is  responsible  for assisting the
Board of  Directors in  monitoring  and  oversight  of (1) the  integrity of the
Company's  financial  statements  and its  systems of  internal  accounting  and
financial  controls and (2) the  independence  and  performance of the Company's
independent auditors. The Audit Committee, which met three times during 2004, is
composed of one  employee  director and two other  directors,  both of whom were
determined  by the Board to be  independent  directors.  During 2004,  the Audit
Committee consisted of Mr. Giffhorn (Chairman), Mr. Recsetar, and Mr. Key.

      The  Board of  Directors  has  determined  that Mr.  Giffhorn  is an audit
committee  financial expert as defined in Item 401 of Regulation S-B promulgated
by the Securities and Exchange Commission. The Board's conclusions regarding the
qualifications of Mr. Giffhorn as an audit committee financial expert were based
on his service as a chief financial  officer of a public company and his degrees
in accounting and business administration.

      Compensation   Committee.   The  Compensation  Committee  establishes  the
compensation  philosophy  for DND and has all  the  authority  of the  Board  of
Directors to act or exercise  corporate  powers with respect to the compensation
of the executive  officers and the  administration of DND's equity  compensation
plans.  The  Compensation  Committee  met once  during  2004.  The  Compensation
Committee is composed of Mr. Recsetar, as Chairman, and Mr. Giffhorn.

Code of Ethics

      DND has set forth its policy on  ethical  behavior  in a  document  called
"Code of Business Conduct and Ethics." This policy applies to the members of our
Board  of  Directors  and all  employees,  including  (but not  limited  to) our
principal executive officer,  principal financial officer,  principal accounting
officer or controller  and persons  performing  similar  functions.  This policy
comprises written standards that are reasonably designed to deter wrongdoing and
to promote the behavior  described in Item 406 of Regulation S-B  promulgated by
the Securities and Exchange  Commission.  No waivers of the Code were granted in
2004.

Section 16(a) Beneficial Ownership Reporting Compliance

      Section  16(a) of the  Exchange  Act  requires  the  Company's  directors,
executive  officers  and  persons who own more than 10% of the  Company's  Stock
(collectively,  "Reporting  Persons")  to file with the SEC  initial  reports of
ownership  and changes in ownership of the  Company's  Common  Stock.  Reporting
Persons are  required by SEC  regulations  to furnish the Company with copies of
all Section 16(a) reports they file. To the Company's knowledge, based solely on
its review of the copies of such  reports  received  or written  representations
from certain Reporting Persons that no other reports were required,  the Company
believes  that during its fiscal year ended  December  31, 2004,  all  Reporting
Persons complied with all applicable filing requirements except as follows: each
of the following


                                       23
<PAGE>

Reporting Persons failed to timely file one or more Forms, as indicated: Douglas
Dixon (one Form 5), and Ronny  Baker  (one Form 4).  Mr.  Dixon and Mr.  Baker's
delinquent forms have now been filed.

ITEM 10. EXECUTIVE COMPENSATION

Summary of Cash and Certain Other Compensation

      The following table provides  certain summary  information  concerning the
compensation  earned by the Company's  Chief  Executive  Officer and each of the
Company's  other  most  highly  compensated  executive  officers,  for  services
rendered in all  capacities to the Company and its  subsidiaries  for the fiscal
years ended December 31, 2002, 2003 and 2004. The following information includes
the dollar value of base  salaries,  bonus  awards,  the number of stock options
granted and certain other  compensation,  if any, whether paid or deferred.  The
listed individuals shall be hereinafter referred to as the "Named Officers."

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Long Term Compensation
                                                   Annual                 ------------------------------------------
                                               Compensation                          Awards                 Payouts
------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Securities
                                                                           Restricted       Underlying        LTIP       All Other
                                                   Salary       Bonus     Stock Awards     Options/SARs      Payouts    Compensation
Name and Principal Position            Year          ($)         ($)          ($)              (#)             ($)           ($)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>         <C>          <C>            <C>          <C>                <C>       <C>
------------------------------------------------------------------------------------------------------------------------------------
                                       2002        104,567           0         0                    0           0         8,763(2)
                                       ---------------------------------------------------------------------------------------------
Douglas N. Dixon (CEO)(1)              2003        120,000           0         0              375,000           0        11,501(3)
                                       ---------------------------------------------------------------------------------------------
                                       2004        150,000      24,068         0                    0           0        14,165(6)
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
G. Dennis Key (CFO; CEO
and CFO of ASI)                        2003        141,000           0         0            1,050,000           0        10,224(4)
------------------------------------------------------------------------------------------------------------------------------------
                                       2004        150,000      37,500         0                    0           0        14,165(7)
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
Scott Magoon (former director          2002        105,692           0         0                    0           0         6,293(5)
of ASI)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)   Effective January 1, 2004, Mr. Dixon resigned as CEO of Aspect Systems,
      Inc, the Company's subsidiary. He remains CEO of the Company.

(2)   Represents $2,163 for insurance premiums and $6,600 for automobile
      allowance.

(3)   Represents $4,901 for insurance premiums and $6,600 for automobile
      allowance.

(4)   Represents $4,224 for insurance premiums and $6,000 for automobile
      allowance.

(5)   Represents $6,293 for automobile allowance.

(6)   Represents $7,565 for insurance premiums and $6,600 for automobile
      allowance.

(7)   Represents $7,565 for insurance premiums and $6,600 for automobile
      allowance.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values

      The following table sets forth certain information with respect to options
and  warrants  exercised  by the Named  Officers  during the  fiscal  year ended
December  31,  2004.  In  addition,  the table  sets  forth the number of shares
covered by unexercised  stock options and warrants held by the Named Officers as
of December 31,  2004,  and the value of  "in-the-money"  stock  options,  which
represents  the positive  spread between the exercise price of a stock option or
warrant and the market price of the shares  subject to such option or warrant as
of December 31, 2004.


                                       24
<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                           Number of Securities            Value of Unexercised
                                                          Underlying Unexercised      In-the-Money Options at Fiscal
                                                      Options at Fiscal Year-End(#)           Year-End($)(1)
----------------------------------------------------------------------------------------------------------------------
                          Number of
                           Shares
                         Acquired on       Value
         Name           Exercise (#)   Realized ($)    Exercisable    Unexercisable     Exercisable    Unexercisable
----------------------------------------------------------------------------------------------------------------------
<S>                           <C>           <C>         <C>              <C>             <C>              <C>
Douglas N. Dixon              0             --            132,703        242,297         $ 16,524         $29,076
----------------------------------------------------------------------------------------------------------------------
G. Dennis Key                 0             --          1,050,000             --         $126,000          _____
----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Value is based on average  bid price as  reflected  on the OTCBB on December
31, 2004, which may not represent actual transactions, less the exercise price.

Employment Agreements and Termination of Employment

      DND has not entered into any employment  agreements  with its  management,
other than an employment  agreement with its CEO,  Douglas Dixon,  dated June 1,
2001,  and an employment  agreement  with its CFO, G. Dennis Key,  dated July 1,
2003.  The  agreement  with Mr. Dixon is  terminable  by either Mr. Dixon or the
Company at the anniversary  date of the agreement each year upon 60 days written
notice.  Under the  agreement,  Mr.  Dixon  receives  an annual  base  salary of
$150,000,  and  receives  certain  benefits  and  bonuses  as  described  in the
agreement.  The  agreement  with Mr. Key provides for Mr.  Key's  employment  as
President  and CEO of ASI, and also  provides for Mr. Key's  appointment  to the
Board of Directors of both the Company and ASI. This  agreement is terminable by
Mr. Key with cause only upon 30 days  written  notice,  and by the Company  with
cause only upon 14 days written notice. Under the agreement, Mr. Key receives an
annual base salary equal to that paid to Mr.  Dixon (or $150,000 if Mr.  Dixon's
agreement terminates), and receives certain benefits and bonuses as described in
the agreement.

      Mr. Dixon has a separation agreement,  under which Mr. Dixon is to receive
a  continued  salary at the  amount  Mr. Key is paid,  a car  allowance,  health
insurance,  life insurance and disability  insurance  through December 31, 2005.
This  agreement was triggered  when Mr. Key became the President and CEO of ASI.
Pursuant to a separate agreement, Mr. Key has an option to acquire 4,933,333 out
of the DND shares owed by Mr.  Dixon.  The exercise  price of such options is $1
per share.

Director Compensation

      Members  of the  Board of  Directors  do not  generally  receive  any cash
compensation  for their  service as  Directors  but the  Company  awarded  stock
options to  directors  for their  service  during the 2003  fiscal  year and Mr.
Giffhorn  received  $1,000 during 2003 as  compensation  for Board service.  All
expenses incurred by directors for meeting  attendance or out of pocket expenses
connected directly with their Board representation are reimbursed by DND.

      Director  liability  insurance may be provided to all members of the Board
of Directors.  DND has not yet obtained such insurance and is currently checking
into specifics for available cost and coverage.  A specific time frame to obtain
the insurance has not been set. No  differentiation  is made in the compensation
of "outside directors" and those employees of DND serving in that capacity.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

      As of March 31, 2005, there were 23,515,000 common shares outstanding. The
following tabulates holdings of shares of DND by each person who, subject to the
above,  as of March 31, 2005,


                                       25
<PAGE>

holds of record or is known by management to own beneficially  more than 5.0% of
the common  shares  and,  in  addition,  by all  directors  and  officers of DND
individually and as a group.

                      SHARE OWNERSHIP AS OF MARCH 31, 2005

<TABLE>
<CAPTION>
                                                                       Options Exercisable                             Percent of
             Name and Address of                    Amount of           Within 60 Days of       Total Shares         Common Shares
             Beneficial Owner(1)               Common Shares Owned        March 31, 2005      Beneficially Owned         Owned(2)
<S>                                                   <C>                    <C>                   <C>                      <C>
   Douglas Dixon, Chairman of the Board,             14,200,000                132,703            14,332,703               60.6%
   Chief Executive Officer and President
                                                      1,100,000(3)           1,050,000(4)          2,150,000                8.7%
   G. Dennis Key, Chief
   Financial Officer and Director

   Ernie Recsetar, Director                                   0                137,500               137,500                   *

   Lowell Giffhorn, Director                                  0                250,000               250,000                1.1%

   Ronny Baker, Controller                               10,000                 39,583                49,583                   *

   Scott Magoon                                       2,000,000                     -0-            2,000,000                8.5%
   5709 Charleston Dr
   Frisco, TX 75035

   All Officers and Directors                        15,310,000              1,609,786            16,919,786               67.3%
   as a group (5 persons)
</TABLE>

* Less than one percent of the outstanding Common Stock.

(1) Except as otherwise noted, the address for each of these  individuals is c/o
DND Technologies, Inc., 375 E. Elliot Road, Bldg. 6, Chandler, Arizona 85225.

(2)  Percentage  ownership  is  based  on  23,515,000  shares  of  Common  Stock
outstanding  on March 31, 2005.  Shares of Common Stock subject to stock options
which are currently  exercisable or will become exercisable within 60 days after
March 31, 2005 are deemed outstanding for computing the percentage  ownership of
the person or group holding such  options,  but are not deemed  outstanding  for
computing the percentage ownership of any other person or group.

(3) These shares have not yet been issued to Mr. Key.

(4) In addition to options to purchase 1,050,000 shares granted to him under the
2003  Option  Plan,  Mr. Key has an  immediately  exercisable  option to acquire
4,933,333  shares out of the DND shares owed by Mr. Dixon. The exercise price of
such options is $1 per share.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      On December  31, 1997 and March 6, 1998,  the Company  borrowed a total of
$120,000  from  Douglas  Dixon  through two  promissory  notes.  These notes are
unsecured and were due on December 31, 1998.  The notes have not been repaid and
are accruing  interest at 7%,  compounded  daily, with accrued interest totaling
approximately  $44,000 at December  31,  2004.  The notes are payable on demand,
and, while it is unlikely that Mr. Dixon will require payment in the foreseeable
future, if he were to do so, the Company may have difficulty  repaying the notes
immediately.


                                       26
<PAGE>

ITEM 13. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K

      (a) The following documents are filed as part of this report:

<TABLE>
<CAPTION>
                                                                                                   Page Number
                                                                                                   -----------
<S>                                                                                                       <C>
          1. Financial Statements:

             Report of Independent Auditors                                                             F-1

             Consolidated Balance Sheets at December 31, 2004                                           F-2

             Consolidated Statements of Operations for each of the two years
             ended December 31, 2004                                                                    F-4

             Consolidated Statements of Stockholders' Deficit for each of the two years
             ended December 31, 2004                                                                    F-6

             Consolidated Statements of Cash Flows for each of the two years
             ended December 31, 2004                                                                    F-7

             Notes to Consolidated Financial Statements                                                 F-9

             Exhibits included or incorporated herein:  See Exhibit Index.
</TABLE>

      (b) Reports on Form 8-K:

      On  December  17,  2004,  the Company  filed a Current  Report on Form 8-K
announcing  the  execution of documents  with Merrill Lynch  Business  Financial
Services.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

      The following table presents fees for  professional  services  rendered by
Farber  and  Hass,  LLP for  the  audit  of the  Company's  annual  consolidated
financial  statements  for  fiscal  2004 and  2003,  and fees  billed  for other
services rendered by Farber and Hass, LLP:

                                                     2004             2003
                                                     ----             ----
         Audit Fees                                $75,667           $51,974
         Audit related fees                        $    -0-          $    -0-
         Tax Fees                                  $    -0-          $    -0-
         All other fees                            $    -0-          $    -0-
                       Total Fees                  $75,667           $51,794

      The audit  committee  pre-approves  all auditing and  permitted  non-audit
services to be performed for the Company by its independent  auditor,  including
the fees and terms of those services.


                                       27
<PAGE>
                                   SIGNATURES

      In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                       DND TECHNOLOGIES, INC.,
                                       a Nevada corporation


                                       By: /s/Douglas N. Dixon
                                           -------------------
                                           Douglas N. Dixon
                                           Chief Executive Officer and Director

                                POWER OF ATTORNEY

      KNOW ALL  PERSONS BY THESE  PRESENTS,  that each  person  whose  signature
appears   below   constitutes   and   appoints   Douglas   N.   Dixon,   his/her
attorney-in-fact,  with the power of  substitution,  for  him/her in any and all
capacities,  to sign any amendments to this Report on Form 10-K, and to file the
same, with Exhibits thereto and other documents in connection therewith with the
Securities  and Exchange  Commission,  hereby  ratifying and confirming all that
said  attorney-in-fact,  or substitute or substitutes may do or cause to be done
by virtue hereof.

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

<TABLE>
<CAPTION>
       Signature                            Title                           Date
       ---------                            -----                           ----
<S>                              <C>                                      <C>
/s/ Douglas N. Dixon             Chief Executive Officer and Director     April 14, 2005
--------------------------
Douglas N. Dixon

/s/ G. Dennis Key                Chief Financial Officer and Director     April 14, 2005
--------------------------
G. Dennis Key

/s/ Ernie L. Recsetar            Director                                 April 14, 2005
--------------------------
Ernie L. Recsetar

/s/ Lowell W. Giffhorn           Director                                 April 14, 2005
--------------------------
Lowell W. Giffhorn
</TABLE>

<PAGE>

                                  EXHIBIT INDEX

Exhibit No.    Description

2.1(3)         Agreement and Plan of Reorganization, dated May 15, 2002, between
               ASI, Zurickirch Corp. and John Chris Kirch

2.2(3)         First  Amendment to Agreement and Plan of  Reorganization,  dated
               August 2, 2002

3.1(4)         Restated Articles of Incorporation

3.2(4)         Restated Bylaws

3.3(2)         First Amendment to Articles of Incorporation

10.1(5)        Asset Sale and License Agreement, dated November 8, 2002, between
               Lam Research Corporation and Aspect Systems, Inc.

10.2(6)        Employment Agreement, dated June 1, 2001, between Aspect SemiQuip
               International, Inc. and Douglas Dixon

10.5(7)        Employment Agreement, dated July 1, 2003, between Aspect Systems,
               Inc. and G. Dennis Key

10.6(7)        License  Agreement,  dated  November  3,  2003,  between  Axcelis
               Technologies, Inc. and Aspect Systems, Inc.

10.7(7)        First  Amendment to Lease,  dated March 10, 2000,  between Aspect
               Systems, Inc. and Teachers Insurance and Annuity Association

10.8(7)        Second  Amendment to Lease,  dated  February  23,  2004,  between
               Aspect   Systems,   Inc.  and  Teachers   Insurance  and  Annuity
               Association

10.9(8)        Agreement on Outstanding  Aspect  Payables,  dated June 25, 2004,
               between Aspect Systems, Inc. and Lam Research Corporation

10.10(9)       License Agreement,  dated August 2, 2004, between Aspect Systems,
               Inc. and Axcelis Technologies, Inc.

10.11(10)      Term Loan and Security  Agreement,  dated May 14,  2004,  between
               Aspect  Systems,   Inc.  and  Merrill  Lynch  Business  Financial
               Services, Inc.

10.12(10)      Security Agreement, dated May 14, 2004, between DND Technologies,
               Inc. and Merrill Lynch Business Financial Services, Inc.

10.13(10)      Unconditional Guaranty by Douglas N. Dixon, dated May 14, 2004.

10.14(10)      Unconditional  Guaranty by DND Technologies,  Inc., dated May 14,
               2004.

14(7)          Code of Ethics

16.1(1)        Letter on Change in Certifying Accountant

21.1(11)       Subsidiaries of the Company

24.1(11)       Power of Attorney  (see  signature  page of this Annual Report on
               Form 10-KSB).

31.1(11)       Rule  13a-14(a)/15d-14(a)  Certification  of Principal  Executive
               Officer

31.2(11)       Rule  13a-14(a)/15d-14(a)  Certification  of Principal  Financial
               Officer

32.1(11)       Section 1350 Certification of CEO

32.2(11)       Section 1350 Certification of CFO

<PAGE>

(1)   Incorporated  by reference,  filed with the Company's  Form 8-K on January
      19, 2003.

(2)   Incorporated by reference,  filed with the Company's Form 8-K/A on October
      7, 2002.

(3)   Incorporated  by  reference,  filed  with  the  Company's  Form  8-K/A  on
      September 27, 2002.

(4)   Incorporated by reference, filed with the Company's Form SB-2 on August 3,
      2000.

(5)   Incorporated  by reference,  filed with the Company's Form 10-KSB on April
      15, 2003.

(6)   Incorporated  by  reference,  filed with the  Company's  Form  10-KSB/A on
      January 27, 2004.

(7)   Incorporated  by reference,  filed with the Company's Form 10-KSB on April
      14, 2004.

(8)   Incorporated by reference, filed with the Company's Form 8-K on August 17,
      2004.

(9)   Incorporated by reference,  filed with the Company's Form 10-QSB on August
      18, 2004.

(10)  Incorporated  by reference,  filed with the Company's Form 8-K on December
      17, 2004.

(11)  Filed herewith.

<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Of DND Technologies, Inc.:

We have audited the accompanying consolidated balance sheet of DND Technologies,
Inc. (the "Company") as of December 31, 2004 and the related consolidated
statements of operations, stockholders' deficit and cash flows for the two years
then ended. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the accompanying consolidated financial statements present
fairly, in all material respects, the financial position of the Company at
December 31, 2004 and the results of its operations and its cash flows for the
two years then ended in conformity with accounting principles generally accepted
in the United States.


/s/ Farber & Hass LLP
February 18, 2005
Camarillo, California


                                      F-1-
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2004

ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                           $   316,488
Accounts receivable, net                                              2,447,029
Inventories, net                                                      2,942,336
Prepaid expenses                                                        193,506
                                                                    -----------
Total current assets                                                  5,899,359
                                                                    -----------

PROPERTY AND EQUIPMENT, Net of accumulated depreciation                 288,316
                                                                    -----------
LICENSE AGREEMENTS, Net of accumulated amortization                   3,228,564
                                                                    -----------
OTHER                                                                    29,795
                                                                    -----------

TOTAL ASSETS                                                        $ 9,446,034
                                                                    ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Notes payable, current portion                                      $   688,845
Capital leases payable, current portion                                  18,641
Accounts payable and accrued expenses                                 3,731,836
Deposits from customers                                               1,102,919
Payables, Lam Research Corporation, current portion                     967,606
License and royalty payable, Axcelis                                    788,416
Amounts due to related party                                            420,400
                                                                    -----------
Total current liabilities                                             7,718,663
                                                                    -----------

CAPITAL LEASE PAYABLE                                                    16,307
                                                                    -----------
PAYABLES, LAM RESEARCH CORPORATION                                    3,317,684
                                                                    -----------
 NOTES PAYABLE                                                          748,739
                                                                    -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
Preferred stock                                                              --
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 to be issued                                                55,000
Accumulated deficit                                                  (4,390,519)
                                                                    -----------
Total stockholders' deficit                                          (2,355,359)
                                                                    -----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                         $ 9,446,034
                                                                    ===========

See accompanying notes.


                                      F-2-
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

                                                    2004               2003
                                                    ----               ----

REVENUE:
Systems and chillers                            $  9,682,656       $  2,626,534
Parts, assemblies and consumables                  5,897,285          5,746,576
Field service and training                           219,975            363,416
                                                ------------       ------------
Total revenue                                     15,799,916          8,736,526
                                                ------------       ------------

COST OF REVENUE:
Cost of revenues                                  10,237,166          5,499,564
Reserve for slow moving
  and obsolete inventory                            (770,642)         2,401,221
                                                ------------       ------------
Total cost of revenue                              9,466,524          7,900,785
                                                ------------       ------------

GROSS PROFIT                                       6,333,392            835,741
                                                ------------       ------------

OPERATING EXPENSES:
Research and development                              96,298             58,226
Sales and marketing                                2,517,649          1,147,977
General and administrative                         1,986,934          1,992,588
Lawsuit settlement                                   140,000                  0
                                                ------------       ------------
Total operating expenses                           4,740,881          3,198,791
                                                ------------       ------------

INCOME (LOSS) FROM OPERATIONS                      1,592,511         (2,363,050)

INTEREST EXPENSE                                    (356,689)          (373,208)
                                                ------------       ------------

INCOME (LOSS) BEFORE INCOME TAX EXPENSE            1,235,822         (2,736,258)

INCOME TAX EXPENSE                                       800                  0
                                                ------------       ------------

NET INCOME (LOSS)                               $  1,235,022       $ (2,736,258)
                                                ============       ============

                                                                     (Continued)


                                      F-3-
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF OPERATIONS - Continued
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

                                                      2004            2003
                                                      ----            ----

NET INCOME (LOSS)
  PER COMMON SHARE:
  Basic                                            $      .05     $     (.12)
                                                   ==========     ==========
  Diluted                                          $      .05     $      N/A
                                                   ==========     ==========

WEIGHTED AVERAGE
  NUMBER OF COMMON
  SHARES OUTSTANDING
  AND SUBSCRIBED:
      Basic                                        23,000,000     22,833,333
                                                   ==========     ==========
      Diluted                                      26,758,911            N/A
                                                   ==========     ==========

See accompanying notes.


                                      F-4-
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                       Common Stock                             Stock To Be Issued
                                 -------------------------      Paid-In       ------------------------   Accumulated
                                   Shares         Amount        Capital         Shares        Amount        Deficit         Total
                                 ----------    -----------    -----------     ---------     ----------   -----------    -----------
<S>                              <C>           <C>            <C>             <C>          <C>           <C>            <C>
BALANCE,
 JANUARY 1, 2003                 22,000,000    $    22,000    $ 1,798,160                                $(2,889,283)   $(1,069,123)

COMMON STOCK
 ISSUED FOR
 ACCOUNTS PAYABLE                 1,000,000          1,000        159,000                                                   160,000

STOCK TO BE ISSUED FOR OFFICER
COMPENSATION                                                                  1,100,000         55,000                       55,000

NET LOSS                                                                                                  (2,736,258)    (2,736,258)
                                ---------------------------------------------------------------------------------------------------

BALANCE,
 DECEMBER 31,2003                23,000,000         23,000      1,957,160     1,100,000         55,000    (5,625,541)    (3,590,381)

NET INCOME                                                                                                 1,235,022      1,235,022
                                ---------------------------------------------------------------------------------------------------
BALANCE,
 DECEMBER 31,2004                23,000,000    $    23,000    $ 1,957,160     1,100,000    $    55,000   $(4,390,519)   $(2,355,359)
                                ===========    ===========    ===========   ===========    ===========   ===========    ===========
</TABLE>

See accompanying notes.


                                      F-5-
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

                                                      2004              2003
                                                      ----              ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                 $ 1,235,022       $(2,736,258)
Adjustments to reconcile net income (loss)
  to net cash provided (used) by operating
  activities:
  Common stock to be issued                                              55,000
  Depreciation                                        179,861           197,033
  Amortization                                        547,000           436,292
  Provision for slow moving and
    obsolete inventories                              192,116         2,450,081
  Provision for doubtful accounts                                        24,375
  Loss on disposal of fixed asset                       2,349
  Changes in operating assets
    and liabilities:
    Accounts receivable                            (1,393,468)         (740,680)
    Other receivables                                                     6,236
    Inventories                                    (3,047,830)         (460,609)
    Prepaid expenses and other assets                 (22,089)          (45,626)
    Accounts payable and accrued expenses           1,965,824           489,279
    Deposits from customers                           897,919
    Accrued expenses and amounts due
      to related parties                              360,381           247,391
                                                  -----------       -----------
Net cash provided (used)
  by operating activities                             917,085           (77,486)
                                                  -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment                 (58,552)          (14,647)
                                                  -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt               42,156           631,190
Principal payments on long-term debt                 (742,002)         (581,136)
                                                  -----------       -----------
Net cash provided (used) by financing
  activities                                         (699,846)           50,054
                                                  -----------       -----------

NET INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALANTS                                    158,687           (42,079)

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

CASH AND CASH EQUIVALENTS,
  END OF PERIOD                                   $   316,488       $   157,801
                                                  ===========       ===========


                                      F-6-
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

                                                        2004              2003
                                                        ----              ----

SUPPLEMENTARY DISCLOSURE
   OF CASH FLOW INFORMATION:
Cash paid for interest                                $296,290          $397,217
                                                      ========          ========
Cash paid for taxes                                   $      0          $      0
                                                      ========          ========

SCHEDULE OF NON-CASH INVESTING
   AND FINANCING ACTIVITIES:
Cancellation of capital lease
  and return of asset to vendor                       $  9,202          $      0
                                                      ========          ========
Common stock issued for
  accounts payable                                                      $160,000
                                                                        ========
Acquisition of equipment
  through capital equipment
  financing                                                             $ 42,636
                                                                        ========
License agreement acquired
  through debt financing                                                $150,000
                                                                        ========

See accompanying notes.

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


                                      F-7-
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

1.    GENERAL

      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 ASI MX-1 and ASI MX-10 platforms (formerly Matrix System One and Ten),
      and the Arista and Arista Dual platforms (formerly Matrix Bobcat and
      Cheetah). Elements of support include spare parts and assemblies, and
      various engineering services.

      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.


                                      F-8-
<PAGE>

      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. ASI does require advance
      payments on certain orders of large systems, which are classified as
      "Deposits from customers" in the accompanying balance sheet.

      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, 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. Inventory with no sales or
      usage within the prior 12 months is considered obsolete. Inventory in
      excess of a 12 month supply, is considered excessive and slow-moving. The
      reserves are evaluated on a quarterly basis and adjusted for the full
      carrying value of obsolete, excessive and slow-moving inventory.

      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:


                                      F-9-
<PAGE>

      Office furniture, fixtures and equipment                         5-7 Years
      Leasehold improvements and capital leases                    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 years ended December 31, 2004
      and 2003.

      Product Warranty Provision - ASI provides a warranty provision on sales of
      its systems to cover anticipated repairs and/or replacement. This warranty
      ranges from ninety days to twelve months from date of acceptance.

      A summary of the warranty liability is as follows:

      Balance, January 1, 2004                                        $  46,622
      Addition to warranty liability                                    559,256
      Expired warranties                                                (72,891)
      Payment of warranty costs                                        (180,370)
                                                                      ---------

      Balance, December 31, 2004                                      $ 352,617
                                                                      =========

      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.

      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," (SAB 101). 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 and completed.


                                     F-10-
<PAGE>

      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
      years ended December 31, 2004 and 2003, the Company charged to operations
      $0 and $4,173, 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.

      Net Loss - Basic income (loss) per common share is computed by dividing
      net income (loss) available to common stockholders by the weighted-average
      number of common shares outstanding during the period. Diluted income
      (loss) per common share is computed by dividing net income (loss)
      available to common stockholders by the weighted-average number of common
      shares outstanding plus an assumed increase in common shares outstanding
      for potentially dilutive securities, which consist of options. Potentially
      dilutive shares are excluded from the computation in loss periods, as
      their effect would be anti-dilutive. The dilutive effect of options to
      acquire common stock is measured using the treasury stock method. The
      dilutive effect of potentially issuable securities was 5,334,226 shares
      and 5,874,226 shares for the years ended at December 31, 2004 and 2003,
      respectively.

      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. As of Dec 31, 2004, the Company had $767,096 deposited in
      one banking institution. Only $100,000 of the balance is federally
      insured.


                                     F-11-
<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 December
      31, 2004, the Company had two customers whose balances were 20% and 25% of
      net accounts receivable.

      Significant Customers - For the year ended December 31, 2004, the Company
      had no customers whose revenues exceeded 10% of total revenues. For the
      year ended December 31, 2003, the Company had two customers whose revenues
      exceeded 10% of total revenues, 17% and 12%. Revenues in 2004 and 2003
      outside the United States include Europe 14% and 15%, and Asia 22% and
      11%, respectively.

      Significant Suppliers - For the years ended December 31, 2004 and 2003,
      approximately 25% and 26%, respectively, of gross inventory purchases were
      purchased from Lam. The Company expects to have significant purchases of
      inventory from Lam in the coming year.

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

      Disclosure About Fair Value of Financial Instruments - The Company
      estimates that the fair value of all financial instruments as of December
      31, 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.

      Stock Based Compensation - As permitted by FAS 123, as amended, the
      Company accounts for stock options issued to employees using the intrinsic
      value method as prescribed by APB 25. Under this method no expense is
      recognized for options issued with an exercise price equal to or greater
      that the market price of the


                                     F-12-
<PAGE>

      stock on the date of grant. Expense for options or warrants issued to
      non-employees is recorded in the financial statements at estimated fair
      value. For options issued to employees the Company is subject to proforma
      disclosures based on the estimated fair value of the options issued.

      The Black-Scholes option-pricing model was developed for use in estimating
      the fair value of traded options which have no vesting restrictions and
      are fully transferable. In addition, option valuation models require the
      input of highly subjective assumptions including the expected stock price
      volatility. Because the Company's stock options and warrants have
      characteristics different from those of traded options, and because
      changes in the subjective input assumptions can materially affect the fair
      value estimate, in management's opinion, the existing models do not
      necessarily provide a reliable single measure of the fair value of such
      stock options.

      For purposes of proforma disclosures, the estimated fair value of the
      options granted in 2003 is amortized to expense over the options' vesting
      periods. The Company's proforma information follows:

      Net income:
         As reported                                                  $1,235,022
         Proforma                                                     $1,213,665

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

      Recently Issued Accounting Pronouncements - In November 2004, the FASB
      issued SFAS No. 151, "Inventory Costs-an amendment of ARB. No. 43, Chapter
      4". This Statement amends the guidance in ARB No. 43, Chapter 4,
      "Inventory Pricing," to clarify the accounting for abnormal amounts of
      idle facility expense, freight, handling costs, and wasted material
      (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that "...
      under some circumstances, items such as idle facility expense, excessive
      spoilage, double freight, and re-handling costs may be so abnormal as to
      require treatment as current period charges...." This Statement requires
      that those items be recognized as current-period charges regardless of
      whether they meet the criterion of "so abnormal." In addition, this
      Statement requires that allocation of fixed production overheads to the
      costs of conversion be based on the


                                     F-13-
<PAGE>

      normal capacity of the production facilities. The Company will adopt this
      standard on January 1, 2006.

      In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
      Assets - an amendment of APB Opinion No. 29". This Statement amends APB
      Opinion 29 to eliminate the exception for nonmonetary exchanges of similar
      productive assets and replaces it with a general exception for exchanges
      of nonmonetary assets that do not have commercial substance. A nonmonetary
      exchange has commercial substance if the future cash flows of the entity
      are expected to change significantly as a result of the exchange. The
      Company will adopt this standard on January 1, 2006.

      In December 2004, the FASB issued SFAS No. 123R, "Share Based Payment".
      This Statement is a revision of FASB Statement No. 123, Accounting for
      Stock-Based Compensation. This Statement supersedes APB Opinion No. 25,
      Accounting for Stock Issued to Employees, and its related implementation
      guidance. This Statement establishes standards for the accounting for
      transactions in which an entity exchanges its equity instruments for goods
      or services. It also addresses transactions in which an entity incurs
      liabilities in exchange for goods or services that are based on the fair
      value of the entity's equity instruments or that may be settled by the
      issuance of those equity instruments. This Statement focuses primarily on
      accounting for transactions in which an entity obtains employee services
      in share-based payment transactions. This Statement does not change the
      accounting guidance for share-based payment transactions with parties
      other than employees provided in Statement 123 as originally issued and
      EITF Issue No. 96-18, "Accounting for Equity Instruments That Are Issued
      to Other Than Employees for Acquiring, or in Conjunction with Selling,
      Goods or Services." This Statement does not address the accounting for
      employee share ownership plans, which are subject to AICPA Statement of
      Position 93-6, Employers' Accounting for Employee Stock Ownership Plans.
      The Company will adopt this standard on January 1, 2006.

2.    ACCOUNTS RECEIVABLE

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

      Accounts receivable                                             $2,473,869
      Allowance for doubtful accounts                                     26,840
                                                                      ----------

      Net accounts receivable                                         $2,447,029
                                                                      ==========


                                     F-14-
<PAGE>

      Allowance for Doubtful Accounts:

      Balance, January 1, 2004                                         $ 34,000
      Reductions for the year                                            (7,160)
                                                                       --------

      Balance, December 31, 2004                                       $ 26,840
                                                                       ========

3.    INVENTORIES

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

      Parts and materials                                           $ 4,003,951
      Work-in-process                                                 1,052,496
      Allowance for obsolescence                                     (2,114,111)
                                                                    -----------

      Net inventories                                               $ 2,942,336
                                                                    ===========

      Allowance For Obsolescence:

      Balance, January 1, 2004                                      $ 3,126,222
      Provision                                                         192,116
      Reductions for the year                                        (1,204,227)
                                                                    -----------

      Balance, December 31, 2004                                    $ 2,114,111
                                                                    ===========

4.    PROPERTY AND EQUIPMENT

      Property and equipment and accumulated depreciation at December 31, 2004
      consist of:

      Office furniture, fixtures and equipment                       $  364,981
      Leasehold improvements                                            444,669
      Machinery and equipment                                           342,211
      Laboratory tools                                                   29,600
                                                                     ----------
                                                                      1,181,461
      Less accumulated depreciation                                     893,145
                                                                     ----------

      Total property and equipment                                   $  288,316
                                                                     ==========

5.    LICENSE AGREEMENT AND PAYABLES, 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 13) 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%.


                                     F-15-
<PAGE>

      On June 25, 2004, the Company signed an amendment to the November 2002
      Asset Purchase and License Agreement with Lam that calls for payments on
      the inventory purchases. The spares inventory payment plan calls for 30
      monthly installment payments of $28,220 beginning August 1, 2004 and
      ending January 1, 2007 with an additional payment of $90,000 that was due
      and paid on September 30, 2004. An additional inventory transfer of
      $65,000 took place in August 2004 and was added to this outstanding
      balance. The product group inventory payment plan calls for 18 monthly
      installments of $9,404 beginning August 1, 2004 and ending January 1,
      2006.

      Estimated amortization of the license agreement is as follows:

      December 31, 2005                                               $  523,551
      December 31, 2006                                                  523,551
      December 31, 2007                                                  523,551
      December 31, 2008                                                  523,551
      Thereafter                                                       1,134,360
                                                                      ----------
                                                                      $3,228,564
                                                                      ==========

      Future minimum payments under the agreements are as follows:

                                                  Inventory             License
                                                  ---------             -------

      December 31, 2005                           $  451,488          $  516,118
      December 31, 2006                              310,418             507,050
      December 31, 2007                               28,220             538,324
      December 31, 2008                                   --             571,527
      December 31, 2009                                   --             606,777
      Thereafter                                          --             755,368
                                                  ----------          ----------
                                                  $  790,126          $3,495,164
                                                  ==========          ==========

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

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

      In August 2004, the Company entered into an additional agreement with
      Axcelis acquiring an exclusive license to manufacture, sell and provide
      services and parts support for certain reactive ion etch semiconductor
      manufacturing equipment for wafer sizes up to


                                     F-16-
<PAGE>

      200mm now marketed under the ASI tradenames Arista and Arista Dual
      (formerly Matrix Bobcat and Cheetah). The agreement provides for a
      quarterly payment equal to 18% of net revenues from the sale of this
      product by the Company, beginning with the fourth quarter of 2004 and
      ending December 31, 2011, or until $750,000 (the license fee) has been
      paid, whichever occurs first, and payment of a declining royalty (from 10%
      down to 2%) on related sales over a period of time that ends December 31,
      2011.

      Estimated amortization of the license fee is as follows:

      December 31, 2005                                               $   21,428
      December 31, 2006                                                   21,428
      December 31, 2007                                                   21,428
      December 31, 2008                                                   21,428
      Thereafter                                                          41,074
                                                                      ----------
                                                                      $  126,786
                                                                      ==========

      The license and royalty payable at December 31, 2004 consisted of the
      following:

      License payable                                                 $  506,839
      Royalty payable                                                    281,577
                                                                      ----------
      Total license and royalty payable                               $  788,416
                                                                      ==========

7.    NOTES PAYABLE

      The Company's renegotiated term loan to Merrill Lynch
      bears interest at 2.00% plus the Prime Rate as
      published in the Wall Street Journal per annum. The
      loan is due March 2006 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 total assets
      ($9,446,034 as of December 31, 2004) and has been
      guaranteed by Doug Dixon and the Company                        $1,048,234

      A note payable, bearing interest at 12% was due in
      November 2003, required monthly interest payments of
      $2,000 and is secured by a second lien on the
      receivables and inventory of ASI ($5,389,365 as of
      December 31, 2004). 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). A principal payment of $100,000 was made
      December 2004. The remaining $100,000 was due December
      31, 2004 (see Note 17)                                             100,000


                                     F-17-
<PAGE>

      Unsecured demand note due to an individual
      with interest accruing at 7%                                       289,350
                                                                      ----------
      Total                                                           $1,437,584
                                                                      ==========

      Future minimum payments under the notes are as follows:

      December 31, 2005                                               $  688,845
      December 31, 2006                                                  748,739
                                                                      ----------
                                                                      $1,437,584
                                                                      ==========

8.    CAPITAL LEASE PAYABLE

      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
      November 2008. The assets have an original cost of $100,391 and a net book
      value of $36,568 at December 31, 2004.

      Future minimum lease payments under the leases at December 31, 2004 are a
      follows:

      December 31, 2005                                               $  21,642
      December 31, 2006                                                   7,008
      December 31, 2007                                                   7,008
      Thereafter                                                          4,994
      Total                                                              40,652
      Less amount representing interest                                  (5,704)
                                                                      ---------
      Present value of future minimum lease payments                     34,948
      Less current portion                                              (18,641)
                                                                      ---------
      Long-term portion                                               $  16,307
                                                                      =========

9.    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 began September 1, 2004 and continue until
      October 1, 2005, without interest (see Note 10).

10.   ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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

      Trade accounts payable                                          $2,384,799
      Accrued commissions                                                404,078
      Accrued payroll                                                    176,349
      Product warranty provision                                         352,617
      Accrued interest                                                   194,495
      Lawsuit payable                                                     90,000


                                     F-18-
<PAGE>

      Sales and state income taxes payable                                88,248
      Accrued officer bonus                                               41,250
                                                                      ----------
                                                                      $3,731,836
                                                                      ==========

11.   RELATED PARTY TRANSACTIONS

      Amounts Due to Related Party

      The Company has the following amounts due to its Chairman at December 31,
      2004:

      Notes payable at 7.0%                                             $120,000
      Accrued interest on notes payable                                   44,308
      Accrued salaries                                                   256,092
                                                                        --------
      Total Amount Due To Related Party                                 $420,400
                                                                        ========

      The amounts due to the Chairman are delinquent and payable on demand.

12.   INCOME TAXES

      Provision (Benefit)

      The provision for income taxes for the year ended December 31, 2004 and
      2003 represents primarily California franchise taxes and consists of the
      following:

                                                            2004          2003
                                                            ----          ----

      Current                                             $   800        $     0
      Deferred                                            $     0        $     0

      The Company's income tax (benefit) provision differs from the amount
      computed by applying the Federal statutory rate to (loss) income before
      (benefit from) provision for income taxes. Reconciliation to the statutory
      federal income tax rate is as follows for the years ended December 31,
      2004 and 2003.

                                                      2004               2003
                                                      ----               ----

      Statutory federal income
        tax (benefit) provision                     $ 325,200         $(633,000)

      State income taxes, net of
        federal benefit                                   800                 0

      Adjustment of deferred tax
        asset                                        (325,200)          633,000
                                                    ---------         ---------
                                                    $     800         $       0
                                                    =========         =========


                                     F-19-
<PAGE>

      Deferred Tax Components

      Significant components of the Company's deferred tax assets are as follows
      at December 31, 2004:

      Net operating loss carryforwards                              $   654,100
      Timing difference for expense deductions                          103,700
                                                                    -----------
                                                                        757,800
      Less valuation allowance                                         (757,800)
                                                                    -----------
      Net deferred tax assets                                       $         0
                                                                    ===========

      Summary of valuation allowance:

      Balance, January 1, 2004                                      $ 1,083,000
      Reduction (utilization of loss carryforwards)                    (325,200)
                                                                    -----------
      Balance, December 31, 2004                                    $   757,800
                                                                    ===========

      In assessing the realizability 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.

      The Company has the following net operating loss carryforwards:

        Year of Loss                 Expiration Date                    Total
        ------------                 ---------------                    -----

      December 31, 2002             December 31, 2022                $   330,724
      December 31, 2003             December 31, 2023                  2,939,347
                                                                     -----------
                                                                     $ 3,270,071
                                                                     ===========

13.   COMPUTATION OF EARNINGS PER SHARE

                                                     2004              2003
                                                 ------------      ------------
      Basic
      Net income (loss)                          $  1,235,022      $ (2,736,258)
                                                 ------------      ------------
      Weighted average number of
        common shares outstanding                  23,000,000        22,833,333

      Income (Loss) per share                    $       0.05      $      (0.12)

      Diluted
      Net income (loss)                          $  1,235,022      $ (2,736,258)
                                                 ------------      ------------
      Weighted average number of
        common shares outstanding                  26,758,911               N/A

      Income (Loss) per share                    $       0.05      $        N/A


                                     F-20-
<PAGE>

14.   COMMITMENTS AND CONTINGENCIES

      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 $397,116 and $384,880, respectively.

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

      Fiscal
      December 31, 2005                                               $  293,000
      December 31, 2006                                                  302,000
      December 31, 2007                                                  299,000
      December 31, 2008                                                  112,000
                                                                      ----------

      Total                                                           $1,006,000
                                                                      ==========

      Officers' Compensation

      The Company has not entered into any employment agreements with its
      management, other than an employment agreement with its CEO, Douglas
      Dixon, dated June 1, 2001, and an employment agreement with its CFO, G.
      Dennis Key, dated July 1, 2003. The agreement with Mr. Dixon is terminable
      by either Mr. Dixon or the Company at the anniversary date of the
      agreement each year upon 60 days written notice. Under the agreement, Mr.
      Dixon receives an annual base salary of $150,000, and receives certain
      benefits as described in the agreement. The agreement with Mr. Key
      provides for Mr. Key's employment as President and CEO of ASI, and also
      provides for Mr. Key's appointment to the Board of Directors of both the
      Company and ASI. This agreement is terminable by Mr. Key with cause only
      upon 30 days written notice, and by the Company with cause only upon 14
      days written notice. Under the agreement, Mr. Key receives an annual base
      salary equal to that paid to Mr. Dixon (or $150,000 if Mr. Dixon's
      agreement terminates), and receives certain benefits as described in the
      agreement.

      Mr. Dixon has a separation agreement, under which he is to receive a
      continued salary at the amount Mr. Key is paid, a car allowance, health
      insurance, life insurance and disability insurance through December 31,
      2005. This agreement was triggered when Mr. Key became the President and
      CEO of ASI. Pursuant to a separate agreement, Mr. Key has an option to
      acquire 4,933,333 shares of the DND shares owed by Mr. Dixon. The exercise
      price of such options is $1 per share.


                                     F-21-
<PAGE>

15.   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 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.

      A summary of the option activity for the year ended December 31, 2004,
      pursuant to the terms of the Plan is as follows:

                                                                       Weighted
                                                                       Average
                                                                       -------
      Options outstanding
        at January 1, 2004                              4,774,226        $.06
      Granted                                                   0        $.00
      Exercised                                                 0        $.00
      Cancelled and expired                               540,000        $.06
                                                        ---------

      Options outstanding
        at December 31, 2004                            4,234,226
                                                        =========

      3,164,226 shares are exercisable at December 31, 2004.

      Information regarding stock options outstanding as of December 31, 2004 is
      as follows:

      Price                                                              $   .06
      Weighted average exercise price                                    $   .06
      Weighted average remaining
        contractual life                                       9 years, 4 months


                                     F-22-
<PAGE>

16.   SUBSEQUENT EVENTS (UNAUDITED)

      In February 2005, the Company's Board of Directors unanimously approved
      the 2005 Stock Option plan and the registration of 3,000,000 shares.

      Also in February 2005, the Company's Board of Directors unanimously
      approved common stock compensation to each non-employee director of both
      the DND Technologies, Inc. and ASI boards of directors of 100,000 shares
      of the Company's common stock from the August 11, 2003, DND Technologies,
      Inc. Stock Option Plan.

      In March 2005, the Company made the final $100,000 principal payment on
      the aforementioned unsecured demand note (See Note 7).

      Subsequent to December 31, 2004, the Company issued the following shares
      of common stock:

            o     100,000 shares of common stock for payment of approximately
                  $15,000 of legal services received during the year ended
                  December 31, 2004.

            o     265,000 shares of common stock for payment of approximately
                  $53,000 of sales commissions earned during the year ended
                  December 31, 2004.

            o     150,000 shares of common stock for the exercise of an option
                  by a member of ASI's board of directors.


                                     F-23-