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, 2003

|_|   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| Yes |_| 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, 2003
were $8,736,526.

<PAGE>

      As of April 12, 2004, there were 23,000,000 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 of April 12, 2004, 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 $750,000.

                       Documents Incorporated by Reference

      None.

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


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                                TABLE OF CONTENTS

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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...........................................................................................................9

Item 5.     Market for Common Equity and Related Stockholder Matters..............................................9
Item 6.     Management's Discussion and Analysis of Financial Condition and Results of Operations................10
Item 7.     Financial Statements.................................................................................23
Item 8.     Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.................23
Item 8A.    Controls and Procedures..............................................................................23

PART III.........................................................................................................23

Item 9.     Directors and Executive Officers; Compliance with Section 16(a) of the Exchange Act..................23
Item 10.    Executive Compensation...............................................................................26
Item 11.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.......29
Item 12.    Certain Relationships and Related Transactions.......................................................29
Item 13.    Exhibits, Financial Statements and Reports on Form 8-K...............................................30
Item 14.    Principal Accountant Fees And Services...............................................................30

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, is a supplier of reconditioned
assemblies and a provider of service programs specific to major original
equipment manufacturer semiconductor fabrication equipment, used to manufacture
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") provider of AutoEtch and Drytek plasma etch product lines,
formerly manufactured by Lam, and plasma products offered on the Matrix One and
Ten system platforms which were formerly manufactured by Matrix Integrated
Systems, and later acquired by Axcelis. 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 Lam Rainbow and TCP plasma
etch system and Matrix system products.

      ASI has a website under construction, located at
http://www.aspectsemiquip.com, and another website, which is designed to briefly
describe our products and services during the construction of our main website,
located at http://www.semiconductor-technology.com/contractors/wafer/aspect.

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 a wafer of silicon up to 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

<PAGE>

flow. Later, metal interconnections are formed on top of the silicon that
connects the transistor components together.

      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, have had a severe
adverse impact on the semiconductor industry and on suppliers to the
semiconductor industry.

      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 100mm to 200mm markets but
management intends to offer equipment for processing 300mm wafers when feasible.


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<PAGE>

      The customer base 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 for a new 300 mm fab, and the very
large volume of product each fab can produce, 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 some companies to seek refurbished equipment, which we provide, rather
than purchasing new 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 wafer
manufacturers and semiconductor integrated circuit (or chip) manufacturers,
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


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<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 April 12, 2004, we had
approximately twenty installed units, all sold to Texas Instruments. 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 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 Drytek plasma etch
products, adding this new capability to the AutoEtch refurbishing and after
market support business upon which ASI had been founded.

      In December, 2003, through a similar and exclusive licensing agreement
with Axcelis Technologies, Inc., ASI gained OEM rights to manufacture and
support plasma products which are offered on the Matrix One and Ten system
platforms. ASI is now accepting orders for both new and refurbished Matrix tools
manufactured to origin manufacturer specifications.

      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. To date, we have
purchased equipment for approximately $1.6 million under the Lam Agreement, and
we are required to pay approximately $5,376,000 over 96 months as a royalty for
the licensed intellectual property. We are in the process of renegotiating
certain terms of the Lam Agreement, and 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 November 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 manufacturing equipment. We have
agreed to pay a license fee totaling $2,750,000 ($150,000 plus 18% of net
revenues from sales of the licensed products per quarter until paid in full),
and a royalty based on net sales of the licensed products through December 31,
2010, which will range from two to ten percent based on when the sales occur.

      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


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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.

      Management has in the past been committed to developing a new ultra-deep
trench etch product, known as the Crystal 2000 tool. The Crystal 2000 tool was
being designed to allow etching of 150 mm wafers, which are used predominately
in the micro electronic mechanical systems market, due to the 150 mm wafers'
ability to allow growth of gallium arsenide crystals. Wafers containing gallium
arsenide are used primarily in research laboratories, and currently Surface
Technology Systems dominates this niche market. Management has determined that
the Crystal 2000 tool does not fit with the Company's current business model,
and thus we do not intend to continue its development.

Research and Development Activities

      Our R&D expenditures were $58,226 during the 2003 fiscal year, and $74,111
during the 2002 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 companies like 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. Most of our technology is not currently patented and most of
our equipment is not proprietary but is remanufactured equipment acquired from
various vendors or equipment based on licensed technology and therefore not
appropriate to patent. 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. Management no longer
believes these patents protect the technology underlying our NCS product.

      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.

      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.

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,


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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 2003,
spare parts and technical services accounted for approximately 70% of our total
sales. Our revenues in 2003 were derived from sales in both the US and overseas,
with overseas sales accounting for approximately 26% 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 on 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 2003 was Lam, which accounted for approximately 26%
of our inventory purchases last year. Management anticipates that we will
purchase significant quantities of inventory from Lam in 2004. 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
2003, revenue from Texas Instruments and National Semiconductor accounted for
approximately 17% and 12%, respectively, of total revenue. In 2002, revenue from
Texas Instruments accounted for approximately 31% of total revenue. We do not
have contracts or any other formal relationship with our customers.

      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 in turn depend on the current and anticipated market demand for integrated
circuits and products utilizing integrated circuits. Beginning in the first half
of fiscal 2001, a slowing U.S. economy and worldwide decline in demand for
integrated circuits resulted in excess capacity in the semiconductor industry
and a severe contraction of the manufacturing equipment market. Our customers


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reduced their level of capital expenditures, which caused a steep decline in
demand for our products in fiscal 2001 and 2002. The industry began to increase
capital expenditures in 2003 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 and
larger wafer sizes and adopting new materials for use in semiconductor
manufacturing as funds are available for these often significant capital
expenditures. When funds are restricted, often customers will choose to repair
existing equipment or purchase older generation equipment 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.

      Substantial competition exists for each of the Company's products.
Competitors range from small companies that compete with a single product to
companies with a large and diverse line of semiconductor processing products.
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 general compliance with these
regulations and that we have obtained (or will obtain or are otherwise
addressing) all necessary environmental permits to conduct our business. We
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, cessation of our operations or reduction in our
customers' acceptance of our products. These


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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 our CFO. ASI had
approximately 40 full-time employees as of April 1, 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, 2003 were
approximately $385,000. 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

      DND and its subsidiary, ASI, are currently involved in two legal
proceedings, which were described in two Form 8-Ks filed on January 14, 2003 and
June 3, 2003. The first suit, Merrill Lynch Business Financial Services, Inc. v.
Aspect Semiquip International, Inc. et al., is currently pending in the United
States District Court for the District of Arizona. At issue in the suit is DND's
default on its $1 million line of credit with Merrill Lynch, and Merrill Lynch
is requesting as relief the amounts due under the line of credit and a related
term loan plus interest, costs and attorney's fees. The complaint was filed on
December 18, 2002, and Merrill Lynch agreed to extend the time for answering
until April of 2003. DND and the other defendants filed their answers on April
7, 2003. No trial date has been set. DND is current on its required interest
payments under the line of credit. DND is engaged in negotiations with Merrill
Lynch to settle the lawsuit and establish new repayment terms, although
management can provide no assurance that any agreement will be reached.

      On May 2, 2003, Scott Magoon, a former shareholder and employee of Aspect
Semiquip International, Inc., a subsidiary of DND, filed a complaint in the
Dallas County, Texas court, naming DND Technologies, Inc., Aspect Semiquip
International, Inc., Semiquip, Inc. and Doug N. Dixon as defendants. The
complaint alleges that the defendants defrauded Mr. Magoon and requests, among
other forms of relief, that the court divest DND of its wholly owned subsidiary,
Semiquip, Inc. The action was removed to federal district court but has since
been removed back to the Dallas County, Texas court in which the action was
filed. No trial date has been set. If Mr. Magoon is successful in his claim, it
is possible the Company could lose its Texas operations, which would adversely
affect our operations as the Company's Texas operations account for
approximately 33% of the Company's total operations. Management believes it is
likely that the dispute with Mr. Magoon will be settled during 2004 with no
significant impact on our operations, but can provide no assurance that this
will occur.

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

      None.


                                       8
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      DND currently has 23,000,000 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.

                  Period                   Average Low            Average High
                  ------                   -----------            ------------
            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
            Fourth Quarter 2002               $0.02                  $0.51
            Third Quarter 2002                $0.07                  $1.45
            Second Quarter 2002               $0.90                  $2.05
            First Quarter 2002                 n/a                    n/a

      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 April 12, 2004 was approximately 50.

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, if any, 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, 2003, options to purchase 4,999,226
shares had been granted under the Option Plan, and 225,000 of these granted
options were cancelled and expired during 2003.


                                       9
<PAGE>

<TABLE>
<CAPTION>
                                      Number of securities          Weighted-average
                                        to be issued upon          exercise price of          Number of securities
         Plan Category                     exercise of            outstanding options,       remaining available for
                                      outstanding options,        warrants and rights         future issuance under
                                     warrants and rights (#)              ($)               equity compensation plans
                                     ------------------------    -----------------------    --------------------------
<S>                                        <C>                             <C>                            <C>
Equity compensation plans
approved by shareholders                   4,999,226                       $0.06                          774

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

Total                                      4,999,226                       $0.06                          774
</TABLE>

Recent Sales of Unregistered Securities

      In January 2003, DND issued 1,000,000 common shares to a vendor in
exchange for forgiveness of $160,000 of accounts payable in reliance on the
ss.4(2) exemption from registration for non-public offerings. DND was initially
obligated to register these shares within 120 days of issuance, although this
vendor, in August of 2003, agreed to payment of $15,000 in lieu of registration.

      In March 2002, Zurickirch issued, in reliance on the ss.4(2) exemption
from registration for non-public offerings, 3,255,000 shares to John Chris
Kirch, as payment for loans to Zurickirch totaling $50,466. The shares were
subsequently cancelled in connection with the acquisition between Zurickirch and
DND.

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 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 products manufactured on the Matrix System One and
Ten platforms. Elements of support include spare parts and assemblies, and
various engineering services.

      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 nine
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.


                                       10
<PAGE>

1.    Going Concern

      These financial statements are presented on the basis that the Company is
a going concern. Going concern contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business over a reasonable
length of time. The Company has incurred significant operating losses for the
years ended December 31, 2003 and 2002, has negative working capital and a
stockholders' deficit and is in default on its Merrill Lynch line of credit and
License Agreement with Lam Research Corporation. These factors raise substantial
doubt as to the Company's ability to continue as a going concern.

      Management's plans to eliminate the going concern situation include, but
are not limited to, the following:

      1.    Negotiate a long-term payment plan for the Merrill Lynch line of
            credit.

      2.    Negotiate repayment terms and assessed inventory value with Lam
            Research Corporation.

      3.    Obtain additional equity or debt financing from investors.

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

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

2.    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 and completed.

3.    Accounts Receivable

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

4.    Allowance for Doubtful Accounts

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

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


                                       11
<PAGE>

5.    Inventory

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

6.    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.

7.    Property and Equipment

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

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

8.    Product Warranty Provision

      We provide a warranty on our systems ranging from ninety days to nine
months from date of acceptance, not to exceed eleven months from the ship date.
In connection with this warranty, we provide a reserve based on the historical
percentage of costs associated with repairs and replacement of parts on such
sales.

9.    Employee Stock Options

      We account for stock-based compensation under APB Opinion No. 25, under
which no compensation expense has been recognized for stock options.


                                       12
<PAGE>

Selected Financial Information

<TABLE>
<CAPTION>
                                                   Years Ended
                                                                            Increase
                                                                            --------
                                           12/31/2003      12/31/2002      (Decrease)      %
                                           ----------      ----------      ----------      -
<S>                                        <C>             <C>             <C>             <C>
Statements of Operations
        Total Revenue                      $ 8,736,526     $ 5,374,523     $ 3,362,003      63%
        Cost of Revenue:
             Costs of revenues               5,499,564       3,753,479       1,746,085      46%
             Reserve for slow moving and
                  Obsolete inventory         2,401,221         521,000       1,880,221     N/A
        Total Cost of Revenues               7,900,785       4,274,479       3,626,306      85%
             Percentage of Sales                    90%             80%
        Gross Profit                           835,741       1,100,044        (264,303)    (24%)
             Percentage of Sales                    10%             20%
        Operating Expenses:
             Research and development           58,226          74,111         (15,885)    (21%)
             Sales and marketing             1,147,977         648,799         499,178      77%
             General and administrative      1,992,588       1,654,518         338,070      20%
        Total Operating Expenses             3,198,791       2,377,428         821,363      35%
        Interest Expense                       373,208         171,593         201,615     117%
        (Loss) Before Income Tax Expense    (2,736,258)     (1,448,977)      1,287,281      89%
        Income Tax Expense                           0          11,500         (11,500)   (100%)
        Net (Loss)                         ($2,736,258)    ($1,460,477)    $ 1,275,781      87%
        Net (Loss) Per Share
        Basic and Diluted                       ($0.12)         ($0.09)    $      0.03      33%
</TABLE>

Results of Operations

Year ended December 31, 2003, compared to year ended December 31, 2002.

Revenues

      Our revenue increase of $3,362,003, or 63%, was due to an increase in
system sales ($1.4 million) and additional sales of parts ($1.2 million) to
customers who are reactivating their idle capital equipment to meet the demands
of a recovering economy.

Cost of Revenues - Recurring Operations

      Our cost of revenues for recurring operations increased $1,746,085 or 46%.
This increase is primarily the result of costs associated with increased
revenues in 2003. Our cost of revenues as a percentage to revenues decreased
from 70% in 2002 to 63% in 2003. This decrease in percentage is due to the
increase in system sales which are normally at a higher margin than other
products.

Cost of Revenues - Reserve for Slow Moving and Obsolete Inventory

      Our cost of revenues - reserve for slow moving and obsolete inventory, is
the result of our decision to reserve $2,401,221 of slow moving and obsolete
inventory in the year ended December 31, 2003. Most of this inventory came from
Lam pursuant to its licensing agreement with the Company.


                                       13
<PAGE>

Operating Expenses

      Research and Development

      Research and development costs decreased $15,885 or 21% in the year ended
December 31, 2003. The decrease is related to the discontinuation of the
"Crystal Development" project in 2003.

      Sales and Marketing

      Sales and marketing costs increased $499,178 or 77% in the year ended
December 31, 2003. The increase is primarily related to amortization of our
license agreement with Lam amounting to $436,000 and increased payroll and
commissions of approximately $64,000 related to hiring new sales persons.

      General and Administrative

<TABLE>
<CAPTION>
                                                            Years Ended
                                                                                  Increase
                                                                                  --------
                                                        12/31/2003   12/31/2002   (Decrease)      %
                                                        ----------   ----------   ----------      -
<S>                                                     <C>          <C>          <C>            <C>
General and Administrative
       Salaries and wages                               $  758,407   $  531,318   $ 227,089      43%
       Professional fees                                   350,089      124,585     225,504     181%
       Rent, less amount allocated to Cost of Revenue      107,702       91,817      15,885      17%
       Other general and administrative expenses           776,390      906,798    (130,408)    (24%)
            Total General and Administrative            $1,992,588   $1,654,518   $ 338,070      20%
</TABLE>

      Salaries and wages increased due to the hiring of additional employees to
meet our growth and annual wage increases of $172,000 and the value of a stock
grant to our CFO of $55,000.

      Professional fees increased in 2003 for both accounting and legal due to
our SEC filing requirements and compliance with the Sarbanes-Oxley Act 2002
which took effect in late 2002.

      Other general and administrative expenses decreased primarily due the lack
of costs incurred in 2003 as compared to costs associated with the merging of
our Arizona and Texas operations in 2002 of $76,000, employee benefits related
to moving in 2002 of $36,000 and reduced software consulting costs incurred in
2002 related to integrating our software systems of $24,000.

Interest Expense

      Interest expense increased $201,615, or 117%, as a result of our Note
Payable to Lam for acquiring the license with Lam in November 2002.

Net Loss

      We had a net loss of $2,736,258 for the year ended December 31, 2003,
compared to a net loss of $1,460,477 for the year ended December 31, 2002. The
increase in the net loss was caused primarily by the write-off of slow-moving
and obsolete inventory, additional interest expense and license amortization
expense related to the Lam agreement.


                                       14
<PAGE>

Capital Resources

                                            Years Ended
Working Capital                                                       Increase
                                                                      --------
                                      12/31/2003     12/31/2002      (Decrease)
                                      ----------     ----------      ----------

Current Assets                       $  2,442,282    $ 3,627,681    $(1,185,399)
Current Liabilities                    10,202,594      4,820,078      5,382,516
                                     ------------    -----------    -----------
       Deficit Working Capital       $ (7,760,312)   $(1,192,397)   $ 6,567,915
                                     ============    ===========    ===========
Long-term Debt                       $     35,962    $ 4,639,821    $(4,603,859)
                                     ============    ===========    ===========
Stockholders' (Deficit)              $ (3,590,381)   $(1,069,123)   $ 2,521,258
                                     ============    ===========    ===========

Statements of Cash Flows Select Information

                                                           Years Ended
                                                   12/31/2003        12/31/2002
                                                   ----------        ----------

Net Cash Provided (Used) By:
Operating Activities                                $(77,486)         $(508,878)
Investing Activities                                $(14,647)         $ (25,327)
Financing Activities                                $ 50,054          $ 314,395

Operating Activities

      During the year ended December 31, 2003 cash was provided from an increase
in our revenues and gross margin. Our gross margin, before the non-cash
provision for slow-moving and obsolete inventories, increased from approximately
$1.6 million in the year ended December 31, 2002 to $3.2 million in the year
ended December 31, 2003. Increased inventories and receivables associated with
our increased revenues resulted in net cash used in the year ended December 31,
2003.

Investing Activities

      Cash was used in each period for the purchases of property and equipment.

      The Company currently has no material commitments for capital
expenditures.

Financing Activities

      Financing activities in the year ended December 31, 2003 consisted of
proceeds from (and principal payments on) long-term debt. Financing activities
in the year ended December 31, 2002 consisted of borrowings from the line of
credit, proceeds from (and principal payments on) long-term debt.

      We have $8,272,835 and $35,962 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 renegotiating its payments with Lam and Merrill Lynch and
increased cash flows from operations.

Liquidity

      Initially, liquidity has been negatively impacted by the decline in sales
revenues we experienced during the year ended December 31, 2002. We attribute
the 2002 fiscal year decline in revenues 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.


                                       15
<PAGE>

      To date, we have financed our operations with cash from our operating
activities, a bank line of credit and a loan for $200,000. This loan for
$200,000 was made by Jean Charles Cartier in October of 2002, with a
twelve-month term and at an interest rate of 1% per month. Mr. Cartier also
received warrants to acquire 200,000 shares at $0.20 per share and 200,000
shares at $1.00 per share. As of November of 2003, we are 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. We are in the process of negotiating
more favorable terms of repayment including converting the indebtedness to
equity, but there can be no assurance that we will succeed.

      Our bank line of credit with Merrill Lynch Business Financial Services,
Inc. matured on April 1, 2002. Interest accrued at Libor plus 2.75% with an
effective rate of 6.13% at December 31, 2002. The note is secured by a first
lien on our accounts receivable and inventories that amounted to approximately
$2,260,000 at December 31, 2003 and has been personally guaranteed by the
majority shareholder. The note contains numerous loan covenants that the Company
has violated and the Company continues to remain out of compliance. We have not
received waivers on the covenants and are actively negotiating with Merrill
Lynch to renegotiate the note and establish a repayment plan for the loan. The
balance on the line of credit and a term loan, including accrued interest, at
December 31, 2003 was $1,132,010. In December of 2002, Merrill Lynch filed a
lawsuit against the Company in connection with its default on the line of credit
in December of 2002. Should Merrill Lynch successfully foreclose on its line of
credit, Merrill Lynch could take all of our assets and we would be forced to
cease operations. The Company, on April 7, 2003, as part of its answer, filed a
counterclaim against Merrill Lynch, alleging breach of the covenant of good
faith and fair dealing in connection with loan agreements, interference with
contract, and interference with business relations, and is continuing its
negotiations with Merrill Lynch as of the date of this filing. Management is
actively seeking to restructure our note in lieu of costly and protracted
litigation but there is no assurance they will be able to do so.

      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
equipment for approximately $1.6 million under the Agreement, and we are
required to pay approximately $5,376,000 over 96 months as a royalty for the
licensed intellectual property.

      The Company and Lam are mutually in default under the Lam license
agreement. We are in the process of negotiating a resolution for the default,
and management believes that Lam and the Company will reach an agreement to
resolve the defaults, without damages payable by the Company, but there can be
no assurance that this will occur. Management's view is that Lam's sole remedy
under the license agreement is to recover under its purchase money security
interest in the inventory we have purchased from Lam, but Lam may choose to
bring additional claims against us, and a court could give Lam remedies not
provided for in our agreement.

      On May 2, 2003, Scott Magoon, a former shareholder and employee of Aspect
Semiquip International, Inc., a subsidiary of DND, filed a complaint in the
Dallas County, Texas court, naming DND Technologies, Inc., Aspect Semiquip
International, Inc., Semiquip, Inc. and Doug N. Dixon as defendants. The
complaint alleges that the defendants defrauded Mr. Magoon and requests, among
other forms of relief, that the court divest DND of its wholly owned subsidiary,
Semiquip, Inc. The action has since been removed to federal district court, but
has since been removed back to the Dallas County, Texas court in which the
action was filed. If Mr. Magoon is successful in his claim, it is possible the
Company could lose its Texas operations, which would adversely affect our
operations as the Company's Texas operations account for approximately 33% of
the Company's total operations. It is management's view that the lawsuit with
Mr. Magoon has no merit. Management believes the dispute with Mr. Magoon will be
resolved in a manner favorable to the Company, but there can be no assurance
this will occur.


                                       16
<PAGE>

      Should Merrill Lynch, Lam or Cartier successfully foreclose on their
security interests, as provided in their agreements with the Company, or should
any of these three parties obtain judgments against us in court, we could lose
part or all of our assets, the Company could be forced to cease operations and
our stock could become worthless. In addition, should Mr. Magoon obtain a
judgment in his lawsuit which divests us of our Texas operations, our operations
would be reduced significantly and we anticipate that revenues would
significantly decline.

      In November 2003, the Company entered into an agreement with Axcelis
Technologies, Inc. and acquired an exclusive license on all future
manufacturing, sales, service and parts support for certain dry strip
semiconductor manufacturing equipment marketed under the trade names "System
One" and "System Ten". The agreement provides for the payment of $150,000 plus
18% of net revenues from these sales by the Company per quarter until $2,750,000
(the license fee) has been paid and the payment of a royalty on related sales
ranging from 2% to 10% through December 31, 2010.

      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, our ability to renegotiate our agreement with Lam and our ability to
negotiate a repayment plan for our line of credit with Merrill Lynch Business
Financial Services, Inc. and a settlement of the Merrill Lynch lawsuit.

      Our obligations consist of $200,000 due immediately to Mr. Cartier,
approximately $1 million due immediately to Merrill Lynch, and a total of
approximately $8 million due to Lam and Axcelis over the next several years.
Even if we are able to increase revenue, expand our product base and obtain
additional financing, we may be unable to meet these obligations. Our ability to
continue operations depends on our ability to negotiate a long-term payment plan
for the Merrill Lynch line of credit, and to negotiate new repayment terms with
Lam.

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

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.


                                       17
<PAGE>

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.

      We are in default on our line of credit, and our creditor could foreclose
on our business at any time.

      We are in default on our $1 million line of credit with Merrill Lynch
Business Financial Services ("Merrill Lynch") because we are not in compliance
with many of the loan covenants, although we are current on the monthly interest
payments required under the terms of the line of credit. On December 18, 2002,
Merrill Lynch filed a lawsuit against us in connection with our default on the
line of credit. On April 7, 2003, we filed our answer, which denied the
allegations in the complaint, and sought relief against Merrill Lynch for breach
of its duty of good faith and fair dealing in connection with the line of credit
and for interference with contract and the Company's business relations. Merrill
Lynch may foreclose on our business at any time and is under no obligation to
forbear collecting its $1 million line of credit. Management is currently
working with Merrill Lynch to renegotiate the repayment terms of the line of
credit and resolve the lawsuit, but there is no assurance that any agreement
will be reached.

      We are in default on our license agreement.

      We are in mutual default with Lam Research Corp. on our license agreement.
Management's view is that Lam's sole remedy under the license agreement is to
recover under its purchase money security interest in the inventory we have
purchased from Lam, but Lam may choose to bring additional claims against us,
and a court could give Lam remedies not provided for in our agreement.
Management is currently renegotiating the agreement with Lam, but there can be
no assurance that this dispute will be resolved.

      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;


                                       18
<PAGE>

      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.

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

      Our ability to continue as a going concern is an issue raised as a result
of the significant operating losses incurred in 2003 and 2002, our negative
working capital, stockholders' deficit and our default on a significant portion
of our debt. We continue to experience net operating losses. Our ability to
continue as a going concern is subject to our ability to favorably renegotiate
repayment of indebtedness over a period of time, generate a profit and obtain
necessary funding from outside sources, including obtaining additional funding
from the sale of our securities, increasing sales or obtaining loans and grants
from various financial institutions where possible. Approximately $6.6 million
of indebtedness will need to be favorably renegotiated. The going concern
increases the difficulty in meeting such goals.

      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 next sales and operating results will
not be adversely affected if the current downturn in the semiconductor industry
continues, or if other downturns or slowdowns in the rate of capital investment
in the semiconductor industry occur in the future. As of the end of 2003, the
semiconductor industry continues to remain cautious 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.


                                       19
<PAGE>

      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 or expand current
manufacturing capacity - both of which typically involve 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 collective accounts receivable and additional service and warrant
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;

      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


                                       20
<PAGE>

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 may occur. 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.

      Currently, approximately 26% of our revenues result 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 is highly concentrated including two customers that
together account for approximately 29% of sales. 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. 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


                                       21
<PAGE>

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, 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.

      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.
A shortfall in projected revenues primarily from our recent contracts with Lam
and Axcelis would negatively impact any future expansion of our operations. In
addition, we are seeking to renegotiate approximately $6.6 million of
indebtedness to provide for extended repayment terms. 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 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.


                                       22
<PAGE>

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

Change in Certifying Accountants

      As disclosed in the Company's Form 8-K filed November 19, 2002, on
November 14, 2002, Andersen, Andersen & Strong, L.C. resigned as the independent
auditor for the Company and on November 15, 2002, the Board of Directors engaged
Farber & Hass, L.L.P. as the new independent auditor for the Company.

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 of 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 were no significant changes in our internal
controls or in other factors that could significantly affect these controls
subsequent to the date of evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

                                    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:


                                       23
<PAGE>

<TABLE>
<CAPTION>
             Name                     Age                        Position
-------------------------------     ---------      -------------------------------------------
<S>                                    <C>         <C>
Douglas N. Dixon                       61          CEO, President, Chairman and Director

G. Dennis Key                          61          CFO, Secretary and Director

Lowell W. Giffhorn*                    57          Director, Chair of Audit Committee

Ernie L. Recsetar*                     50          Director, Chair of Compensation Committee

Ronny Baker                            58          Controller
</TABLE>

*     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/COO/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/COO 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


                                       24
<PAGE>

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

      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 four times during 2003, is
composed of two directors, both of whom were determined by the Board to be
independent directors. During 2003 and to date, the Audit Committee consists of
Mr. Giffhorn (Chairman) and Mr. Recsetar.

      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 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. The text of this code of ethics is
attached as Exhibit 14 to this filing.

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, 2003, all Reporting
Persons complied with all applicable filing requirements except as follows: each
of the following Reporting Persons failed to timely file one or more Forms, as
indicated: Douglas Dixon (one Form


                                       25
<PAGE>

3 and one Form 4), G. Dennis Key (one Form 3 and one Form 4), Paul Gallo (one
Form 3 and one Form 4), Lowell Giffhorn (one Form 3), Ernie Recsetar (one Form 3
and one Form 4) and Ronny Baker (one Form 3 and one Form 4). Mr. Dixon, Mr. Key,
and Mr. Giffhorn's respective 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, 2001, 2002 and 2003. 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
-----------------------------------------------------------------------------------------------------
                                                               Restricted     Securities
                                                                  Stock       Underlying      LTIP       All Other
                                 Year      Salary      Bonus     Awards      Options/SARs    Payouts   Compensation
 Name and Principal Position                 ($)        ($)        ($)           (#)           ($)          ($)
---------------------------------------------------------------------------------------------------------------------
<S>                              <C>       <C>           <C>     <C>          <C>               <C>      <C>
Douglas N. Dixon (CEO)(1)        2001       99,228       0            0               0         0        12,369(2)
---------------------------------------------------------------------------------------------------------------------
                                 2002      104,567       0            0               0         0         8,763(3)
---------------------------------------------------------------------------------------------------------------------
                                 2003      120,000       0            0         375,000         0        11,501(4)
---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------
G. Dennis Key (CFO; CEO and
CFO of ASI)                      2003      114,000       0       55,000       1,050,000         0        10,224(5)
---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------
Paul Gallo (former CFO)          2003       86,514       0            0        375,000          0         8,976(6)
---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------
Scott Magoon (former director    2002      105,692       0            0              0          0        6,293(7)
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 $5,769 for insurance premiums and $6,600 for automobile
      allowance.

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

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

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

(6)   Represents $2,376 for insurance premiums and $6,660 for automobile
      allowance.

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


                                       26
<PAGE>

Option Grants in Last Fiscal Year

      The following table provides certain information with respect to stock
options and warrants granted to the Named Officers during the fiscal year ended
December 31, 2003.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------

                                                                 Individual Grants

----------------------------------------------------------------------------------------------------------------------
                                     Number of            Percent of Total
                                     Securities          Options Granted to
                                 Underlying Options          Employees in            Exercise Price     Expiration
             Name                    Granted(#)             Fiscal Year(%)(1)       Per Shares($/sh)        Date
----------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                        <C>                      <C>              <C>
Douglas N. Dixon                      375,000(2)                 7.5%                    $0.06            8/11/13
----------------------------------------------------------------------------------------------------------------------
G. Dennis Key                        1,050,000(3)               21.0%                    $0.06            8/11/13
----------------------------------------------------------------------------------------------------------------------
Paul Gallo                            375,000(3)                 7.5%                    $0.06            8/11/13
----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)   The Company granted stock options representing 4,999,226 shares of Common
      Stock to employees in the fiscal year ended December 31, 2003.

(2)   Option vests as follows: 25% of the options on August 11, 2004, and an
      additional 1/36th of 75% of the options on the last day of each month
      thereafter, until all options are vested.

(3)   Exercisable immediately. The option has a ten year term but is subject to
      termination in connection with termination of employment.

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, 2003. 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, 2003, 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, 2003.

<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            --                 --         375,000            --               --
----------------------------------------------------------------------------------------------------------------------
G. Dennis Key                 0            --          1,050,000              --            --               --
----------------------------------------------------------------------------------------------------------------------
Paul Gallo                    0            --            375,000              --            --               --
----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)   Value is based on average bid price as reflected on the OTCBB on December
      31, 2003, which may not represent actual transactions, less the exercise
      price. As the market price of our shares on December 31, 2003 was less
      than the exercise price for the Named Officers, none of the options were
      in-the-money on December 31, 2003.


                                       27
<PAGE>

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 verbal 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, and also gives Mr. Key an option to acquire the lesser of (i) 1/3 of
18,000,000 shares of Mr. Dixon's DND stock or (ii) 1/3 of 18,000,000 shares
less any shares transferred to Scott Magoon 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 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. All expenses incurred by
directors for meeting attendance or out of pocket expenses connected directly
with their Board representation are reimbursed by DND.

      Mr. Recsetar was separately compensated in 2003 for legal consulting
services rendered to the Company. For these services, he was paid $31,000 during
2003.

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


                                       28
<PAGE>

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

      There are currently 23,000,000 common shares outstanding. The following
tabulates holdings of shares of DND by each person who, subject to the above, as
of April 12, 2004, 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 APRIL 12, 2004

<TABLE>
<CAPTION>
                                                                      Options                           Percent of
                                                                     Exercisable       Total Shares       Common
          Name and Address of                   Amount of         Within 60 Days of    Beneficially       Shares
          Beneficial Owner(1)              Common Shares Owned      April 12, 2004         Owned         Owned(2)
<S>                                            <C>                    <C>                <C>                <C>
   Douglas Dixon, Chairman of the              18,022,500(3)                  0          18,022,500         78.4%
   Board, Chief Executive Officer
   and President

   G. Dennis Key, Chief Financial               1,100,000(4)          1,050,000(5)        2,150,000          8.5%
   Officer and Director

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

   Lowell Giffhorn, Director                            0               150,000             150,000            *

   Paul Gallo, former Chief                             0               375,000             375,000          1.6%
   Financial Officer and Director

   All Officers and Directors
   as a group (4 persons)                      19,122,500             1,712,500          20,835,000         80.6%
</TABLE>

*     Less than one percent of the outstanding Common Stock.

(1)   The address for each of these individuals is c/o DND Technologies, Inc.,
      375 E. Elliott Road, Bldg. 6, Chandler, Arizona 85225.

(2)   Percentage ownership is based on 25,000,000 shares of Common Stock
      outstanding on April 12, 2004. Shares of Common Stock subject to stock
      options which are currently exercisable or will become exercisable within
      60 days after April 12, 2004 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)   Mr. Dixon's shares are subject to a potential claim that, if successful,
      could reduce his share ownership by up to 5,400,000 shares. DND cannot
      currently estimate when this potential claim will be resolved.

(4)   The 1,100,000 shares have not yet been issued to Mr. Key.

(5)   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 the lesser of (i) 1/3 of 18,000,000 shares of Mr. Dixon's DND
      stock or (ii) 1/3 of 18,000,000 shares less any shares transferred to
      Scott Magoon 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,


                                       29
<PAGE>

1998. The notes have not been repaid and are accruing interest at 7%, compounded
daily, with accrued interest totaling approximately $33,000 at December 31,
2003.

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, 2003                                           F-2
              Consolidated Statements of Operations for each of the two years
              ended December 31, 2003                                                                    F-4
              Consolidated Statements of Stockholders' Deficit for each of the two years
              ended December 31, 2003                                                                    F-5
              Consolidated Statements of Cash Flows for each of the two years
              ended December 31, 2003                                                                    F-6
              Notes to Consolidated Financial Statements                                                 F-8
              Exhibits included or incorporated herein:  See Exhibit Index.
</TABLE>

    (b) Reports on Form 8-K:

      On November 25, 2003, the Company filed a Current Report on Form 8-K
announcing its subsidiary's acquisition of certain Matrix legacy products from
Axcelis Technologies, Inc.

      On January 28, 2004, the Company filed an amended Current Report on Form
8-K/A relating to the Form 8-K filed on August 1, 2002.

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 2003, and fees billed for other services
rendered by Farber and Hass, LLP:

                                                           2003
                                                        -----------
               Audit Fees                                 $51,794
               Audit related fees$                              0
               Tax fees                                   $     0
               All other fees                             $     0

                                 Total fees               $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.


                                       30
<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

10.3(6)         Promissory Note, dated October 3, 2002, between the Company and
                Jean Charles Cartier and Jacqueline Cartier

10.4(6)         Letter of Intent, dated January 31, 2003, between the Company
                and ESL Elektronik Handels GmbH

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

14(7)           Code of Ethics

16.1(1)         Letter on Change in Certifying Accountant 21.1(7) Subsidiaries
                of the Company

24.1(7)         Power of Attorney (see signature page of this Annual Report on
                Form 10-KSB).

31.1(7)         Rule 13a-14(a)/15d-14(a) Certification of Principal Executive
                Officer

31.2(7)         Rule 13a-14(a)/15d-14(a) Certification of Principal Financial
                Officer

32.1(7)         Section 1350 Certification of CEO

32.2(7)         Section 1350 Certification of CFO

(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)   Filed herewith.

<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, 2004
----------------------------------------
Douglas N. Dixon


/s/ G. Dennis Key                                   Chief Financial Officer and Director            April 14, 2004
----------------------------------------
G. Dennis Key


/s/ Ernie L. Recsetar                               Director                                        April 14, 2004
----------------------------------------
Ernie L. Recsetar


/s/ Lowell W. Giffhorn                              Director                                        April 14, 2004
----------------------------------------
Lowell W. Giffhorn
</TABLE>

<PAGE>

INDEPENDENT AUDITORS' REPORT

To The Board of Directors and Stockholders DND Technologies, Inc. and
Subsidiaries

We have audited the accompanying consolidated balance sheet at December 31, 2003
and the related consolidated statements of operations, stockholders' (deficit)
and cash flows of DND Technologies, Inc. and Subsidiaries for the years ended
December 31, 2003 and 2002. These consolidated financial statements are the
responsibility of the Company's management.

Our responsibility is to express an opinion on the financial statements based on
our audit. We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those standards require that
we plan and perform the audit 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 financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respect, the financial position of the Company at
December 31, 2003 and the results of its operations and its cash flows for the
years ended December 31, 2003 and 2002, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has incurred significant operating losses, has
negative working capital and is in default on a significant portion of its debt.
These conditions raise substantial doubt about its ability to continue as a
going concern. Management's plans regarding these matters are described in Note
18. The consolidated financial statements do not include any adjustments that
might result from the outcome of these uncertainties.


/s/ Farber & Hass LLP

Camarillo, California
March 24, 2004

<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2003

ASSETS

CURRENT ASSETS:
Cash and cash equivalents                                             $  157,801
Accounts receivable, net of
  allowance for doubtful accounts                                      1,053,561
Inventories, net of allowance for obsolescence                         1,038,861
Prepaid expenses and other current assets                                192,059
                                                                      ----------
Total current assets                                                   2,442,282
                                                                      ----------

PROPERTY AND EQUIPMENT, Net of
  accumulated depreciation                                               421,176
                                                                      ----------

OTHER ASSETS:
License agreements                                                     3,752,115
Deposits                                                                  32,602
                                                                      ----------
Total other assets                                                     3,784,717
                                                                      ----------

TOTAL ASSETS                                                          $6,648,175
                                                                      ==========

                                                                    (Continued)


                                       2
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                     CONSOLIDATED BALANCE SHEET (CONTINUED)
                                DECEMBER 31, 2003

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Notes payable, current portion                                     $    659,573
Line of credit due to Merrill Lynch
  (including interest)                                                1,008,639
Capital lease payable, current portion                                   29,796
Accounts payable and accrued expenses                                 1,929,762
Accounts payable, Lam Research Corporation                            2,093,109
Licenses payable                                                      4,057,234
Amounts due to related parties                                          424,481
                                                                   ------------
Total current liabilities                                            10,202,594
                                                                   ------------

LONG-TERM LIABILITIES, NET OF CURRENT PORTION-
Capital lease payable                                                    35,962

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT:
Preferred stock                                                               0
Common stock, par value, $.001 per share;
  authorized, 50,000,000 shares;
  issued and outstanding, 23,000,000 shares                              23,000
Paid-in capital                                                       1,957,160
Common stock subscribed                                                  55,000
Accumulated deficit                                                  (5,625,541)
                                                                   ------------
Total stockholders' deficit                                          (3,590,381)
                                                                   ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                        $  6,648,175
                                                                   ============

See accompanying notes.

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


                                       3
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

                                                      2003              2002
                                                      ----              ----

REVENUE:
Systems and Chillers                             $  2,626,534      $  1,289,581
Parts, assemblies and consumables                   5,746,576         3,002,066
Field service and training                            363,416         1,082,876
                                                 ------------      ------------
Total revenue                                       8,736,526         5,374,523
                                                 ------------      ------------

COST OF REVENUE:
Cost of revenues                                    5,499,564         3,753,479
Reserve for slow moving
  and obsolete inventory                            2,401,221           521,000
                                                 ------------      ------------
Total cost of revenue                               7,900,785         4,274,479
                                                 ------------      ------------

GROSS PROFIT                                          835,741         1,100,044
                                                 ------------      ------------

OPERATING EXPENSES:
Research and development                               58,226            74,111
Sales and marketing                                 1,147,977           648,799
General and administrative                          1,992,588         1,654,518
                                                 ------------      ------------
Total operating expenses                            3,198,791         2,377,428
                                                 ------------      ------------

LOSS FROM OPERATIONS                               (2,363,050)       (1,277,384)

INTEREST EXPENSE                                     (373,208)         (171,593)
                                                 ------------      ------------

LOSS BEFORE INCOME TAX EXPENSE                     (2,736,258)       (1,448,977)

INCOME TAX EXPENSE                                          0            11,500
                                                 ------------      ------------

NET LOSS                                         $ (2,736,258)     $ (1,460,477)
                                                 ============      ============

NET LOSS PER COMMON SHARE -
  Basic and diluted                              $       (.12)     $       (.07)
                                                 ============      ============

WEIGHTED AVERAGE NUMBER OF COMMON
     SHARES OUTSTANDING - Basic and
     diluted                                       22,833,333        22,000,000
                                                 ============      ============

See accompanying notes.

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


                                       4
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>
                              Stock Subscribed           Common Stock
                           ----------------------   -----------------------      Paid-in    Accumulated
                             Shares       Amount      Shares        Amount       Capital       Deficit         Total
                           -----------   --------   -----------    --------    -----------   -----------    -----------
<S>                          <C>         <C>         <C>           <C>         <C>           <C>            <C>
BALANCE,
  JANUARY 1, 2002                    0   $      0     6,745,000    $  6,745    $   312,957   $  (366,377)   $   (46,675)

SHARES CANCELLED                     0          0    (2,745,000)     (2,745)         2,745             0              0
COMMON STOCK ISSUED
  PURSUANT TO
  ACQUISITION OF
  ASPECT SEMIQUIP
  INTERNATIONAL, INC
  AND ASI TEAM ASIA LTD              0          0    18,000,000      18,000      1,482,458    (1,062,429)       438,029

NET LOSS                             0          0             0           0              0    (1,460,477)    (1,460,477)
                           -----------   --------   -----------    --------    -----------   -----------    -----------

BALANCE,
  DECEMBER 31, 2002                  0          0    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             0        160,000

STOCK SUBSCRIBED             1,100,000   $ 55,000             0           0              0             0         55,000

NET LOSS                             0          0             0           0              0    (2,736,258)    (2,736,258)
                           -----------   --------   -----------    --------    -----------   -----------    -----------

BALANCE,
  DECEMBER 31, 2003          1,100,000   $ 55,000    23,000,000    $ 23,000    $ 1,957,160   $(5,625,541)   $(3,590,381)
                           ===========   ========   ===========    ========    ===========   ===========    ===========
</TABLE>

See accompanying motes.

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


                                       5
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

                                                2003           2002
                                                ----           ----

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                    $(2,736,258)   $(1,460,477)
Adjustments to reconcile net loss to
  net cash used by operating
  activities:
  Common stock subscribed                        55,000
  Depreciation                                  197,033        211,242
  Amortization                                  436,292              0
  Provision for slow moving and
    obsolete inventories                      2,450,081        521,000
  Provision for doubtful accounts
    receivable                                   24,375              0
  Changes in operating assets
    and liabilities:
    Accounts receivable                        (740,680)       119,238
    Other receivables                             6,236        (16,606)
    Inventories                                (460,609)    (1,660,083)
    Prepaid expenses and other assets           (45,626)         1,815
    Accounts payable                            489,279      2,121,930
    Accrued expenses and amounts due
      to related parties                        247,391       (346,937)
                                            -----------    -----------
Net cash used in operating activities           (77,486)      (508,878)
                                            -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES -
  Purchases of property and equipment           (14,647)       (25,327)
                                            -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings from line of credit                    0        248,716
Proceeds from issuance of long-term debt        631,190        200,000
Principal payments on long-term debt           (581,136)      (134,321)
                                            -----------    -----------
Net cash provided by financing
  activities                                     50,054        314,395
                                            -----------    -----------

NET DECREASE IN CASH AND CASH EQUIVALANTS       (42,079)      (219,810)

CASH AND CASH EQUIVALENTS,
  BEGINNING OF YEAR                             199,880        419,690
                                            -----------    -----------

CASH AND CASH EQUIVALENTS, END OF YEAR      $   157,801    $   199,880
                                            ===========    ===========

                                                                     (Continued)


                                       6
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

                                                        2003              2002
                                                        ----              ----

SUPPLEMENTARY DISCLOSURE
   OF CASH FLOW INFORMATION:
Cash paid for interest                                $397,217        $   49,901
                                                      ========        ==========
Cash paid for taxes                                   $      0        $   23,000
                                                      ========        ==========

SCHEDULE OF NON-CASH INVESTING
   AND FINANCING ACTIVITIES:
Common stock issued for
  accounts payable                                    $160,000        $        0
                                                      ========        ==========
Acquisition of equipment
  through capital lease                               $ 42,636        $        0
                                                      ========        ==========
License agreement acquired
  through debt financing                              $150,000        $4,188,407
                                                      ========        ==========

See accompanying notes.

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


                                       2
<PAGE>

                      DND TECHNOLOGIES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

      ASI is a supplier of semiconductor manufacturing equipment and also
      supplies complete after market support of the aforementioned equipment,
      which currently includes Lam AutoEtch, Rainbow, and TCP plasma etch
      systems, plus products manufactured on the Matrix System One and Ten
      platforms. Elements of support include spare parts and assemblies, and
      various engineering services.

      Going Concern - These consolidated financial statements are presented on
      the basis that the Company is a going concern. Going concern contemplates
      the realization of assets and the satisfaction of liabilities in the
      normal course of business over a reasonable length of time. The Company
      incurred significant operating losses in 2003 and 2002, has negative
      working capital and a stockholders' deficit and is in default on a
      significant portion of its debt. These factors raise substantial doubt as
      to the Company's ability to continue as a going concern.

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

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


                                       3
<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.

      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, account balance over one year old,
      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.

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

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

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

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


                                       4
<PAGE>

      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 year ended December 31, 2003.

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

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

      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). Our 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.

      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, 2003 and 2002, the Company charged to operations
      $4,173 and $3,829, respectively.

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


                                       5
<PAGE>

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

      Concentration of Risk - Financial instruments which potentially subject
      the Company to concentrations of credit risk consist principally of cash
      and trade accounts receivable. The Company places its temporary cash
      investments in reputable financial institutions.

      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, 2003, the Company had one customer whose balance was 14% of net
      accounts receivable.

      Significant Customers - For the years ended December 31, 2003 and 2002,
      the Company had two customers and one customer, respectively, whose
      revenues exceeded 10% of total revenues (2003 - 17%, 12%; 2002 - 31%).

      Revenues in 2003 outside the United States included Europe (15%) and Asia
      (11%).

      Significant Suppliers - Through December 31, 2003, approximately 26% of
      gross inventory purchases were purchased from Lam Research Corp. The
      Company expects to have significant purchases of inventory from Lam in the
      coming year.

      Disclosure About Fair Value of Financial Instruments - The Company
      estimates that the fair value of all financial instruments as of December
      31, 2003, 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


                                       6
<PAGE>

      indicative of the amounts that the Company could realize in a current
      market exchange.

      Recently-Issued Accounting Pronouncements - In June 2002, the Financial
      Accounting Standards Board ("FASB") issued SFAS 146, "Accounting for Costs
      Associated with Exit or Disposal Activities", which nullifies EITF Issue
      94-3. SFAS 146 is effective for exit and disposal activities that are
      initiated after December 31, 2002 and requires that a liability for a cost
      associated with an exit or disposal activity be recognized when the
      liability is incurred in contrast to the date of an entity's commitment to
      an exit plan, as required by EITF Issue 94-3. The Company adopted this
      pronouncement on January 1, 2003.

      In December 2002, the FASB issued SFAS 148 "Accounting for Stock-Based
      Compensation" an amendment to SFAS 123. SFAS 148 provides alternative
      methods of transition for a voluntary change to the fair value based
      method of accounting for stock-based employee compensation. In addition,
      this Statement amends the disclosure requirements of Statement 123 to
      require prominent disclosures in both annual and interim financial
      statements about the method of accounting for stock-based employee
      compensation and the effect of the method used on reported results. This
      Statement is effective for fiscal years ending after December 15, 2002 for
      transition guidance and annual disclosure provisions; for financial
      reports containing financial statements for interim periods beginning
      after December 15, 2002 for interim disclosure provisions. The Company
      adopted this pronouncement on January 1, 2003.

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


                                       7
<PAGE>

      Company's adoption of the remaining provisions of FIN 46R in the quarter
      ending March 31, 2004 will not have an impact on the Company's financial
      statements.

      In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
      Financial Instruments with Characteristics of both Liabilities and
      Equity". This Statement establishes standards for how an issuer of debt
      classifies and measures certain financial instruments with characteristics
      of both liabilities and equity. It requires that an issuer classify
      certain financial instruments as a liability (or an asset in some
      circumstances) instead of equity. The Statement is effective for financial
      instruments entered into or modified after May 31, 2003, and otherwise is
      effective at the beginning of the first interim period beginning after
      June 15, 2003. The Company adopted this Statement on July 1, 2003.

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

      Reclassifications - Certain 2002 amounts have been reclassified to conform
      to 2003 presentations.

2.    ACCOUNTS RECEIVABLE

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

      Accounts receivable                                   $1,087,561
      Allowance for doubtful accounts                           34,000
                                                            ----------

      Net accounts receivable                               $1,053,561
                                                            ==========

      Allowance For Doubtful Accounts:

      Balance, January 1, 2003                              $    9,000
      Additions for the year                                    24,375
      Collection of accounts previously written off                625
                                                            ----------

      Balance, December 31, 2003                            $   34,000
                                                            ==========


                                       8
<PAGE>

3.    INVENTORIES

      The inventories are comprised of the following:

      Parts and materials                                     $ 3,842,501
      Work-in-process                                             322,582
      Allowance for obsolescence                               (3,126,222)
                                                              -----------

                                                              $ 1,038,861
                                                              ===========

      4. PROPERTY AND EQUIPMENT

Property and equipment and accumulated depreciation at December 31, 2003
      consists of:

      Office, furniture, fixtures and equipment               $   348,303
      Leasehold improvements                                      427,249
      Machinery and equipment                                     336,933
      Laboratory tools                                             25,833
                                                              -----------
                                                                1,138,318
      Less accumulated depreciation                               717,142
                                                              -----------

      Total property and equipment                            $   421,176
                                                              ===========

5.    LICENSE AGREEMENT AND PAYABLE, LAM RESEARCH CORPORATION

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

      Estimated amortization of the license agreement is as follows:

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

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


                                       9
<PAGE>

      Future minimum payments under the agreement are as follows:

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

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

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

      The Company has questioned the realized value of the products received and
      is currently in default on its payments. Negotiations are in process with
      Lam to revise the terms and dollar value of repayment, accordingly, the
      full amount has been classified as current in the consolidated balance
      sheet.

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 marketed under the trade names "System One" and
      "System Ten". The agreement provides for the payment of a License fee of
      $150,000 plus 18% of net revenues (from these sales) per quarter until a
      $2,750,000 license fee has been paid and a royalty on related sales
      ranging from 10% to 2% through December 31, 2010.

      Estimated amortization of the license fee is as follows:

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

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

      The license and royalty payable at December 31, 2003 consisted of the
      following:

      License payable                                         $ 109,296
      Royalty payable                                             5,164
                                                              ---------

      Total License and Royalty Payable                       $ 114,460
                                                              =========


                                       10
<PAGE>

7.    LINE OF CREDIT

      ASI had a $1,000,000 revolving line of credit with Merrill Lynch Business
      Financial Services, Inc. ("Merrill Lynch") which matured on April 1, 2002.
      Interest is accrued at Libor plus 2.75% (5.87% at December 31, 2003). The
      note is secured by a first lien on the Company's accounts receivable and
      inventories and has been personally guaranteed by the majority
      shareholder.

      The note contains numerous loan covenants for which ASI is not in
      compliance. The Company is current on the monthly interest payments. ASI
      has not yet received waivers on the covenants but is working with Merrill
      Lynch to renegotiate the note and establish a repayment plan for the loan.
      The loan balance, including accrued interest, at December 31, 2003 was
      $1,008,639.

8.    NOTES PAYABLE, RELATED PARTY

      Douglas Dixon                                                     $120,000
                                                                        ========
      On December 31, 1997 and March 6, 1998, the Company
      borrowed $120,000 from Douglas Dixon, Chairman of
      the Company. The loans are unsecured and were due on
      December 31, 1998. The Company has not repaid the
      notes and is accruing interest at 7%, compounded
      daily.

9.    NOTES PAYABLE, OTHER

      On May 19, 2001, the Company received a $250,000                  $123,371
      term loan from Merrill Lynch Business Financial
      Services, Inc.  The loan is payable in sixty
      monthly installments of $4,167, including interest
      at Libor plus 2.75% with an effective rate of
      5.87% at December 31, 2003.  The loan is secured
      by the same assets as the line of credit to
      Merrill Lynch as referenced in Note 7.

      A note payable, bearing interest at 12% was due                    200,000
      in November 2003, required monthly interest
      payments of $2,000 and is secured by a second
      lien on the receivables and inventory of ASI
      which total $2,260,490 at December 31, 2003.  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).


                                       11
<PAGE>

      A note payable to an individual. On June 12, 1997,                  46,852
      the Company acquired 35% of the outstanding stock of
      ASI from the former president of ASI and issued a
      note payable to the seller for $483,630. The note is
      payable in quarterly installments of $24,319,
      including interest at 10% and matures on May 15,
      2004. The note is secured by 947,000 shares of ASI
      stock held in escrow.

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

      Total (all current)                                              $ 659,573
                                                                       =========

10.   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 November 2004 through
      October 2008.

      Future minimum lease payments under the leases at December 31, 2003 are a
      follows:

      December 31, 2004                                                $ 37,350
      December 31, 2005                                                  21,642
      December 31, 2006                                                   7,008
      Thereafter                                                         11,704
                                                                       --------
       Total                                                             77,704
      Less amount representing interest                                 (11,946)
                                                                       --------

      Present value of future minimum lease payments                     65,758
      Less current portion                                              (29,796)
                                                                       --------

      Long-term portion                                                $ 35,962
                                                                       ========

11.   ACCOUNTS PAYABLE, LAM RESEARCH CORPORATION

      The inventory purchase from Lam (see Note 5) is due in equal monthly
      installments beginning in July 2003.

      The Company has questioned the realized value of the products received and
      is currently in default on its payments. Negotiations are in process with
      Lam to revise the terms and dollar value of repayment, accordingly, the
      full amount has been classified as current in the consolidated balance
      sheet.


                                       12
<PAGE>

12.   AMOUNTS DUE TO RELATED PARTIES

      The due to related parties at December 31, 2003 consists of the following:

      Accrued interest on note payable (see Note 8)               $ 33,201
      Accrued officer's salaries                                   271,280
                                                                  --------

      Total Amount Due To Related Parties                         $304,481
                                                                  ========

13.   INCOME TAXES

      Provision (Benefit)

      The provision for income taxes for the year ended December 31, 2003 and
      2002 represents primarily Texas franchise taxes and consists of the
      following:

                                                       2003         2002
                                                       ----         ----

      Current                                        $      0     $ 11,500
      Deferred                                       $      0     $      0

      Deferred Tax Components

      Significant components of the Company's deferred tax assets are as follows
      at December 31, 2003:

      Net operating loss carryforwards                        $ 1,053,000
      Timing difference for expense deductions                     30,000
                                                              -----------
                                                                1,083,000
      Less valuation allowance                                 (1,083,000)
                                                              -----------

      Net deferred tax assets                                 $         0
                                                              ===========

      Summary of valuation allowance:

      Balance, January 1, 2003                                $   494,930
      Addition for the year ended December 31, 2003               588,070
                                                              -----------

      Balance, December 31, 2003                              $ 1,083,000
                                                              ===========

      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


                                       13
<PAGE>

      future taxable income and tax planning strategies in making this
      assessment.

14.   NET OPERATING LOSSES

      The Company has the following net operating loss carryforwards:

<TABLE>
<CAPTION>
                                                                  Aspect
                                                                 Semiquip
                                                               International
                                                                    Inc.
                                                      DND           and
                                                 Technologies    Semiquip
          Year of Loss       Expiration Date          Inc.          Inc.          Total
          ------------       ---------------          ----          ----          -----
<S>                         <C>                    <C>            <C>         <C>
       December 31, 1997    December 31, 2017      $   82,403     $      0    $   82,403
       December 31, 1998    December 31, 2018          17,297            0        17,297
       December 31, 2000    December 31, 2020         117,915            0       117,915
       December 31, 2001    December 31, 2021         142,448      134,299       276,747
       December 31, 2002    December 31, 2022       1,507,813            0     1,507,813
       December 31, 2003    December 31, 2023       2,876,627            0     2,876,627
                                                   ----------     --------    ----------

                                                   $4,744,503     $134,299    $4,878,802
                                                   ==========     ========    ==========
</TABLE>

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

15.   PRODUCT WARRANTY PROVISION

      The Company maintains a provision for warranty costs for all system sales.
      A summary of the warranty liability is as follows:

      Balance, January 1, 2003                                   $ 47,129
      Addition to warranty liability
        for the year ended December 31, 2003                       54,446
      Payment of warranty costs for the
        the year ended December 31, 2003                          (54,953)
                                                                 --------

      Balance, December 31, 2003                                 $ 46,622
                                                                 ========

16.   COMMITMENTS AND CONTINGENCIES

      Real Estate Leases

      The Company leases its Arizona and Texas facilities under operating leases
      which expire in November 2007 and November 30, 2008, respectively. Rent
      expense in 2003 and 2002 amounted to $384,880 and $337,383, respectively.


                                       14
<PAGE>

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

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

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

      Litigation

      Merrill Lynch has filed a lawsuit against the Company seeking repayment of
      its line of credit and term loan. The Company has filed a countersuit
      against Merrill Lynch. Should Merrill Lynch successfully foreclose on its
      line of credit, the Company's available funds and ability to continue its
      operations will be adversely affected. ASI has not yet received waivers on
      the legal covenants, but is working with Merrill Lynch to renegotiate the
      note and establish a repayment plan for the loan.

      The Company and a former employee have counter-claims against each other
      arising from the employee's prior association with the Company.

      The Company has made no provision for any losses in connection with the
      above litigation and does not expect the final settlement of the above
      matters to have a significant impact on the consolidated financial
      statements.

17.   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


                                       15
<PAGE>

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

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

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

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

      A summary of the option activity for the year ended December 31, 2003,
      pursuant to the terms of the Plan is as follows:

      Options outstanding at January 1, 2003                    0     $.00
      Granted 4,999,226                                               $.06
      Exercised                                                 0     $.00
      Cancelled and expired                               225,000     $.06
                                                        ---------

      Options outstanding at December 31, 2003          4,774,226
                                                        =========

      3,004,226 shares are exercisable at December 31, 2003.

      Information regarding stock options outstanding as of December 31, 2003 is
      as follows:

      Price                                                          $   .06
      Weighted average exercise price                                $   .06
      Weighted average remaining contractual life          9 years, 7 months

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

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

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

      Net loss:
      As reported                                                 $(2,736,258)


                                       16
<PAGE>

      Proforma                                                    $(2,750,883)

      Loss per share attributable to common stock:

      Basic and diluted:
      As reported                                                      $(.12)
      Proforma                                                         $(.12)

18.   MANAGEMENT PLANS

      Management's plans include, but are not limited to, renegotiating the Lam
      agreement, negotiating a long-term payment plan for the Merrill Lynch line
      of credit, increasing revenue by continuing to expand the legacy product
      lines, and obtaining additional equity or debt financing from investors.

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


                                       17