U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549

                                   FORM 10-QSB
(Mark One)
[X]      QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006.

                                       OR

[_]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

                        Commission file number 000-21477

                                  ASPEON, INC.
                                  ------------
        (Exact name of small business issuer as specified in its charter)

         Delaware                                   52-1945748
         --------                                   ----------
(State or other jurisdiction of                     (IRS Employer Identification
   incorporation or organization)                   No.)

           2460 West 26th Avenue, Suite 380-C, Denver, Colorado, 80211
           -----------------------------------------------------------
                    (Address of principal executive offices)

                                 (303) 380 9784
                                 --------------
                           (Issuer's telephone number)

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

Indicate by check mark whether the  Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]

State the  number of  shares  outstanding  of each of the  issuer's  classes  of
equity, as of the latest practicable date:

              Class                                   Outstanding May 12, 2006
              -----                                   ------------------------
Common Stock, $ 0.01 par value                          9,436,225 shares

         Transitional Small Business Disclosure format: Yes [ ] No [ X ]


<PAGE>


<TABLE>
<CAPTION>

                                      INDEX

                                  ASPEON, INC.
<S>                                                                             <C>

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)                                       PAGE

Consolidated Balance Sheet - March 31, 2006.                                      3

Consolidated Statements of Operations - Three Months and Nine Months ended        4
March 31, 2006 and 2005.

Consolidated Statement of Cash Flows - Nine Months ended March 31, 2006           5
and 2005.

Notes to Consolidated Financial Statements.                                       6


Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations.                                    20

Item 3.  Controls and Procedures.                                                35



PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.                                                      35
Item 2.  Changes in Securities.                                                  36
Item 3.  Defaults on Senior Securities.                                          36
Item 4.  Submission of Matters to a Vote of Security Holders.                    36
Item 5.  Other Information.                                                      36
Item 6.  Exhibits and Reports on Form 8-K.                                       36
</TABLE>




                                       2

<PAGE>

Part I.   FINANCIAL INFORMATION

Item I. Financial Statements

<TABLE>
<CAPTION>

                                     Aspeon, Inc.
                              Consolidated Balance Sheet
                                     (Unaudited)




                                                                                                  March 31,
                                                                                                    2006
                                                                                             ------------------
<S>                                                                                          <C>
ASSETS

Current Assets
      Cash & Cash Equivalents                                                                $               7
      Other Receivables                                                                                 49,153
      Prepaid Expenses                                                                                     188

                                                                                             ------------------
                   Total Current Assets                                                                 49,348

Fixed Assets                                                                                                 0

Other Assets                                                                                                 0

                                                                                             ------------------
TOTAL ASSETS                                                                                 $          49,348
                                                                                             ==================

LIABILITIES & STOCKHOLDERS' DEFICIT

Current Liabilities
      Accounts Payable                                                                       $       6,808,889
      Unearned Income & Customer Deposits                                                              236,128
      Accrued Expenses                                                                                 577,277
      Notes Payable                                                                                    296,806
      Deferred Earnouts                                                                                208,195

                                                                                             ------------------
                   Total Current Liabilities                                                         8,127,295

STOCKHOLDERS' DEFICIT
      Preferred Stock, $0.01 par value: 990,000 shares authorized (1,000,000                                 0
      authorized, net 10,000 designated as mandatorily redeemable stock), no
      shares issued and outstanding.
      Common Stock, $0.01 par value: 20,000,000 shares authorized,  9,436,225                           94,361
      shares issued and outstanding.
      Additional Paid In Capital                                                                    84,938,361
      Treasury Stock                                                                                   (60,000)
      Accumulated Deficit                                                                          (93,050,669)
                                                                                             ------------------
                   Total Stockholders' Deficit                                                      (8,077,947)

                                                                                             ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                                  $          49,348
                                                                                             ==================
</TABLE>

             See accompanying Notes to Consolidated Financial Statements.

                                           3

<PAGE>

<TABLE>
<CAPTION>

                                             Aspeon, Inc.
                                Consolidated Statements of Operations
                                              (Unaudited)


                                                           Three Months Ended                     Nine Months Ended
                                                              March 31,                              March 31,
                                                         2006              2005                2006                2005
                                                   ---------------    --------------     ----------------   ----------------
<S>                                                <C>                <C>                <C>                <C>

Operating Expenses

      General & Administrative Expenses                    22,176            11,169               83,707             11,169

      Loss on Assignment For Benefit of Creditors               0                 0               20,000                  0

                                                   ---------------    --------------     ----------------   ----------------
      Total Operating Expenses                            (22,176)          (11,169)            (103,707)           (11,169)

      Operating (Loss)                                    (22,176)          (11,169)            (103,707)           (11,169)

Interest and Other Income / (Expenses) Net                 (2,891)               (3)              (7,485)                (3)

                                                   ---------------    --------------     ----------------   ----------------
(Loss) before Income Taxes                                (25,067)          (11,172)            (111,192)           (11,172)

Provision for Income Taxes                                -                  -                   -                  -

                                                   ---------------    --------------     ----------------   ----------------
Net (Loss)                                         $      (25,067)    $     (11,172)     $      (111,192)   $       (11,172)
                                                   ===============    ==============     ================   ================

NET (LOSS) PER COMMON SHARE

      Basic & Diluted                                      ($0.00)           ($0.00)              ($0.01)            ($0.00)
                                                   ===============    ==============     ================   ================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

      Basic & Diluted                                 9,436,225          9,436,225           9,436,225          9,436,225
                                                   ===============    ==============     ================   ================

                     See accompanying Notes to Consolidated Financial Statements.

                                                   4
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                          Aspeon, Inc.
                             Consolidated Statements of Cash Flows
                                          (Unaudited)


                                                                                            Nine Months Ended
                                                                                                 March 31,
                                                                                       2006                  2005
                                                                                 ----------------     -----------------
<S>                                                                              <C>                  <C>

CASH FLOW (USED IN) OPERATING ACTIVITIES

NET  (LOSS)                                                                      $      (111,192)     $              0

ADJUSTMENTS TO RECONCILE NET (LOSS) TO NET CASH                                                0                     0
(USED IN) OPERATING ACTIVITIES

CHANGES IN OPERATING ASSETS & LIABILITIES

      (Increase)/Decrease in Other Receivables                                           (44,019)                    0
      (Increase)/Decrease in Prepaid Expenses                                                962                     0
      Increase/(Decrease) in Accounts Payable                                             46,363                     0
      Increase/(Decrease) in Accrued Expenses                                              7,485                     0

                                                                                 ----------------     -----------------
      Total Cash Flow (used in) Operating Activities                                    (100,401)                    0

CASH FLOW FROM INVESTING ACTIVITIES                                                            0                     0

                                                                                 ----------------     -----------------
      Total Cash Flow provided by / (used in) Investing Activities                             0                     0

CASH FLOW FROM FINANCING ACTIVITIES

      Advances under Notes Payable                                                        80,408                     0

                                                                                 ----------------     -----------------
      Total Cash Flow provided by Financing Activities                                    80,408                     0

(DECREASE) IN CASH & CASH EQUIVALENTS                                            $       (19,993)     $              0
                                                                                 ================     =================

Cash and Cash Equivalents at the beginning of the period                         $        20,000      $              0
                                                                                 ================     =================

Cash and Cash Equivalents at the end of the period                               $             7      $              0
                                                                                 ================     =================

SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION

Cash paid for interest                                                           $             0      $              0
                                                                                 ----------------     -----------------

Cash paid for income tax                                                         $             0      $              0
                                                                                 ----------------     -----------------

</TABLE>

                  See accompanying Notes to Consolidated Financial Statements.

                                                5


<PAGE>



                                  ASPEON, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Note. 1           General

         We were  incorporated  in the Sate of Delaware in September  1995 under
the name Sunwood Research,  Inc. We changed our name to Javelin Systems, Inc. in
October 1996 and  subsequently  to Aspeon,  Inc. in December  1999.  Our mailing
address is 2460 West 26th Avenue, Suite 380-C, Denver,  Colorado,  80211 and our
telephone number is 303-380-9784.

         Effective  June 30, 2003 we made the  decision to  discontinue  all our
remaining  operating  businesses  and are now focused on  reaching  satisfactory
negotiated  settlements  with our outstanding  creditors,  vigorously  defending
against any further  appeal that may be made  against our  currently  successful
defense of the law suit  brought  against  us by  certain  of our  shareholders,
bringing our financial records and SEC filings up to date,  seeking a listing on
the over the  counter  bulletin  board,  raising  debt and,  or,  equity to fund
negotiated  settlements  with our  creditors  and to meet our ongoing  operating
expenses and attempting to merge with another entity with experienced management
and  opportunities for growth in return for shares of our common stock to create
value for our shareholders. There can be no assurance that this series of events
will be successfully completed.

            Prior  to  our  cessation  of  operations,  our  principal  business
activities were:

    - POS PRODUCTS. Javelin Systems, a division of Aspeon, Inc.  ("Javelin") and
CCI Group, Inc. ("CCI"), a subsidiary of Aspeon, Inc.,  designed,  manufactured,
marketed  and sold open system  touch  screen  point of sale  ("POS")  computers
primarily to the foodservice and retail industries (the "POS Products").

    -SOLUTION SERVICES.  Through our CCI, Jade Communications  Limited ("Jade"),
RGB/Trinet Limited ("RGB"), (subsequently renamed Javelin Holdings International
Limited (UK)),  (collectively "RGB/Jade") and Aspact IT Services (Singapore) Pte
Ltd. ("Aspact")  subsidiaries,  we provided  information  technology  management
services  for  customers  that did not intend or were not able to hire their own
information  technology  personnel  (the  "Solution  Services").  These services
included network design and management,  installation of computer systems, local
and wide area network support, maintenance and repair, and help desk support.

    - APPLICATION SERVICES PROVIDER. Through our Aspeon Solutions, Inc. ("Aspeon
Solutions"),  Dynamic  Technologies,  Inc.  ("DTI"),  SB Holdings,  Inc. ("SB"),
Restaurant   Consulting  Services  ("RCS")  and  Monument  Software  Corporation
("Monument")  subsidiaries,  we  operated  as an  application  service  provider
("ASP"). Our ASP services enabled software applications to be deployed, managed,
supported and upgraded from centrally located servers, rather than on individual
computers (the "ASP Services").  Our ASP Services primarily were directed toward
customers in the foodservice industry.

            An over view of the major events since incorporation is as follows:

            On November 1, 1996,  we completed an initial  public  offering (the
"IPO")  of  850,000  shares of our  common  stock at $5.00  per  share,  netting
proceeds of approximately $3.2 million. Proceeds were used to repay debt with an
outstanding  balance  of  approximately   $745,000  and  for  general  corporate
purposes.

            In December 1997, we acquired all of the outstanding common stock of
POSNET Computers,  Inc.  ("Posnet") and CCI Group, Inc. ("CCI").  Posnet and CCI
provided  full  turn-key   systems   integration   services,   including  system
consulting, staging, training, deployment, product support and maintenance.

                                       6

<PAGE>

            In  March  and  April  1998,  we  established  three   international
subsidiaries to expand our sales and distribution  channels in the international
marketplace.  The  international  subsidiaries  were:  Javelin Systems  (Europe)
Limited   ("Javelin   Europe")   headquartered   in  England;   Javelin  Systems
International Pte Ltd ("Javelin Asia")  headquartered in Singapore;  and Javelin
Systems Australia Pty Limited ("Javelin Australia"), subsequently renamed Aspeon
Systems (Asia Pacific) Pty Ltd, headquartered in Australia.

            In May 1998,  Javelin Asia  acquired all of the  outstanding  common
stock  of  Aspact  IT  Services  (Singapore)  Pte  Ltd  ("Aspact").  Aspact  was
headquartered  in  Singapore  and  provided  consulting  and system  integration
services.

            In November 1998, we completed a public offering of 1,395,000 shares
of our common stock at $6.75 per share,  netting proceeds of approximately  $8.1
million. Proceeds were used to repay borrowings under a revolving line of credit
of approximately  $3.2 million,  to purchase all of the outstanding common stock
of RGB/Trinet Limited ("RGB"),  which was subsequently  renamed Javelin Holdings
International Limited (UK), and Jade Communications Ltd ("Jade") and for general
corporate  purposes.  RGB and Jade were  headquartered  in England and  provided
complementary  Wide Area  Networking  (WAN)  products and services  primarily to
large retail, hospitality, and telecommunications companies.

            During the  course of 1998 we  established  a 75% owned  subsidiary,
Teneo Ltd ("Teneo"), in an effort to expand our service management and wide area
network solutions business.

            In January 1999 the business and assets of Posnet were  transferred
from Posnet and merged with the business and assets of
CCI.

            In February 1999, we completed a public offering of 2,375,000 shares
of our common stock at $12.25 per share, netting proceeds of approximately $26.9
million.  Proceeds were used to purchase the outstanding common stock of Dynamic
Technologies,  Inc. ("DTI") and SB Holdings, Inc. ("SB") and for working capital
and general  corporate  purposes.  DTI and SB provided custom  Internet/Intranet
software and services.

            In August 1999, we acquired all of the outstanding  capital stock of
Restaurant  Consulting  Services,  Inc. ("RCS").  RCS implemented,  operated and
supported packaged software applications for the restaurant industry.

            In  January  2000,  we  created  Aspeon  Solutions,   Inc.  ("Aspeon
Solutions")  as a wholly owned  subsidiary to centralize  and continue the rapid
development of our ASP service business.

            On March 8, 2000 we completed a private placement of securities with
Marshall Capital  Management,  Inc., an affiliate of Credit Suisse First Boston,
in  which  we sold an  aggregate  of  10,000  shares  of  Series  A  Convertible
Exchangeable  Preferred  Stock  (the  "Preferred  Stock"),  a warrant to acquire
583,334 shares of our common stock and a warrant to acquire  1,250,000 shares of
Aspeon Solutions, one of our wholly-owned subsidiaries. Proceeds to us from this
placement  amounted  to $9.6  million,  net of offering  costs,  which were used
primarily to acquire Monument Software Corporation  ("Monument"),  settle future
contingent  payments associated with the acquisition of RCS, hire management and
staff  personnel,   expand  corporate  facilities  and  fund  our  ASP  Services
operations. Monument specialized in the rapid implementation of enterprise-class
financial systems with an emphasis on Oracle Financials

            During  fiscal  2000,  we  sustained  significant  losses and we had
experienced negative cash flows from our operations since inception.  As at June
30,  2000 we were in default of  certain  covenants  under the terms of both our
credit  facility  and  Preferred  Stock and were  delinquent  in the  payment of

                                       7

<PAGE>

various  trade  payables.  Our ability to meet our  obligations  in the ordinary
course of business was  dependent  upon the success of our attempts to return to
profitability,  obtain a waiver of credit  line and  Preferred  Stock  defaults,
raise additional financing through public and, or, private equity financings and
evaluate potential strategic opportunities. We sought to return to profitability
by  streamlining  operations  and  generating  on-going  cost  savings and began
evaluating  strategic  opportunities  for our sale or the sale of certain of our
subsidiaries.

            As part of our efforts to streamline our  operations,  during fiscal
2001 we merged the business of Javelin Asia into Javelin  Australia  and renamed
Javelin  Australia  Aspeon  Systems  (Asia  Pacific)  Pty Ltd and we merged  the
operations of Monument into those of RCS.

         In August  2000,  we executed a sale  agreement  with the then  current
director of Aspact (the "Purchaser"). The initial purchase price of $350,000 was
payable  to us in  monthly  installments  of  $14,600  commencing  in July 2001.
Consequently,  a loss on sale of  approximately  $229,000 was  recognized in the
three months ended September 30, 2000. In the event the Purchaser consummated an
initial  public  offering or disposed  of all or  substantially  all of Aspact's
common stock,  the  Purchaser was required to pay: a) the unpaid  balance of the
initial  consideration  and b) 50% of the net proceeds received from the initial
public  offering  less the amount  paid  under  (a),  in an amount not to exceed
$200,000. Concurrent with the sale agreement, the Purchaser was terminated as an
employee of ours.

         In   September    2000,   at   the    insistence   of   our   auditors,
PricewaterhouseCoopers,  LLC  ("PWC"),  we announced  that we would  restate our
first quarter 2000 financial statements as a result of accounting misstatements.
In October 2000 we announced we would require  additional  time to file our form
10-K report for the fiscal year ended June 30, 2000.

         In October 2000, the Nasdaq Stock Market  ("Nasdaq")  suspended trading
in our common stock while it sought additional  information from us. On November
9, 2000, we participated  in a hearing before the Nasdaq Listing  Qualifications
Panel which was held for the purpose of evaluating  whether shares of our common
stock would continue to be listed on Nasdaq or if they would be delisted.

         In October and November 2000,  eight  purported  class action  lawsuits
were  filed  against  us, our Chief  Executive  Officer,  and our  former  Chief
Financial  Officer in the United States District Court for the Central  District
of California  for alleged  violations of the  Securities  Exchange Act of 1934.
After the  defendants  moved to dismiss each of the actions,  the lawsuits  were
consolidated   under  a  single  action,   entitled  "In  re  Aspeon  Securities
Litigation,"  Case No. SACV 00-995 AHS (ANx),  and the appointed  lead plaintiff
voluntarily filed an amended and consolidated complaint. The defendants moved to
dismiss  that  complaint  and on April  23,  2001  the  Court  entered  an order
dismissing the complaint without  prejudice.  On May 21, 2001 the appointed lead
plaintiff  filed a third  complaint,  styled  as a "First  Amended  Consolidated
Complaint." On June 4, 2001 the  defendants  moved to dismiss this complaint and
on September 17, 2001 the United States  District Court  dismissed the suit with
prejudice and entered judgment in favor of the us and our officers. On September
20,  2001 the lead  plaintiff  in the class  action  suit  appealed  against the
dismissal of the case.  On January 21, 2003 the decision to dismiss the case was
upheld  but  the  lead  plaintiff  was  given  the  opportunity  to  remedy  the
deficiencies  in the complaint that had been filed.  Accordingly on May 30, 2003
the plaintiff filed its "Second Amended Consolidated  Complaint" which again was
subsequently  dismissed  by the  District  Court.  On November 26, 2003 the lead
plaintiff  filed its  "Third  Amended  Consolidated  Complaint"  which was again
dismissed  with  prejudice in March 2004. The lead plaintiff once again appealed
against  the  dismissal  and the United  States  Court of Appeals  for the Ninth
Circuit  affirmed the dismissal with prejudice on February 23, 2006. This is the
fifth  time  that  the  Courts  have  ruled  in  favor  of us  and  against  the
shareholders  who have  brought  this suit  against us. On each of the  previous
occasions the  shareholders  who have brought this suit against us have filed an
appeal  against the decision of the Courts.  There can be no assurance  that the
shareholders  who have  brought  this  suit  against  us will not file a further
appeal  against  the  Courts'  latest  ruling in which case we will  continue to
vigorously defend against the claims.

                                       8

<PAGE>

         In December 2000 we restated the results for the fiscal  quarters ended
September 30, 1999, December 31, 1999 and March 31, 2000 by an aggregate of $1.7
million or $0.19 per share.  Revenue was reduced by $679,000 or 1.05%, our gross
profit was  decreased  by $206,000  or 1.22%,  $1.4  million of the  restatement
related to an  adjustment  to increase the amount  recorded  for the  beneficial
conversion  feature associated with the issuance of our Preferred Stock in March
2000 based upon an independent  valuation and the remaining  adjustments related
to unrecorded compensation expense, amortization of intangible assets, expensing
costs previously capitalized and the additional accrual of general expenses.

         Effective  as of  January  4,  2001 our  shares of  common  stock  were
delisted  from Nasdaq.  As we were in arrears with our filings with the SEC, our
shares of common  stock were not  eligible  to be traded on the over the counter
bulletin  board and  commenced  trading  on the Pink  Sheets  under  the  symbol
ASPE.PK. Subsequently our shares of common stock ceased to be traded on the Pink
Sheets and are now traded on the Gray Sheets.

         In January 2001 our auditors,  PWC, notified us that it was terminating
its auditor relationship with us effective immediately.

         In February  2001 our  subsidiary,  RGB,  sold its interest in Teneo to
employees of Teneo for the consideration of a $350,000 note. Consequently a gain
on sale of $432,000 was recognized during the quarter ended March 31, 2001.

         On March 1, 2001 we completed the sale of the consulting  contracts and
certain of the fixed assets our DTI subsidiary to a company  controlled by DTI's
former owners and certain of our  shareholders  for a purchase price of $900,000
and the return for  cancellation of 200,000 of shares of our common stock valued
at $60,000.  With the  completion of the transfer of its help desk business to a
third party on April 27, 2001, the business  activities of DTI ceased. A gain on
the sale of the net assets of DTI totaling  $820,900 was  recognized  during the
quarter ended March 31, 2001.

         On  March  19,  2001  we  retained  BDO  Seidman,  LLP  ("BDO")  as our
independent auditing firm. However, as PWC, our previous  independent  auditors,
refused to allow BDO access to PWC's prior year work  papers,  BDO was unable to
complete an audit of our financial statements for later periods.

         During fiscal 2001,  despite our efforts to return to profitability and
the sale of certain of our  subsidiaries,  we continued to generate  significant
losses,  to be in default of certain  covenants under the terms of our Preferred
Stock,  to be delinquent  in the payment of various trade  payables and had been
unable to replace  our line of credit  which had been  repaid in full during the
course of the year.  While we had  appointed  new  auditors,  we were  unable to
generate  audited  financial  accounts due to the lack of  cooperation  from our
previous  auditors  and  consequently  were  unable to comply  with the  listing
requirements  of  either  Nasdaq or the over the  counter  bulletin  board.  Our
relegation  to the Pink Sheets had  serious  adverse  consequences  for both the
confidence  of our  customers or potential  customers and our ability to attract
new debt or equity financing. The law suits brought against us by certain of our
shareholders  diverted a significant  amount of our  management's  time from our
operations which were also severely  effected by the collapse of the tech market
in early 2001.  Nevertheless we continued press ahead by attempting to return to
profitability  through  further cost  reductions,  renegotiate  the terms of our
Preferred  Stock,  settle  the  outstanding  shareholder  litigation,   evaluate
strategic  opportunities for our sale or the sale of certain of our subsidiaries
and raise additional debt and, or, equity funding.

         In August 2001 we, together with our Chief Executive  Officer,  filed a
six count complaint  against our former  auditors,  PWC,  alleging  professional
negligence,   intentional  interference  with  prospective  business  advantage,
negligent  interference  with  prospective  economic  advantage,   violation  of

                                       9

<PAGE>

California   Business  and  Professions  Code  Sections  17200  and  17500,  and
defamation.

            On March 22, 2002 we signed an agreement to sell our  subsidiary RGB
(renamed  Javelin Holdings  International  Ltd.), the UK holding company that in
turn owned our Javelin Europe and Jade subsidiaries, to an investment group that
included  members  of the  existing  UK  management  team for  $125,995  and the
repayment of inter-company  debt.  $750,000 was paid on signing with $175,000 to
be paid upon completion of a technology escrow agreement

         On May 1, 2002 we signed an agreement  with the holder of our Preferred
Shares  that had been in  default.  Under that  agreement,  in return for a cash
payment of $447,500 by us (a) we were released from all liabilities  relating to
our  outstanding  Series A  Convertible  Exchangeable  Preferred  Stock  and the
documents under which those securities had been issued and were outstanding; (b)
all of our outstanding  Series A Convertible  Exchangeable  Preferred Stock were
cancelled; (c) a warrant previously issued by us entitling the holder thereof to
purchase  583,334  shares of our common stock was  cancelled;  and (d) a warrant
previously  issued by our  subsidiary,  Aspeon  Solutions,  entitling the holder
thereof to purchase 1,250,000 shares of the common stock of Aspeon Solutions was
cancelled.  We believed  that the  settlement  had a net positive  effect on our
balance sheet of approximately $19 million.

         In June 2002 we terminated the activities of RCS.

         On  January  17,  2003,  we sold  our  Australian  subsidiary,  Javelin
Australia,  to Mr. Matthew Maley. Prior to the sale, Mr. Maley had served as our
general manager of that  subsidiary.  We received $80,000 at the closing of this
transaction.  Under the Share Sale Agreement  relating to this transaction,  Mr.
Maley agreed to cause Javelin  Australia to pay its account payable to us in the
amount of $239,000 in monthly installments of $10,000 each until the full amount
of the account  payable has been paid.  Mr. Maley  personally  guaranteed  these
payments.

            During the fiscal years ending June 30, 2002 and 2003, we used every
effort to return to profitability  through  on-going cost  reductions,  to raise
additional debt and, or, equity funding and to identify strategic  opportunities
for our sale or the sale of certain of our subsidiaries  However,  the weak tech
market,  together with our inability to produce  audited  accounts and come into
compliance  with the listing  conditions of Nasdaq or over the counter  bulletin
board  markets,  meant we were  unable to attract new  customers  or the debt or
equity financing necessary to secure our financial future.

         On June 30, 2003 we decided to  discontinue  the operations of our last
two  operating  businesses,  Javelin and CCI.  Javelin  ceased  operations  with
immediate effect while CCI completed certain outstanding  customer orders before
ceasing  production  on August  3, 2003 and  continued  to  subcontract  certain
maintenance activities through December 31, 2003.

         In August  2003 we reached an out of court  settlement  in our law suit
against  PWC.  Under the terms of the  settlement  we received a payment of $1.3
million and agreement to write off certain  outstanding  invoices for accounting
and  legal  fees.  Consequently  we  recognized  a  gain  of  $1,007,000  on the
settlement  although  the net cash we  received  after  all costs  totaled  only
$136,000.

         In December  2003,  we  appointed  attorney  Frank G Blundo Jr. P.C. as
trustee in an  assignment  for the  benefit of the  creditors  of Aspeon and CCI
commencing effective January 1, 2004. Effective January 1, 2004, all of Aspeon's
and CCI's assets were transferred to the trustee for the benefit of those Aspeon
and CCI creditors who elected to  participate  in the assignment for the benefit
of Aspeon and CCI creditors.  The assets  transferred had a fair market value of
$496,000 and creditors totaling $3.7 million elected to participate and be bound
by the terms of the assignment for the benefit of Aspeon and CCI creditors under
which they no longer had any further claim against  Aspeon or CCI.  Consequently
we recognized a gain of $3.2 million on the  establishment of the assignment for
the  benefit  of Aspeon and CCI  creditors.  Certain  Aspeon and CCI  creditors,
totaling in excess of $3.1 million, elected not to participate in the assignment
for the  benefit  of  Aspeon  and CCI  creditors  and  remained  as  outstanding
liabilities of Aspeon and CCI.

                                       10

<PAGE>

         Following  the  establishment  for the  assignment  for the  benefit of
Aspeon  and CCI  creditors  in January  2004,  we had no  assets,  no  operating
business or other source of income,  outstanding  liabilities  in excess of $7.9
million,  an  outstanding  law  suit  brought  against  us  by  certain  of  our
shareholders,  were  substantially  in arrears in  respect  of  maintaining  our
financial  records and our SEC filings,  were no longer  listed on Nasdaq or the
over the  counter  bulletin  board and in due course  ceased to be listed on the
Pink Sheets.

         In April 2005, we appointed  David J Cutler as a new director and Chief
Executive   Officer  and   subsequent  to  that  are  now  focused  on  reaching
satisfactory  negotiated settlements with our outstanding creditors,  vigorously
defending  against any further  appeal  that may be made  against our  currently
successful  defense  of the  law  suit  brought  against  us by  certain  of our
shareholders, bringing our financial records and SEC filings up to date, seeking
a listing on the over the counter bulletin board,  raising  additional debt and,
or,  equity  to  finance  settlements  with  creditors  and to meet our  ongoing
operating  expenses and attempting to merge with another entity with experienced
management and opportunities for growth in return for shares of our common stock
to create value for our shareholders. There can be no assurance that this series
of events will be successfully completed.

         On April 22, 2005,  our sole  director,  David J Cutler entered into an
agreement  with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the
benefit of Aspeon and CCI creditors,  subject to due diligence,  to invest up to
$50,000  cash in us for the benefit of our  creditors  in return for a number of
shares of our common stock to be determined. Following the completion of the due
diligence process during the three months ended December 31, 2005, it was agreed
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI  creditors,  that Mr.  Cutler would invest  $20,000 in us for the
benefit  of Aspeon  and CCI  creditors  in return  for a number of shares of our
common  stock to be  determined.  Accordingly  during  the  three  months  ended
December 31, 2005  $20,000  which had been placed in escrow with Frank G Blundo,
Jr. P.C. by Mr. Cutler was released for the benefit of Aspeon and CCI creditors.
The number of shares of our common  stock to be issued to Mr.  Cutler in respect
of this investment has yet to be finalized.

         During the fiscal  year ended June 30,  2005,  our then sole  director,
David J Cutler,  advanced to us $88,000 by way of loan,  bearing interest at 8%,
to meet our  ongoing  operating  expenses  and fund the  costs of  bringing  our
financial  statements  and SEC  reporting  up to date.  In the nine months ended
March 31, 2006 Mr.  Cutler has made further  advances to us of $80,000 by way of
loan to meet our ongoing  operating  expenses and fund the costs of bringing our
financial  statements  and SEC  reporting  up to date as  required.  There is no
guarantee that Mr. Cutler will continue to provide  further funding to us in the
future.

         On  September  9, 2005 we received a letter from the SEC dated June 24,
2005  indicating  that  unless  we  came  into  compliance  with  the  reporting
requirements under the Securities  Exchange Act of 1934 within 15 days we may be
deregistered.  On  September  12, 2005 we faxed a letter to the SEC's  Office of
Enforcement  Liaison  indicating our intention to come into  compliance with the
reporting requirements under the Securities Exchange Act of 1934 by November 15,
2005.

         On  September  12,  2005  we  retained  Larry   O'Donnell,   CPA,  P.C.
(`O'Donnell') as our independent auditing firm.

         By November  15, 2005 we  completed  all  required  SEC filings for the
period July 1, 2003 through  September 30, 2005.  However,  we had not completed
all required SEC filings in respect of the period April 1, 2001 through June 30,
2003 although we had included  substantial  financial  extracts and all material
disclosures  in respect  of these  periods in the  filings we had  completed  in
respect  of  subsequent  periods.  We  believed  the  cost  to  shareholders  in
completing  these  filings in  respect of these  earlier  periods  exceeded  any
benefit to shareholders in completing  these filings as the information in these
filings  was at  least  two  to  four  years  old,  no  longer  relevant  to our
shareholders given our decision to cease all trading operations made on June 30,

                                       11

<PAGE>

2003 and that all material  information in respect of these earlier  periods has
been made available to our shareholders in our SEC filings for later periods.

         In January 2006 we were  contacted  by the SEC's Office of  Enforcement
Liaison who notified us that while they  recognized  the progress we had made in
bringing our SEC filings up to date,  they still  considered us to be delinquent
in our  filings  because of our  failure to  complete  filings in respect of the
period April 1, 2001 through June 30, 2003.  We are currently  establishing  the
likely costs and practicality of completing the SEC filings for the period April
1, 2001 through June 30, 2003. In the meantime there continues to be a risk that
our  shares  of  common  stock  may be  deregistered  by  the  SEC's  Office  of
Enforcement  Liaison due the  continued  delinquency  of our SEC filings for the
period April 1, 2001 through June 30, 2003.

         On February  23, 2006 the United  States Court of Appeals for the Ninth
Circuit affirmed the dismissal with prejudice of the law suit brought against us
by certain  of our  shareholders.  This is the fifth  time that the Courts  have
ruled in favor of us and against the  shareholders  who have  brought  this suit
against us. On each of the previous  occasions the shareholders who have brought
this suit  against us have filed an appeal  against the  decision of the Courts.
There can be no  assurance  that the  shareholders  who have  brought  this suit
against us will not file a further  appeal  against the Courts' latest ruling in
which case we will continue to vigorously defend against the claims.

         Effective March 13, 2006, David Cutler,  at that time our sole director
and officer,  appointed  Wesley F Whiting and Redgie Green as new, non executive
directors to join him on our board of directors.

Note. 2           Basis of Presentation

         The accompanying  unaudited  financial  statements of Aspeon, Inc. have
been prepared in accordance with generally  accepted  accounting  principles for
interim  financial  information  and with the  instructions  to Form  10-QSB and
Article  10 of  Regulation  S-X.  Accordingly,  they do not  include  all of the
information and footnotes required by generally accepted  accounting  principles
for  complete  financial  statements.  In our opinion the  financial  statements
include all adjustments  (consisting of normal recurring  accruals) necessary in
order to make the financial statements not misleading. Operating results for the
nine month period  ended March 31, 2006 are not  necessarily  indicative  of the
results that may be expected for the year ended June 30, 2006. For more complete
financial information,  these unaudited consolidated financial statements should
be read in  conjunction  with  the  audited  consolidated  financial  statements
included  in our Annual  Report for the year ended June 30,  2005 filed with the
SEC.

Note. 3           Liquidity

         As of March 31,  2006,  we had $7 cash on hand,  $49,000 of assets,  no
operating  business  or other  source  of  income,  outstanding  liabilities  of
approximately  $8.1  million,  a  stockholders'  deficit of  approximately  $8.1
million and a law suit brought against us by certain of our  shareholders  which
had been  ruled in our favor by the  Courts  but  which  could be  subject  to a
further appeal by the shareholders in question.

            We believe  that the  proceeds  from our  Directors'  and  Officers'
insurance  policy  would  be  sufficient  to meet the  legal  cost  incurred  in
defending any further appeal against the Court's decision.  However, there is no
assurance that the proceeds from our Directors' and Officers'  insurance  policy
would be  sufficient  to meet the legal cost  incurred in defending  any further
appeal  against  the Court's  decision  and if they are  exhausted  there are no
further  funds to defend the suit and we would have no  alternative  but to file
for  bankruptcy.  Moreover,  if we were to lose an appeal  against  the  Court's
decision it is unlikely  that the proceeds  from the  Directors'  and  Officers'

                                       12

<PAGE>

insurance  policy would be sufficient to cover any damages assessed and again we
would have no alternative  but to file for  bankruptcy.  In the meantime,  it is
unlikely  that we will be able to merge with  another  entity  with  experienced
management and opportunities for growth in return for shares of our common stock
to create value for our  shareholders  until the law suit has finally be settled
on a basis that is satisfactory to us.

         We are now dependent on raising additional equity and, or, debt to fund
our ongoing  operating  expenses  and to fund  negotiated  settlements  with our
outstanding  creditors.  There is no assurance that we will be able to negotiate
acceptable  settlements with our outstanding creditors or to raise the necessary
equity and, or, debt to fund the  negotiated  settlements  with our creditors or
meet our ongoing operating expenses.

         During the fiscal  year ended June 30,  2005,  our then sole  director,
David J Cutler,  advanced to us $88,000 by way of loan,  bearing interest at 8%,
to meet our  ongoing  operating  expenses  and fund the  costs of  bringing  our
financial  statements  and SEC  reporting  up to date.  In the nine months ended
March 31, 2006 Mr. Cutler made further  advances to us of $80,000 by way of loan
to meet our  ongoing  operating  expenses  and fund the  costs of  bringing  our
financial statements and SEC reporting up to date. There can be no assurance Mr.
Cutler will continue to provide us with further funding in the future.

Note. 4           Basis of Consolidation

         The accompanying consolidated financial statements include the accounts
of Aspeon  and its  wholly-owned  subsidiaries.  All  significant  inter-company
transactions and balances have been eliminated.

Note. 5           Acquisitions and Dispositions

         From  December   1997  to  March  2000  we   established  a  number  of
subsidiaries   to  conduct  our  operating   activities   and  purchased   other
subsidiaries  for a  combination  of shares of our common  stock and cash.  From
August  2000 to  December  2003 our  liquidity  problems  were such that we were
forced to sell,  or  discontinue,  all of our  operating  businesses.  Our final
operating  activities  terminated in December 2003 and our remaining assets were
transferred  to the trustee of the  assignment for the benefit of the Aspeon and
CCI  creditors  effective  January 1, 2004.  A summary of our  acquisitions  and
disposals is as follows:

<TABLE>
<CAPTION>

<S>                                         <C>                                 <C>
Aspeon, Inc.                                established September 1995.         ceased trading operations as
                                                                                at June 30, 2003.


                                                                                assets transferred to the trustee
                                                                                for the assignment for the benefit
                                                                                of Aspeon and CCI creditors in
                                                                                January 2004.

CCI Group, Inc.                             acquired December 1997.             ceased manufacturing in August 2003.

                                                                                ceased providing services in December 2003.


                                                                                assets transferred to the trustee
                                                                                for the assignment for the benefit
                                                                                of Aspeon and CCI creditors in
                                                                                January 2004.

                                       13

<PAGE>

Posnet Computers, Inc.                      acquired December 1997.             merged into CCI Group,Inc.
                                                                                in January 1999.

Javelin Systems Europe, Ltd.                established March 1998.             sold March 2002.

Javelin Systems International Ltd           established March 1998.             merged into Javelin Systems
                                                                                Australia Pty Ltd between
June - September 2000.

Javelin Systems Australia Pty Ltd           established March 1998.             sold January 2003.

Aspact IT Services (Singapore) Pte Ltd      acquired May 1998.                  sold August 2000.

Javelin Holdings International Ltd          acquired November 1998.             sold March 2002.
(formerly RGB Trinet Ltd)

Jade Communications, Ltd                    acquired November 1998.             sold March 2002.

Dynamic Technologies, Inc.                  acquired April 1999.                assets sold March 2001.

SB Holdings, Inc.                           acquired April 1999.                assets sold March 2001.

Restaurant Consulting Services, Inc.        acquired August 1999.               ceased trading in June 2002.

Aspeon Solutions, Inc.                      established February 2000.          dormant from June 2002.

Teneo Ltd (75% ownership)                   established March 2000.             sold March 2001.

Monument Software Corporation.              acquired March 2000.                merged with RCS in fiscal
                                                                                2001.
</TABLE>

Note. 6           Summary of Significant Accounting Policies

Cash and Cash  Equivalents  -- Cash and  cash  equivalents  consist  of cash and
highly  liquid debt  instruments  with  original  maturities  of less than three
months.

Inventories  --  Inventories  consisted  primarily  of  point  of sale  computer
hardware  and  components  and  were  stated  at the  lower  of  cost  (first-in
first-out) or market.

Property and Equipment -- Property and  equipment  were stated at fair value and
depreciated using the straight-line  method over the following  estimated useful
lives:

Leasehold improvements.                              2 - 10 years.
Office furniture, fixtures and equipment.            5 - 7  years.
Computer equipment and software.                     3 - 5  years.
Equipment on lease.                                    3    years.
Warehouse equipment.                                   7    years.
Test equipment.                                        7    years.
Depot spares.                                          7    years
Vehicles.                                              5    years.

Maintenance  and repairs were  charged to expense as incurred,  and the costs of
additions  and  betterments  were  capitalized.   Leasehold   improvements  were
amortized  over the  shorter of the useful  life of the asset or the life of the

                                       14

<PAGE>

related  lease.  When assets were sold or  otherwise  disposed  of, the cost and
related accumulated depreciation and amortization were removed from the accounts
and any resulting gain or loss was recognized.

Deferred  Costs and Other --  Offering  costs  with  respect  to issue of common
stock,  warrants or options by us were initially  deferred and ultimately offset
against the proceeds from these equity transactions if successful or expensed if
the proposed equity transaction is unsuccessful.

Impairment of Long-Lived  and  Intangible  Assets -- In the event that facts and
circumstances indicated that the cost of long-lived and intangible assets may be
impaired,  an evaluation of recoverability  was performed.  If an evaluation was
required, the estimated future undiscounted cash flows associated with the asset
was compared to the asset's  carrying  amount to  determine  if a write-down  to
market value or discounted cash flow value was required.

Financial Instruments -- The estimated fair values for financial instruments was
determined  at  discrete  points in time based on relevant  market  information.
These  estimates  involved  uncertainties  and  could  not  be  determined  with
precision.  The  carrying  amounts  of notes  receivable,  accounts  receivable,
accounts payable and accrued liabilities  approximated fair value because of the
short-term  maturities  of these  instruments.  The fair value of notes  payable
approximated to their carrying value as generally their interest rates reflected
our effective annual borrowing rate.

Income Taxes -- We account for income taxes under the  liability  method,  which
requires  recognition  of deferred tax assets and  liabilities  for the expected
future tax  consequences  of events  that have been  included  in the  financial
statements  or  tax  returns.  Under  this  method,   deferred  tax  assets  and
liabilities  are  determined  based  on the  difference  between  the  financial
statements  and tax bases of assets and  liabilities  using enacted tax rates in
effect for the year in which the differences are expected to reverse.

Revenue  Recognition -- We sold our hardware and third-party  software  products
both as part of a solutions  package and on a  stand-alone  basis.  Sales of our
products which were part of a solutions  package  typically  included  hardware,
third-party   software  and   installation.   Revenues   associated  with  these
arrangements  were  recognized  upon the completion of the  installation  of the
product.  Sales of  products,  which were part of a solution,  were  included in
products  revenue while  installation  and consulting  services were included in
services  revenue.  Revenues from sales of products sold on a stand-alone  basis
were  recognized  upon shipment to the customer.  Estimated  product returns and
sales allowances were provided for when revenue was recognized.

 Service contract revenues were recognized  ratably over the term of the related
contract.  These  revenues  were  generally  from  maintenance,  help  desk  and
application services arrangements.  Revenues earned under time and material type
arrangements  were  recognized as services were  performed,  and primarily  were
comprised of information technology services.

Revenues  from  fixed  fee  arrangements   under  which  we  provided   software
customization,   development  services,  or  significant   implementations  were
recognized on the  percentage-of-completion  method of accounting,  based on the
costs incurred to total estimated costs. We provided for anticipated losses by a
charge to income in the period the losses were first identified.

Unearned Income & Customer Deposits -- Customer deposits represent cash received
in advance of product shipment while deferred revenues  represents cash received
in advance of the performance of service contract revenues.

Warranties--  Our products were sold under  warranty for defects in material and
workmanship  for one year.  Certain  components  included in our  products  were
covered by  manufacturers'  warranties.  We established an accrual for estimated
warranty costs when the related revenue was recognized.

                                       15

<PAGE>

Comprehensive Income (Loss) -- Comprehensive income is defined as all changes in
stockholders'  equity (deficit),  exclusive of transactions with owners, such as
capital  investments.  Comprehensive income includes net income or loss, changes
in certain assets and liabilities  that are reported  directly in equity such as
translation  adjustments on investments in foreign  subsidiaries  and unrealized
gains  (losses) on  available-for-sale  securities.  During the three months and
nine months  ended March 31, 2006 and 2005 our net (loss) was  identical  to our
comprehensive (loss).

Income  (Loss)  Per  Share  -- The  income  (loss)  per  share is  presented  in
accordance  with the provisions of Statement of Financial  Accounting  Standards
(SFAS) No. 128,  Earnings Per Share.  SFAS No. 128 replaced the  presentation of
primary and fully diluted earnings (loss) per share (EPS) with a presentation of
basic EPS and diluted  EPS.  Basic EPS is  calculated  by dividing the income or
loss available to common  stockholders by the weighted  average number of common
stock  outstanding for the period.  Diluted EPS reflects the potential  dilution
that could occur if  securities  or other  contracts  to issue common stock were
exercised or converted  into common  stock.  Basic and diluted EPS were the same
during the three  months and nine months ended March 31, 2006 and 2005 as we had
no stock options or warrants outstanding during the three months and nine months
ended March 31, 2006 while in the three  months and nine months  ended March 31,
2005 our share price was less than the exercise price of all  outstanding  stock
options and there were no warrants outstanding.

Stock-Based  Compensation -- As permitted under the SFAS No. 123, Accounting for
Stock-Based  Compensation,  we  account  for  our  stock-based  compensation  in
accordance with the provisions of Accounting  Principles Board (APB) Opinion No.
25, Accounting for Stock Issued to Employees.  As such,  compensation expense is
recorded  on the date of grant if the  current  market  price of the  underlying
stock  exceeds  the  exercise  price.  Certain  pro  forma  net  income  and EPS
disclosures  for employee  stock option grants are also included in the notes to
the financial  statements as if the fair value method as defined in SFAS No. 123
had been applied.  Transactions in equity  instruments  with  non-employees  for
goods or services are accounted for by the fair value method.

Use of Estimates -- The preparation of our consolidated  financial statements in
conformity with generally accepted accounting  principles requires management to
make  estimates  and  assumptions  that  affect the  amounts  reported  in these
financial  statements and accompanying  notes.  Actual results could differ from
those estimates.  Due to uncertainties inherent in the estimation process, it is
possible that these estimates could be materially revised within the next year.

Business  Segments -- In June 1997,  the Financial  Accounting  Standards  Board
issued SFAS No. 131,  Disclosures  About  Segments of an Enterprise  and Related
Information  ("SFAS No.  131").  SFAS No. 131 changes  the way public  companies
report  segment  information  in annual  financial  statements and also requires
those  companies to report  selected  segment  information in interim  financial
reports to stockholders.  It also establishes  standards for related disclosures
about products and services,  geographic areas, and major customers.  Management
believes  that  following  our decision to terminate  the last of our  operating
businesses  effective June 30, 2003, that our activities during the three months
and nine months ended March 31, 2006 and 2005  comprised only one segment and as
such,  adoption  of SFAS No.  131 does not impact  the  disclosures  made in our
financial statements.

Note. 7           Notes Payable

         As at March 31,  2006 the  balance  of notes  payable  included  a note
payable of $128,000 to an individual who had previously sold his business to us.
We had  renegotiated the terms of the deferred earnout due to him on the sale of
his  business to us such that the note  payable  represented  the balance due to
him. We were in default in repayment of the note payable as at March 31, 2006.

                                       16

<PAGE>

            The remainder of the balance of notes  payable  represents a loan to
us of $169,000  by David J Cutler,  our Chief  Executive  Officer and one of our
directors.  The  loan,  bearing  interest  at 8%,  was made to meet our  ongoing
operating  expenses and fund the costs of bringing our financial  statements and
SEC reporting up to date. There can be no assurance that Mr. Cutler will provide
us with further funding in the future.

Note. 8  Stockholders' Equity

Common Stock

         There was no issue of common  stock in the three months and nine months
ended March 31, 2006 or 2005.

         On April 22, 2005 our sole  director,  David J Cutler,  entered into an
agreement  with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the
benefit of Aspeon and CCI creditors,  subject to due diligence,  to invest up to
$50,000  cash in us for the benefit of our  creditors  in return for a number of
shares of our common stock to be determined. Following the completion of the due
diligence process during the three months ended December 31, 2005, it was agreed
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI  creditors,  that Mr.  Cutler would invest  $20,000 in us for the
benefit  of Aspeon  and CCI  creditors  in return  for a number of shares of our
common  stock to be  determined.  Accordingly  during  the  three  months  ended
December 31, 2005  $20,000  which had been placed in escrow with Frank G Blundo,
Jr. P.C. by Mr. Cutler was released for the benefit of Aspeon and CCI creditors.
The number of shares of our common  stock to be issued to Mr.  Cutler in respect
of this investment has yet to be finalized.

Stock Options

         In August  1996,  we  adopted a stock  incentive  award plan (the "1996
Plan")  under  which  the  Board of  Directors  (the  "Board"),  or a  committee
appointed for such purpose, was authorized to grant options, restricted stock or
other stock-based compensation to the directors, officers, eligible employees or
consultants to acquire up to an aggregate of 300,000 shares of our common stock.
Options issued under the Plan generally vested over a 3-year period based on the
following  schedule:  40% after year one, 30% after year two, and 30% at the end
of year three. All options expired ten years from the date of grant.

            In  December  1997,  our  stockholders   approved  our  1997  Equity
Incentive Plan (the "1997 Plan") under which the Board, or a committee appointed
for such purpose,  was  authorized to grant options,  restricted  stock or other
stock-based  compensation  to the  directors,  officers,  eligible  employees or
consultants  to acquire up to an  aggregate  of  2,100,000  shares of our common
stock.  Options issued under the 1997 Plan generally  vested 20% per year over a
5-year period. All options expired ten years from the date of grant

            In April 1999, the Board approved our 1999 Non-Officer  Stock Option
Plan (the "1999 Plan") under which the Board, or a committee  appointed for such
purpose, was authorized to grant non-statutory  options to eligible employees or
consultants  who were not officers or members of the Board,  to acquire up to an
aggregate of 3,000,000  shares of our common  stock.  Options  granted under the
1999  Plan  vested  25%  per  year  over  a  4-year  period,  in  equal  monthly
installments  over thirty-six  months or 100% upon grant  issuance.  All options
expired ten years from the date of grant.

                                       17

<PAGE>

            Stock options issued and  outstanding  during the nine months ending
March 31, 2006 and 2005 were as follows:

<TABLE>
<CAPTION>

                                                           NINE MONTHS ENDED MARCH 31
                                                        2006                              2005

                                                                WEIGHTED                       WEIGHTED
                                                                AVERAGE                         AVERAGE
                                               OPTIONS       EXERCISE PRICE      OPTIONS     EXERCISE PRICE
<S>                                            <C>              <C>             <C>             <C>
FOR OPTIONS GRANTED AT FAIR MARKET
VALUE ON THE DATE OF GRANT:

Options outstanding beginning of
period................                            --               --             850,000         $0.063
  Granted..........................               --               --                --               --
  Exercised........................               --               --                --               --                  --
  Canceled.........................               --               --                --               --
                                              -----------       -------         ----------      ----------
Options outstanding................               0             $0.000            850,000         $0.063
                                              ===========       =======         ==========      ==========
Options exercisable................               0             $0.000            766,667         $0.063
                                              ===========       =======         ==========      ==========
</TABLE>


            All stock options  outstanding at March 31, 2005 were cancelled with
the  resignation  of Richard P Stack as our sole  director  and officer in April
2005.

Warrants

         We had no warrants  issued or  outstanding  during the three months and
nine months ended March 31, 2006 or 2005.

Note. 9  Treasury Stock

         In connection  with the sale of certain  assets  related to the sale of
DTI in March 2001,  200,000  shares of common  stock,  valued at  $60,000,  were
cancelled

Note. 10 Related Party Transactions

         On April 22, 2005 our sole  director,  David J Cutler,  entered into an
agreement  with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the
benefit of Aspeon and CCI creditors,  subject to due diligence,  to invest up to
$50,000  cash in us for the benefit of our  creditors  in return for a number of
shares of our common stock to be determined. Following the completion of the due
diligence process during the three months ended December 31, 2005, it was agreed
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI  creditors,  that Mr.  Cutler would invest  $20,000 in us for the
benefit  of Aspeon  and CCI  creditors  in return  for a number of shares of our
common  stock to be  determined.  Accordingly  during  the  three  months  ended
December 31, 2005  $20,000  which had been placed in escrow with Frank G Blundo,
Jr. P.C. by Mr. Cutler was released for the benefit of Aspeon and CCI creditors.
The number of shares of our common  stock to be issued to Mr.  Cutler in respect
of this investment has yet to be finalized

            During the fiscal year ended June 30, 2005, our sole director, David
J Cutler, advanced to us $88,000 by way of loan, bearing interest at 8%, to meet
our ongoing  operating  expenses  and fund the costs of bringing  our  financial
statements and SEC reporting up to date. In the nine months ended March 31, 2006
Mr. Cutler has made further advances to us of $80,000 by way of loan to meet our

                                       18

<PAGE>

ongoing  operating  expenses  and  fund  the  costs of  bringing  our  financial
statements  and SEC reporting up to date.  There is no assurance that Mr. Cutler
will continue to provide us with further funding in the future.

Note.11  Commitments

Litigation

         In October and November 2000,  eight  purported  class action  lawsuits
were  filed  against  us, our Chief  Executive  Officer,  and our  former  Chief
Financial  Officer in the United States District Court for the Central  District
of California  for alleged  violations of the  Securities  Exchange Act of 1934.
After the  defendants  moved to dismiss each of the actions,  the lawsuits  were
consolidated   under  a  single  action,   entitled  "In  re  Aspeon  Securities
Litigation,"  Case No. SACV 00-995 AHS (ANx),  and the appointed  lead plaintiff
voluntarily filed an amended and consolidated complaint. The defendants moved to
dismiss  that  complaint  and on April  23,  2001  the  Court  entered  an order
dismissing the complaint without  prejudice.  On May 21, 2001 the appointed lead
plaintiff  filed a third  complaint,  styled  as a "First  Amended  Consolidated
Complaint." On June 4, 2001 the  defendants  moved to dismiss this complaint and
on September 17, 2001 the United States  District Court  dismissed the suit with
prejudice and entered judgment in favor of the us and our officers. On September
20,  2001 the lead  plaintiff  in the class  action  suit  appealed  against the
dismissal of the case.  On January 21, 2003 the decision to dismiss the case was
upheld  but  the  lead  plaintiff  was  given  the  opportunity  to  remedy  the
deficiencies  in the complaint that had been filed.  Accordingly on May 30, 2003
the plaintiff filed its "Second Amended Consolidated  Complaint" which again was
subsequently  dismissed  by the  District  Court.  On November 26, 2003 the lead
plaintiff  filed its  "Third  Amended  Consolidated  Complaint"  which was again
dismissed  with  prejudice in March 2004. The lead plaintiff once again appealed
against  the  dismissal  and the United  States  Court of Appeals  for the Ninth
Circuit  affirmed the dismissal with prejudice on February 23, 2006. This is the
fifth  time  that  the  Courts  have  ruled  in  favor  of us  and  against  the
shareholders  who have  brought  this suit  against us. On each of the  previous
occasions the  shareholders  who have brought this suit against us have filed an
appeal  against the decision of the Courts.  There can be no assurance  that the
shareholders  who have  brought  this  suit  against  us will not file a further
appeal  against  the  Courts'  latest  ruling in which case we will  continue to
vigorously defend against the claims.

         At  present  we  believe  that the  proceeds  from our  Directors'  and
Officers'  insurance  policy would be  sufficient  to meet any further the legal
cost  incurred in defending  any further  appeal that may be filed in respect of
this law  suit.  However,  there is no  assurance  that  the  proceeds  from our
Directors' and Officers'  insurance policy would be sufficient to meet the legal
cost  incurred in defending  the further  appeal that may be filed in respect of
this law suit and if they are exhausted there are no further funds to defend the
suit and we would have no alternative but to file for bankruptcy.  Moreover,  if
we were to lose the law suit on an appeal it is unlikely  that the proceeds from
the Directors' and Officers'  insurance  policy would be sufficient to cover any
damages  assessed  and  again  we  would  have no  alternative  but to file  for
bankruptcy

Guarantee

In July, 2001,  Javelin Australia entered into a factoring facility amounting to
approximately  $500,000 or a lesser  amount based on eligible  receivables.  The
facility  was  cancelable  on 30 days  notice by  either  party.  The  agreement
provided for a discount  rate of 1.75% + the bank's  published  overdraft  index
rate,  and a  factoring  service  fee of 0.50%.  Borrowings  under the line were
restricted  to the  operations  of  Javelin  Australia  and could not be used to
support our other operations. We provided a guarantee for this facility that was
to be released on our sale of Javelin  Australia  in January 2003 and in respect
of which we were  indemnified by the purchaser of Javelin  Australia.  As yet we
have not received confirmation that our guarantee has been released.

                                       19

<PAGE>

Note.12  Subsequent Events

None.

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

         The  following  discussion  should  be read  in  conjunction  with  the
consolidated  financial  statements  included in this  report.  This  discussion
contains  forward-looking  statements that involve risks and uncertainties.  Our
actual results could differ  materially from those  anticipated in these forward
looking  statements  as a result of any  number of  factors,  including  but not
limited to, our ability to reach satisfactorily  negotiated settlements with our
outstanding creditors,  vigorously defend against any further appeal that may be
made against our currently successful defense of the law suit brought against us
by certain of our  shareholders,  bring our financial records and SEC filings up
to date,  achieve a listing on the over the counter  bulletin board,  raise debt
and, or, equity to fund  negotiated  settlements  with our creditors and to meet
our ongoing  operating  expenses and merge with another entity with  experienced
management and opportunities for growth in return for shares of our common stock
to create value for our shareholders.

OVERVIEW

         Effective  June 30, 2003 we made the  decision to  discontinue  all our
remaining  operating  businesses  and are now focused on  reaching  satisfactory
negotiated  settlements  with our outstanding  creditors,  vigorously  defending
against any further  appeal that may be made  against our  currently  successful
defense of the law suit  brought  against  us by  certain  of our  shareholders,
bringing our financial records and SEC filings up to date,  seeking a listing on
the over the  counter  bulletin  board,  raising  debt and,  or,  equity to fund
negotiated  settlements  with our  creditors  and to meet our ongoing  operating
expenses and attempting to merge with another entity with experienced management
and  opportunities for growth in return for shares of our common stock to create
value for our shareholders. There can be no assurance that this series of events
will be successfully completed.

            Prior  to  our  cessation  of  operations,  our  principal  business
activities were:

    - POS PRODUCTS.  Javelin Systems, a division of Aspeon, Inc. ("Javelin") and
CCI Group, Inc. ("CCI"), a subsidiary of Aspeon, Inc.,  designed,  manufactured,
marketed  and sold open system  touch  screen  point of sale  ("POS")  computers
primarily to the foodservice and retail industries (the "POS Products").

    -SOLUTION SERVICES.  Through our CCI, Jade Communications  Limited ("Jade"),
RGB/Trinet Limited ("RGB"), (subsequently renamed Javelin Holdings International
Limited (UK)),  (collectively "RGB/Jade") and Aspact IT Services (Singapore) Pte
Ltd. ("Aspact")  subsidiaries,  we provided  information  technology  management
services  for  customers  that did not intend or were not able to hire their own
information  technology  personnel  (the  "Solution  Services").  These services
included network design and management,  installation of computer systems, local
and wide area network support, maintenance and repair, and help desk support.

    - APPLICATION SERVICES PROVIDER. Through our Aspeon Solutions, Inc. ("Aspeon
Solutions"),  Dynamic  Technologies,  Inc.  ("DTI"),  SB Holdings,  Inc. ("SB"),
Restaurant   Consulting  Services  ("RCS")  and  Monument  Software  Corporation
("Monument")  subsidiaries,  we  operated  as an  application  service  provider
("ASP"). Our ASP services enabled software applications to be deployed, managed,
supported and upgraded from centrally located servers, rather than on individual
computers (the "ASP Services").  Our ASP Services primarily were directed toward
customers in the foodservice industry.

            An over view of the major events since incorporation is as follows:

                                       20

<PAGE>

            On November 1, 1996,  we completed an initial  public  offering (the
"IPO")  of  850,000  shares of our  common  stock at $5.00  per  share,  netting
proceeds of approximately $3.2 million. Proceeds were used to repay debt with an
outstanding  balance  of  approximately   $745,000  and  for  general  corporate
purposes.

            In December 1997, we acquired all of the outstanding common stock of
POSNET Computers,  Inc.  ("Posnet") and CCI Group, Inc. ("CCI").  Posnet and CCI
provided  full  turn-key   systems   integration   services,   including  system
consulting, staging, training, deployment, product support and maintenance.

            In  March  and  April  1998,  we  established  three   international
subsidiaries to expand our sales and distribution  channels in the international
marketplace.  The  international  subsidiaries  were:  Javelin Systems  (Europe)
Limited   ("Javelin   Europe")   headquartered   in  England;   Javelin  Systems
International Pte Ltd ("Javelin Asia")  headquartered in Singapore;  and Javelin
Systems Australia Pty Limited ("Javelin Australia"), subsequently renamed Aspeon
Systems (Asia Pacific) Pty Ltd, headquartered in Australia.

            In May 1998,  Javelin Asia  acquired all of the  outstanding  common
stock  of  Aspact  IT  Services  (Singapore)  Pte  Ltd  ("Aspact").  Aspact  was
headquartered  in  Singapore  and  provided  consulting  and system  integration
services.

            In November 1998, we completed a public offering of 1,395,000 shares
of our common stock at $6.75 per share,  netting proceeds of approximately  $8.1
million. Proceeds were used to repay borrowings under a revolving line of credit
of approximately  $3.2 million,  to purchase all of the outstanding common stock
of RGB/Trinet Limited ("RGB"),  which was subsequently  renamed Javelin Holdings
International Limited (UK), and Jade Communications Ltd ("Jade") and for general
corporate  purposes.  RGB and Jade were  headquartered  in England and  provided
complementary  Wide Area  Networking  (WAN)  products and services  primarily to
large retail, hospitality, and telecommunications companies.

            During the  course of 1998 we  established  a 75% owned  subsidiary,
Teneo Ltd ("Teneo"), in an effort to expand our service management and wide area
network solutions business.

            In January 1999 the  business and assets of Posnet were  transferred
from Posnet and merged with the business and assets of CCI.

            In February 1999, we completed a public offering of 2,375,000 shares
of our common stock at $12.25 per share, netting proceeds of approximately $26.9
million.  Proceeds were used to purchase the outstanding common stock of Dynamic
Technologies,  Inc. ("DTI") and SB Holdings, Inc. ("SB") and for working capital
and general  corporate  purposes.  DTI and SB provided custom  Internet/Intranet
software and services.

            In August 1999, we acquired all of the outstanding  capital stock of
Restaurant  Consulting  Services,  Inc. ("RCS").  RCS implemented,  operated and
supported packaged software applications for the restaurant industry.

            In  January  2000,  we  created  Aspeon  Solutions,   Inc.  ("Aspeon
Solutions")  as a wholly owned  subsidiary to centralize  and continue the rapid
development of our ASP service business.

            On March 8, 2000 we completed a private placement of securities with
Marshall Capital  Management,  Inc., an affiliate of Credit Suisse First Boston,
in  which  we sold an  aggregate  of  10,000  shares  of  Series  A  Convertible
Exchangeable  Preferred  Stock  (the  "Preferred  Stock"),  a warrant to acquire
583,334 shares of our common stock and a warrant to acquire  1,250,000 shares of
Aspeon Solutions, one of our wholly-owned subsidiaries. Proceeds to us from this
placement  amounted  to $9.6  million,  net of offering  costs,  which were used

                                       21

<PAGE>

primarily to acquire Monument Software Corporation  ("Monument"),  settle future
contingent  payments associated with the acquisition of RCS, hire management and
staff  personnel,   expand  corporate  facilities  and  fund  our  ASP  Services
operations. Monument specialized in the rapid implementation of enterprise-class
financial systems with an emphasis on Oracle Financials

            During  fiscal  2000,  we  sustained  significant  losses and we had
experienced negative cash flows from our operations since inception.  As at June
30,  2000 we were in default of  certain  covenants  under the terms of both our
credit  facility  and  Preferred  Stock and were  delinquent  in the  payment of
various  trade  payables.  Our ability to meet our  obligations  in the ordinary
course of business was  dependent  upon the success of our attempts to return to
profitability,  obtain a waiver of credit  line and  Preferred  Stock  defaults,
raise additional financing through public and, or, private equity financings and
evaluate potential strategic opportunities. We sought to return to profitability
by  streamlining  operations  and  generating  on-going  cost  savings and began
evaluating  strategic  opportunities  for our sale or the sale of certain of our
subsidiaries.

            As part of our efforts to streamline our  operations,  during fiscal
2001 we merged the business of Javelin Asia into Javelin  Australia  and renamed
Javelin  Australia  Aspeon  Systems  (Asia  Pacific)  Pty Ltd and we merged  the
operations of Monument into those of RCS.

         In August  2000,  we executed a sale  agreement  with the then  current
director of Aspact (the "Purchaser"). The initial purchase price of $350,000 was
payable  to us in  monthly  installments  of  $14,600  commencing  in July 2001.
Consequently,  a loss on sale of  approximately  $229,000 was  recognized in the
three months ended September 30, 2000. In the event the Purchaser consummated an
initial  public  offering or disposed  of all or  substantially  all of Aspact's
common stock,  the  Purchaser was required to pay: a) the unpaid  balance of the
initial  consideration  and b) 50% of the net proceeds received from the initial
public  offering  less the amount  paid  under  (a),  in an amount not to exceed
$200,000. Concurrent with the sale agreement, the Purchaser was terminated as an
employee of ours.

         In   September    2000,   at   the    insistence   of   our   auditors,
PricewaterhouseCoopers,  LLC  ("PWC"),  we announced  that we would  restate our
first quarter 2000 financial statements as a result of accounting misstatements.
In October 2000 we announced we would require  additional  time to file our form
10-K report for the fiscal year ended June 30, 2000.

         In October 2000, the Nasdaq Stock Market  ("Nasdaq")  suspended trading
in our common stock while it sought additional  information from us. On November
9, 2000, we participated  in a hearing before the Nasdaq Listing  Qualifications
Panel which was held for the purpose of evaluating  whether shares of our common
stock would continue to be listed on Nasdaq or if they would be delisted.

         In October and November 2000,  eight  purported  class action  lawsuits
were  filed  against  us, our Chief  Executive  Officer,  and our  former  Chief
Financial  Officer in the United States District Court for the Central  District
of California  for alleged  violations of the  Securities  Exchange Act of 1934.
After the  defendants  moved to dismiss each of the actions,  the lawsuits  were
consolidated   under  a  single  action,   entitled  "In  re  Aspeon  Securities
Litigation,"  Case No. SACV 00-995 AHS (ANx),  and the appointed  lead plaintiff
voluntarily filed an amended and consolidated complaint. The defendants moved to
dismiss  that  complaint  and on April  23,  2001  the  Court  entered  an order
dismissing the complaint without  prejudice.  On May 21, 2001 the appointed lead
plaintiff  filed a third  complaint,  styled  as a "First  Amended  Consolidated
Complaint." On June 4, 2001 the  defendants  moved to dismiss this complaint and
on September 17, 2001 the United States  District Court  dismissed the suit with
prejudice and entered judgment in favor of the us and our officers. On September
20,  2001 the lead  plaintiff  in the class  action  suit  appealed  against the
dismissal of the case.  On January 21, 2003 the decision to dismiss the case was
upheld  but  the  lead  plaintiff  was  given  the  opportunity  to  remedy  the

                                       22

<PAGE>

deficiencies  in the complaint that had been filed.  Accordingly on May 30, 2003
the plaintiff filed its "Second Amended Consolidated  Complaint" which again was
subsequently  dismissed  by the  District  Court.  On November 26, 2003 the lead
plaintiff  filed its  "Third  Amended  Consolidated  Complaint"  which was again
dismissed  with  prejudice in March 2004. The lead plaintiff once again appealed
against  the  dismissal  and the United  States  Court of Appeals  for the Ninth
Circuit  affirmed the dismissal with prejudice on February 23, 2006. This is the
fifth  time  that  the  Courts  have  ruled  in  favor  of us  and  against  the
shareholders  who have  brought  this suit  against us. On each of the  previous
occasions the  shareholders  who have brought this suit against us have filed an
appeal  against the decision of the Courts.  There can be no assurance  that the
shareholders  who have  brought  this  suit  against  us will not file a further
appeal  against  the  Courts'  latest  ruling in which case we will  continue to
vigorously defend against the claims.

         In December 2000 we restated the results for the fiscal  quarters ended
September 30, 1999, December 31, 1999 and March 31, 2000 by an aggregate of $1.7
million or $0.19 per share.  Revenue was reduced by $679,000 or 1.05%, our gross
profit was  decreased  by $206,000  or 1.22%,  $1.4  million of the  restatement
related to an  adjustment  to increase the amount  recorded  for the  beneficial
conversion  feature associated with the issuance of our Preferred Stock in March
2000 based upon an independent  valuation and the remaining  adjustments related
to unrecorded compensation expense, amortization of intangible assets, expensing
costs previously capitalized and the additional accrual of general expenses.

         Effective  as of  January  4,  2001 our  shares of  common  stock  were
delisted  from Nasdaq.  As we were in arrears with our filings with the SEC, our
shares of common  stock were not  eligible  to be traded on the over the counter
bulletin  board and  commenced  trading  on the Pink  Sheets  under  the  symbol
ASPE.PK. Subsequently our shares of common stock ceased to be traded on the Pink
Sheets and are now traded on the Gray Sheets.

         In January 2001 our auditors,  PWC, notified us that it was terminating
its auditor relationship with us effective immediately.

         In February  2001 our  subsidiary,  RGB,  sold its interest in Teneo to
employees of Teneo for the consideration of a $350,000 note. Consequently a gain
on sale of $432,000 was recognized during the quarter ended March 31, 2001.

         On March 1, 2001 we completed the sale of the consulting  contracts and
certain of the fixed assets our DTI subsidiary to a company  controlled by DTI's
former owners and certain of our  shareholders  for a purchase price of $900,000
and the return for  cancellation of 200,000 of shares of our common stock valued
at $60,000.  With the  completion of the transfer of its help desk business to a
third party on April 27, 2001, the business  activities of DTI ceased. A gain on
the sale of the net assets of DTI totaling  $820,900 was  recognized  during the
quarter ended March 31, 2001.

         On  March  19,  2001  we  retained  BDO  Seidman,  LLP  ("BDO")  as our
independent auditing firm. However, as PWC, our previous  independent  auditors,
refused to allow BDO access to PWC's prior year work  papers,  BDO was unable to
complete an audit of our financial statements for later periods.

         During fiscal 2001,  despite our efforts to return to profitability and
the sale of certain of our  subsidiaries,  we continued to generate  significant
losses,  to be in default of certain  covenants under the terms of our Preferred
Stock,  to be delinquent  in the payment of various trade  payables and had been
unable to replace  our line of credit  which had been  repaid in full during the
course of the year.  While we had  appointed  new  auditors,  we were  unable to
generate  audited  financial  accounts due to the lack of  cooperation  from our
previous  auditors  and  consequently  were  unable to comply  with the  listing
requirements  of  either  Nasdaq or the over the  counter  bulletin  board.  Our
relegation  to the Pink Sheets had  serious  adverse  consequences  for both the
confidence  of our  customers or potential  customers and our ability to attract
new debt or equity financing. The law suits brought against us by certain of our
shareholders  diverted a significant  amount of our  management's  time from our
operations which were also severely  effected by the collapse of the tech market
in early 2001.  Nevertheless we continued press ahead by attempting to return to
profitability  through  further cost  reductions,  renegotiate  the terms of our

                                       23

<PAGE>

Preferred  Stock,  settle  the  outstanding  shareholder  litigation,   evaluate
strategic  opportunities for our sale or the sale of certain of our subsidiaries
and raise additional debt and, or, equity funding.

         In August 2001 we, together with our Chief Executive  Officer,  filed a
six count complaint  against our former  auditors,  PWC,  alleging  professional
negligence,   intentional  interference  with  prospective  business  advantage,
negligent  interference  with  prospective  economic  advantage,   violation  of
California   Business  and  Professions  Code  Sections  17200  and  17500,  and
defamation.

            On March 22, 2002 we signed an agreement to sell our  subsidiary RGB
(renamed  Javelin Holdings  International  Ltd.), the UK holding company that in
turn owned our Javelin Europe and Jade subsidiaries, to an investment group that
included  members  of the  existing  UK  management  team for  $125,995  and the
repayment of inter-company  debt.  $750,000 was paid on signing with $175,000 to
be paid upon completion of a technology escrow agreement

         On May 1, 2002 we signed an agreement  with the holder of our Preferred
Shares  that had been in  default.  Under that  agreement,  in return for a cash
payment of $447,500 by us (a) we were released from all liabilities  relating to
our  outstanding  Series A  Convertible  Exchangeable  Preferred  Stock  and the
documents under which those securities had been issued and were outstanding; (b)
all of our outstanding  Series A Convertible  Exchangeable  Preferred Stock were
cancelled; (c) a warrant previously issued by us entitling the holder thereof to
purchase  583,334  shares of our common stock was  cancelled;  and (d) a warrant
previously  issued by our  subsidiary,  Aspeon  Solutions,  entitling the holder
thereof to purchase 1,250,000 shares of the common stock of Aspeon Solutions was
cancelled.  We believed  that the  settlement  had a net positive  effect on our
balance sheet of approximately $19 million.

         In June 2002 we terminated the activities of RCS.

         On  January  17,  2003,  we sold  our  Australian  subsidiary,  Javelin
Australia,  to Mr. Matthew Maley. Prior to the sale, Mr. Maley had served as our
general manager of that  subsidiary.  We received $80,000 at the closing of this
transaction.  Under the Share Sale Agreement  relating to this transaction,  Mr.
Maley agreed to cause Javelin  Australia to pay its account payable to us in the
amount of $239,000 in monthly installments of $10,000 each until the full amount
of the account  payable has been paid.  Mr. Maley  personally  guaranteed  these
payments.

            During the fiscal years ending June 30, 2002 and 2003, we used every
effort to return to profitability  through  on-going cost  reductions,  to raise
additional debt and, or, equity funding and to identify strategic  opportunities
for our sale or the sale of certain of our subsidiaries  However,  the weak tech
market,  together with our inability to produce  audited  accounts and come into
compliance  with the listing  conditions of Nasdaq or over the counter  bulletin
board  markets,  meant we were  unable to attract new  customers  or the debt or
equity financing necessary to secure our financial future.

         On June 30, 2003 we decided to  discontinue  the operations of our last
two  operating  businesses,  Javelin and CCI.  Javelin  ceased  operations  with
immediate effect while CCI completed certain outstanding  customer orders before
ceasing  production  on August  3, 2003 and  continued  to  subcontract  certain
maintenance activities through December 31, 2003.

         In August  2003 we reached an out of court  settlement  in our law suit
against  PWC.  Under the terms of the  settlement  we received a payment of $1.3
million and agreement to write off certain  outstanding  invoices for accounting
and  legal  fees.  Consequently  we  recognized  a  gain  of  $1,007,000  on the
settlement  although  the net cash we  received  after  all costs  totaled  only
$136,000.

         In December  2003,  we  appointed  attorney  Frank G Blundo Jr. P.C. as
trustee in an  assignment  for the  benefit of the  creditors  of Aspeon and CCI
commencing effective January 1, 2004. Effective January 1, 2004, all of Aspeon's
and CCI's assets were transferred to the trustee for the benefit of those Aspeon
and CCI creditors who elected to  participate  in the assignment for the benefit
of Aspeon and CCI creditors.  The assets  transferred had a fair market value of

                                       24

<PAGE>

$496,000 and creditors totaling $3.7 million elected to participate and be bound
by the terms of the assignment for the benefit of Aspeon and CCI creditors under
which they no longer had any further claim against  Aspeon or CCI.  Consequently
we recognized a gain of $3.2 million on the  establishment of the assignment for
the  benefit  of Aspeon and CCI  creditors.  Certain  Aspeon and CCI  creditors,
totaling in excess of $3.1 million, elected not to participate in the assignment
for the  benefit  of  Aspeon  and CCI  creditors  and  remained  as  outstanding
liabilities of Aspeon and CCI.

         Following  the  establishment  for the  assignment  for the  benefit of
Aspeon  and CCI  creditors  in January  2004,  we had no  assets,  no  operating
business or other source of income,  outstanding  liabilities  in excess of $7.9
million,  an  outstanding  law  suit  brought  against  us  by  certain  of  our
shareholders,  were  substantially  in arrears in  respect  of  maintaining  our
financial  records and our SEC filings,  were no longer  listed on Nasdaq or the
over the  counter  bulletin  board and in due course  ceased to be listed on the
Pink Sheets.

         In April 2005, we appointed  David J Cutler as a new director and Chief
Executive   Officer  and   subsequent  to  that  are  now  focused  on  reaching
satisfactory  negotiated settlements with our outstanding creditors,  vigorously
defending  against any further  appeal  that may be made  against our  currently
successful  defense  of the  law  suit  brought  against  us by  certain  of our
shareholders, bringing our financial records and SEC filings up to date, seeking
a listing on the over the counter bulletin board,  raising  additional debt and,
or,  equity  to  finance  settlements  with  creditors  and to meet our  ongoing
operating  expenses and attempting to merge with another entity with experienced
management and opportunities for growth in return for shares of our common stock
to create value for our shareholders. There can be no assurance that this series
of events will be successfully completed.

         On April 22, 2005,  our sole  director,  David J Cutler entered into an
agreement  with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the
benefit of Aspeon and CCI creditors,  subject to due diligence,  to invest up to
$50,000  cash in us for the benefit of our  creditors  in return for a number of
shares of our common stock to be determined. Following the completion of the due
diligence process during the three months ended December 31, 2005, it was agreed
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI  creditors,  that Mr.  Cutler would invest  $20,000 in us for the
benefit  of Aspeon  and CCI  creditors  in return  for a number of shares of our
common  stock to be  determined.  Accordingly  during  the  three  months  ended
December 31, 2005  $20,000  which had been placed in escrow with Frank G Blundo,
Jr. P.C. by Mr. Cutler was released for the benefit of Aspeon and CCI creditors.
The number of shares of our common  stock to be issued to Mr.  Cutler in respect
of this investment has yet to be finalized.

         During the fiscal year ended June 30, 2005, our sole director,  David J
Cutler,  advanced to us $88,000 by way of loan,  bearing interest at 8%, to meet
our ongoing  operating  expenses  and fund the costs of bringing  our  financial
statements and SEC reporting up to date. In the nine months ended March 31, 2006
Mr. Cutler has made further advances to us of $80,000 by way of loan to meet our
ongoing  operating  expenses  and  fund  the  costs of  bringing  our  financial
statements and SEC reporting up to date as required.  There is no guarantee that
Mr. Cutler will continue to provide further funding to us in the future.

         On  September  9, 2005 we received a letter from the SEC dated June 24,
2005  indicating  that  unless  we  came  into  compliance  with  the  reporting
requirements under the Securities  Exchange Act of 1934 within 15 days we may be
deregistered.  On  September  12, 2005 we faxed a letter to the SEC's  Office of
Enforcement  Liaison  indicating our intention to come into  compliance with the
reporting requirements under the Securities Exchange Act of 1934 by November 15,
2005.

         On  September  12,  2005  we  retained  Larry   O'Donnell,   CPA,  P.C.
(`O'Donnell') as our independent auditing firm.

                                       25

<PAGE>

         By November  15, 2005 we  completed  all  required  SEC filings for the
period July 1, 2003 through  September 30, 2005.  However,  we had not completed
all required SEC filings in respect of the period April 1, 2001 through June 30,
2003 although we had included  substantial  financial  extracts and all material
disclosures  in respect  of these  periods in the  filings we had  completed  in
respect  of  subsequent  periods.  We  believed  the  cost  to  shareholders  in
completing  these  filings in  respect of these  earlier  periods  exceeded  any
benefit to shareholders in completing  these filings as the information in these
filings  was at  least  two  to  four  years  old,  no  longer  relevant  to our
shareholders given our decision to cease all trading operations made on June 30,
2003 and that all material  information in respect of these earlier  periods has
been made available to our shareholders in our SEC filings for later periods.

         In January 2006 we were  contacted  by the SEC's Office of  Enforcement
Liaison who notified us that while they  recognized  the progress we had made in
bringing our SEC filings up to date,  they still  considered us to be delinquent
in our  filings  because of our  failure to  complete  filings in respect of the
period April 1, 2001 through June 30, 2003.  We are currently  establishing  the
likely costs and practicality of completing the SEC filings for the period April
1, 2001 through June 30, 2003. In the meantime there continues to be a risk that
our  shares  of  common  stock  may be  deregistered  by  the  SEC's  Office  of
Enforcement  Liaison due the  continued  delinquency  of our SEC filings for the
period April 1, 2001 through June 30, 2003.

         On February  23, 2006 the United  States Court of Appeals for the Ninth
Circuit affirmed the dismissal with prejudice of the law suit brought against us
by certain  of our  shareholders.  This is the fifth  time that the Courts  have
ruled in favor of us and against the  shareholders  who have  brought  this suit
against us. On each of the previous  occasions the shareholders who have brought
this suit  against us have filed an appeal  against the  decision of the Courts.
There can be no  assurance  that the  shareholders  who have  brought  this suit
against us will not file a further  appeal  against the Courts' latest ruling in
which case we will continue to vigorously defend against the claims.

         Effective March 13, 2006, David Cutler,  at that time our sole director
and officer,  appointed  Wesley F Whiting and Redgie Green as new, non executive
directors to join him on our board of directors.

LIQUIDITY AND CAPITAL RESOURCES

         As of March 31,  2006,  we had $7 cash on hand,  $49,000 of assets,  no
operating  business  or other  source  of  income,  outstanding  liabilities  of
approximately  $8.1  million,  a  stockholders'  deficit of  approximately  $8.1
million and a law suit brought against us by certain of our  shareholders  which
had been  ruled in our favor by the  Courts  but  which  could be  subject  to a
further appeal by the shareholders in question.

            We believe  that the  proceeds  from our  Directors'  and  Officers'
insurance  policy  would  be  sufficient  to meet the  legal  cost  incurred  in
defending any further appeal against the Court's decision.  However, there is no
assurance that the proceeds from our Directors' and Officers'  insurance  policy
would be  sufficient  to meet the legal cost  incurred in defending  any further
appeal  against  the Court's  decision  and if they are  exhausted  there are no
further  funds to defend the suit and we would have no  alternative  but to file
for  bankruptcy.  Moreover,  if we were to lose an appeal  against  the  Court's
decision it is unlikely  that the proceeds  from the  Directors'  and  Officers'
insurance  policy would be sufficient to cover any damages assessed and again we
would have no alternative  but to file for  bankruptcy.  In the meantime,  it is
unlikely  that we will be able to merge with  another  entity  with  experienced
management and opportunities for growth in return for shares of our common stock
to create value for our  shareholders  until the law suit has finally be settled
on a basis that is satisfactory to us.

         We are now dependent on raising additional equity and, or, debt to fund
our ongoing  operating  expenses  and to fund  negotiated  settlements  with our
outstanding  creditors.  There is no assurance that we will be able to negotiate

                                       26

<PAGE>

acceptable  settlements with our outstanding creditors or to raise the necessary
equity and, or, debt to fund the  negotiated  settlements  with our creditors or
meet our ongoing operating expenses.

         During the fiscal  year ended June 30,  2005,  our then sole  director,
David J Cutler,  advanced to us $88,000 by way of loan,  bearing interest at 8%,
to meet our  ongoing  operating  expenses  and fund the  costs of  bringing  our
financial  statements  and SEC  reporting  up to date.  In the nine months ended
March 31, 2006 Mr. Cutler made further  advances to us of $80,000 by way of loan
to meet our  ongoing  operating  expenses  and fund the  costs of  bringing  our
financial statements and SEC reporting up to date. There can be no assurance Mr.
Cutler will continue to provide us with further funding in the future.

Delisting from NASDAQ Market and the Over the Counter Bulletin Board

            Shares of our common stock were listed on the Nasdaq National Market
System under the symbol  "ASPEE." On October 10,  2000,  the Nasdaq Stock Market
("Nasdaq")  suspended  trading in the shares of our common stock while it sought
additional  information from us. On October 11, 2000, Nasdaq sent a letter to us
stating that the shares of our common stock would be delisted  from Nasdaq if we
did not file our Form 10-K for the  fiscal  year  ended  June 30,  2000 with the
Securities  and Exchange  Commission  ("SEC") by October 18, 2000. Our Form 10-K
for the  fiscal  year  ended  June 30,  2000 was not  filed  with the SEC by the
October 18, 2000  deadline.  On  November 9, 2000 we  participated  in a hearing
before the Nasdaq Listing Qualifications Panel which was held for the purpose of
evaluating whether the shares of our common stock would continue to be listed on
Nasdaq or if they would be delisted. Effective January 4, 2001 the shares of our
common stock were delisted from Nasdaq. As we were delinquent in our SEC filings
the shares of our common  stock were not  eligible  to be listed on the over the
counter  bulletin board and  consequently  commenced  trading on the Pink Sheets
under the symbol  ASPE.PK.  Subsequently  the  shares of our  common  stock have
ceased to be traded on the Pink Sheets and are now traded on the Grey Sheets.

            On  September  9, 2005 we  received a letter from the SEC dated June
24, 2005  indicating  that  unless we came into  compliance  with the  reporting
requirements under the Securities  Exchange Act of 1934 within 15 days we may be
deregistered.  On  September  12, 2005 we faxed a letter to the SEC's  Office of
Enforcement  Liaison  indicating our intention to come into  compliance with the
reporting requirements under the Securities Exchange Act of 1934 by November 15,
2005.

                  By November 15, 2005 we completed all required SEC filings for
the  period  July 1,  2003  through  September  30,  2005.  However,  we had not
completed  all  required  SEC  filings in  respect  of the period  April 1, 2001
through June 30, 2003 although we had included  substantial  financial  extracts
and all material  disclosures  in respect of these periods in the filings we had
completed in respect of subsequent periods. We believed the cost to shareholders
in completing  these filings in respect of these  earlier  periods  exceeded any
benefit to shareholders in completing  these filings as the information in these
filings  was at  least  two  to  four  years  old,  no  longer  relevant  to our
shareholders given our decision to cease all trading operations made on June 30,
2003 and that all material  information in respect of these earlier  periods has
been made available to our shareholders in our SEC filings for later periods.

         In  January  2006  we  were  contacted  by  the  SEC  SEC's  Office  of
Enforcement  Liaison who notified us that while they  recognized the progress we
had made in bringing our SEC filings up to date, they still  considered us to be
delinquent in our filings because of our failure to complete  filings in respect
of the period April 1, 2001 through June 30, 2003. We are currently establishing
the likely costs and  practicality  of completing the SEC filings for the period
April 1, 2001  through June 30, 2003.  In the meantime  there  continues to be a
risk that our shares of common stock may be  deregistered by the SEC's Office of
Enforcement  Liaison due our  continued  delinquency  of our SEC filings for the
period April 1, 2001 through June 30, 2003.

                                       27

<PAGE>

Results of  Operations - Three Months Ended March 31, 2006 Compared to the Three
Months Ended March 31, 2005

         We  terminated  the last of our  operating  businesses  at December 31,
2003,  transferred  the last of our assets to the trustee for the assignment for
the benefit of Aspeon and CCI creditors  effective January 1, 2004 and closed of
our final bank account in March 2004.  Consequently we had no activities for the
period July 1, 2004 though December 21, 2004.

         In April 2005 David J Cutler was appointed as our new sole director and
officer  and  we  recommenced   activities  and  are  now  focused  on  reaching
satisfactory  negotiated settlements with our outstanding creditors,  vigorously
defending  against any further  appeal  that may be made  against our  currently
successful  defense  of the  law  suit  brought  against  us by  certain  of our
shareholders, bringing our financial records and SEC filings up to date, seeking
a listing on the over the counter bulletin board,  raising  additional debt and,
or,  equity  to  finance  settlements  with  creditors  and to meet our  ongoing
operating  expenses and attempting to merge with another entity with experienced
management and opportunities for growth in return for shares of our common stock
to create value for our shareholders.

          Consequently  during the quarter to March 31, 2005,  immediately prior
to Mr.  Cutler's  appointment  as our sole  director  and  officer,  we incurred
certain expenditures in preparing for Mr. Cutler's appointment.

         General and  Administrative  Expenses.  In the three months ended March
31, 2006 we incurred general and administrative  expenses of $22,000 compared to
general and  administrative  expenses of $11,000 in the three months ended March
31, 2005, a variance of $11,000, or 100%. General and administrative expenses in
the three  months  ended  March 31,  2006  largely  related  to  director's  and
consultants'  remuneration  ($18,000) and professional fees and related overhead
costs  incurred in  bringing  our  financial  records and SEC filings up to date
($4,000).   During  the  three   months   ended  March  31,  2005   general  and
administrative  expenses  were $11,000  relating to directors  remuneration  and
contract labor ($5,000) and general and  administrative  overhead costs ($6,000)
incurred in evaluating the possibility of bringing our financial records and SEC
filings up to date.

         Operating  (Loss) In the three  months  ended  March 31, 2006 we had an
operating loss of $(22,000) compared to operating loss in the three months ended
March 31, 2005 of $(11,000),  a variance of $11,000, or 100%, due to the factors
outlined above.

           Net Interest and Other Income / (Expense).  We had a net interest and
other  (expense) of $ (3,000) in the three months ended March 31, 2006  relating
to  interest  on the  loan  made to us by one of our  directors.  There  was net
interest  and other  income / (expense)  of $(3) in the three months ended March
31, 2005 as no loan  interest  had accrued on the loan  provided to us by one of
our directors at that stage.

         Provision for Income Taxes.  No provision for income taxes was required
in the three months  ended March 31, 2006 or 2005 as we generated  tax losses in
both periods.

         Net Profit / (Loss)  and  Comprehensive  Profit / (Loss).  We had a net
loss of $(25,000)  for the three  months ended March 31, 2006  compared to a net
loss of  $(11,000)  for the three  months  ended March 31,  2005,  a variance of
$14,000, or more than 100%, due to the factors outlined above.

         Our  comprehensive  loss was  identical  to our net loss for the  three
months ended March 31, 2006 and 2005.

                                       28

<PAGE>

Results of  Operations - Nine Months  Ended March 31, 2006  Compared to the Nine
Months Ended March 31, 2005

         We  terminated  the last of our  operating  businesses  at December 31,
2003,  transferred  the last of our assets to the trustee for the assignment for
the benefit of Aspeon and CCI creditors  effective January 1, 2004 and closed of
our final bank account in March 2004.  Consequently we had no activities what so
ever for the period July 1, 2004 though December 21, 2004.

         In April 2005 David J Cutler was appointed as our new sole director and
officer  and  we  recommenced   activities  and  are  now  focused  on  reaching
satisfactory  negotiated settlements with our outstanding creditors,  vigorously
defending  against any further  appeal  that may be made  against our  currently
successful  defense  of the  law  suit  brought  against  us by  certain  of our
shareholders, bringing our financial records and SEC filings up to date, seeking
a listing on the over the counter bulletin board,  raising  additional debt and,
or,  equity  to  finance  settlements  with  creditors  and to meet our  ongoing
operating  expenses and attempting to merge with another entity with experienced
management and opportunities for growth in return for shares of our common stock
to create value for our shareholders.

         Consequently during the quarter to March 31, 2005, immediately prior to
Mr. Cutler's  appointment as our sole director and officer,  we incurred certain
expenditures in preparing for Mr. Cutler's appointment.

         General and Administrative Expenses. In the nine months ended March 31,
2006 we incurred  general and  administrative  expenses of $84,000,  compared to
general and  administrative  expenses of $11,000 in the nine months  ended March
31, 2005, a variance of $73,000,  or more than 100%.  General and administrative
expenses in the nine months ended March 31, 2065 related  largely to  director's
and  consultants'  remuneration  ($55,000)  and  professional  fees and  related
overhead costs incurred in bringing our financial  records and SEC filings up to
date  ($29,000).  In the  nine  months  ended  March  31,  2005,  there  were no
activities  at all in the six months  ended  December  31,  2005  following  the
termination  of all of our operating  activities in December 31, 2003,  while in
the remaining  three months ended March 31, 2005 we incurred  $11,000 of general
and  administrative  expenses  relating to director's  remuneration and contract
labor ($5,000) and general and  administrative  overhead costs ($6,000) incurred
in evaluating the possibility of bringing our financial  records and SEC filings
up to date.

     Loss on  Assignment  for Benefit of  Creditors.  . In the nine months ended
March 31, 2006 we incurred a loss of $20,000 on the  assignment  for the benefit
of the  creditors  of Aspeon  and CCI due to the  payment  of $20,000 to Frank G
Blundo,  Jr. P.C.,  trustee of the  assignment for the benefit of Aspeon and CCI
creditors, for the benefit of Aspeon and CCI creditors.

         On April 22, 2005,  our sole  director,  David J Cutler entered into an
agreement  with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the
benefit of Aspeon and CCI creditors,  subject to due diligence,  to invest up to
$50,000  cash in us for the benefit of our  creditors  in return for a number of
shares of our common stock to be determined. Following the completion of the due
diligence  process  during the six months ended December 31, 2005, it was agreed
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI  creditors,  that Mr.  Cutler would invest  $20,000 in us for the
benefit  of Aspeon  and CCI  creditors  in return  for a number of shares of our
common stock to be determined.  Accordingly during the six months ended December
31, 2005 $20,000  which had been placed in escrow with Frank G Blundo,  Jr. P.C.
by Mr.  Cutler was  released  for the benefit of Aspeon and CCI  creditors.  The
number of shares of our  common  stock to be issued to Mr.  Cutler in respect of
this investment has yet to be finalized.

         We  incurred  no profit / (loss) on the  assignment  for the benefit of
creditors in the nine months  ended March 31, 2005 as no payments  were made for
the benefit of our creditors during the period.

                                       29

<PAGE>

         Operating  (Loss) In the nine  months  ended  March 31,  2006 we had an
operating  loss of  $(104,000)  compared an operating  loss of $(11,000) for the
nine months ended March 31, 2005, a variance of $93,000,  or more than 100%, due
to the factors outlined above.

           Net Interest and Other Income / (Expense).  We had a net interest and
other (expense) of $ (7,000) in the nine months ended March 31, 2006 relating to
interest on the loan made to us by one of our directors.  There was net interest
and other  (expense) of just $ (3) in the nine months ended March 31, 2005 as no
loan  interest had accrued on the loan provided to us by one of our directors at
that stage.

         Provision for Income Taxes.  No provision for income taxes was required
in the nine months  ended March 31, 2006 or 2005 as we  generated  tax losses in
both periods.

         Net Profit / (Loss)  and  Comprehensive  Profit / (Loss).  We had a net
loss of  $(111,000)  for the nine months ended March 31, 2006  compared to a net
loss of  $(11,000)  for the nine  months  ended  March 31,  2005,  a variance of
$100,000, or more than 100%, due to the factors outlined above.

         Our  comprehensive  loss  was  identical  to our net  loss for the nine
months ended March 31, 2006 and 2005.

Cash Flow Information

     During the nine months  ended March 31, 2005 we had no cash balance or bank
account and consequently no movements in cash flow.

         We reopened a bank  account  during the last quarter of the fiscal year
ended June 30, 2005 and  consequently  had a bank account and  movements in cash
flow during the nine months ended March 31, 2006.

         Net cash (used in)  operations  in the nine months ended March 31, 2006
was  $(100,000)  compared  to no  movement  in net cash  provided by / (used in)
operations  in the nine months  ended March 31,  2005.  In the nine months ended
March 31,  2006 our net loss,  without any  requirement  for an  adjustment  for
non-cash  items,  resulted  in a  negative  cash  flow of  $(111,000).  This was
partially  offset by a  positive  cash flow of  $11,000  generated  from the net
movement in our operating assets and liabilities.

         No cash was provided by / (used in)  investing  activities  in the nine
months  ended  March 31,  2006 or 2005 as we had no  investments  to sell and no
available cash to purchase investments.

         Net cash was provided by financing  activities in the nine months ended
March 31,  2006 was  $80,000  compared  to no net cash  provided  by / (used in)
investing activities in the nine months ended March 31, 2005. In the nine months
ended March 31, 2006 we received $80,000 by way of loan from David J Cutler, one
of our directors and our sole officer.

PLANNED OPERATIONS

         Our plan of operation is to reach satisfactory  negotiated  settlements
with our  outstanding  creditors,  vigorously  defend against any further appeal
that  may be made  against  our  currently  successful  defense  of the law suit
brought against us by certain of our  shareholders,  bring our financial records
and SEC  filings  up to date,  obtain  debt  and,  or,  equity  finance  to fund
negotiated  settlements  with our  creditors  and to meet our ongoing  operating
expenses,  seek a listing on the over the counter  bulletin board and attempt to
merge with another  entity with  experienced  management and  opportunities  for

                                       30

<PAGE>

growth  in  return  for  shares  of our  common  stock to  create  value for our
shareholders.  There  can be no  assurance  that this  series of events  will be
successfully  completed,  that any such  business will be identified or that any
stockholder  will  realize  any  return on their  shares  after  such  series of
transactions has been completed.  Any merger or acquisition  completed by us can
be expected to have a significant  dilutive  effect on the  percentage of shares
held by our current stockholders.

General Business Plan
--------------------------------

         We intend to seek,  investigate  and, if such  investigation  warrants,
acquire an  interest  in business  opportunities  presented  to us by persons or
firms which desire to seek the advantages of an issuer who has complied with the
Securities Act of 1934 (the "1934 Act").  We will not restrict our search to any
specific business,  industry or geographical location, and we may participate in
business  ventures of  virtually  any nature.  This  discussion  of our proposed
business  is  purposefully  general  and is not meant to be  restrictive  of our
virtually  unlimited  discretion to search for and enter into potential business
opportunities.  We  anticipate  that we may be able to  participate  in only one
potential business venture because of our lack of financial resources.

         We may seek a business  opportunity  with entities  which have recently
commenced operations,  or that desire to utilize the public marketplace in order
to raise additional capital in order to expand into new products or markets,  to
develop a new  product  or  service,  or for other  corporate  purposes.  We may
acquire assets and establish wholly owned  subsidiaries in various businesses or
acquire existing businesses as subsidiaries.

         We expect that the selection of a business  opportunity will be complex
and risky.  Due to general economic  conditions,  rapid  technological  advances
being made in some  industries  and shortages of available  capital,  we believe
that there are numerous firms seeking the benefits of an issuer who has complied
with the 1934 Act. Such benefits may include facilitating or improving the terms
on which  additional  equity  financing may be sought,  providing  liquidity for
incentive  stock  options  or  similar  benefits  to  key  employees,  providing
liquidity (subject to restrictions of applicable  statutes) for all stockholders
and other factors.  Potentially,  available business  opportunities may occur in
many different  industries and at various  stages of  development,  all of which
will make the task of  comparative  investigation  and analysis of such business
opportunities  extremely  difficult and complex.  We have,  and will continue to
have,  essentially  no assets to provide the owners of  business  opportunities.
However,  we  will be  able  to  offer  owners  of  acquisition  candidates  the
opportunity  to acquire a  controlling  ownership  interest in an issuer who has
complied  with the 1934 Act  without  incurring  the cost and time  required  to
conduct an initial public offering.

         The analysis of new business  opportunities  will be undertaken  by, or
under the  supervision  of,  our sole  director.  We intend  to  concentrate  on
identifying  preliminary prospective business opportunities which may be brought
to our attention  through  present  associations  of our director,  professional
advisors   or  by  our   stockholders.   In   analyzing   prospective   business
opportunities,  we  will  consider  such  matters  as (i)  available  technical,
financial and managerial  resources;  (ii) working  capital and other  financial
requirements; (iii) history of operations, if any, and prospects for the future;
(iv) nature of present and expected  competition;  (v) quality,  experience  and
depth of management services;  (vi) potential for further research,  development
or exploration;  (vii) specific risk factors not now foreseeable but that may be
anticipated to impact the proposed  activities of the company;  (viii) potential
for growth or expansion;  (ix) potential for profit;  (x) public recognition and
acceptance of products, services or trades; (xi) name identification;  and (xii)
other factors that we consider  relevant.  As part of our  investigation  of the
business  opportunity,  we expect to meet  personally  with  management  and key
personnel.  To the extent  possible,  we intend to utilize  written  reports and
personal investigation to evaluate the above factors.

         We will  not  acquire  or merge  with any  company  for  which  audited
financial statements cannot be obtained within a reasonable period of time after
closing of the proposed transaction.

                                       31

<PAGE>

Acquisition Opportunities
------------------------------------

         In implementing a structure for a particular business  acquisition,  we
may become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another company or entity. We may also acquire stock or
assets of an  existing  business.  Upon  consummation  of a  transaction,  it is
probable  that our  present  management  and  stockholders  will no longer be in
control of us. In addition,  our sole  director may, as part of the terms of the
acquisition transaction,  resign and be replaced by new directors without a vote
of our stockholders, or sell his stock in us. Any such sale will only be made in
compliance  with the  securities  laws of the United  States and any  applicable
state.

         It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from  registration  under application
federal  and state  securities  laws.  In some  circumstances,  as a  negotiated
element  of the  transaction,  we may  agree to  register  all or a part of such
securities  immediately  after the  transaction  is  consummated or at specified
times  thereafter.  If such  registration  occurs,  it will be undertaken by the
surviving entity after it has  successfully  consummated a merger or acquisition
and is no longer  considered an inactive  company.  The issuance of  substantial
additional securities and their potential sale into any trading market which may
develop  in our  securities  may have a  depressive  effect  on the value of our
securities in the future.  There is no assurance that such a trading market will
develop.

         While the actual  terms of a  transaction  cannot be  predicted,  it is
expected that the parties to any business  transaction will find it desirable to
avoid  the  creation  of a taxable  event and  thereby  structure  the  business
transaction in a so-called "tax-free" reorganization under Sections 368(a)(1) or
351 of the  Internal  Revenue  Code (the  "Code").  In order to obtain  tax-free
treatment  under the Code,  it may be  necessary  for the owner of the  acquired
business to own 80% or more of the voting stock of the surviving entity. In such
event, our stockholders would retain less than 20% of the issued and outstanding
shares of the surviving entity. This would result in significant dilution in the
equity of stockholders.

         As  part of our  investigation,  we  expect  to  meet  personally  with
management  and key personnel,  visit and inspect  material  facilities,  obtain
independent  analysis of verification  of certain  information  provided,  check
references  of  management  and  key  personnel,   and  take  other   reasonable
investigative  measures,  to the extent of our limited  financial  resources and
management expertise.  The manner in which we participate in an opportunity will
depend on the nature of the  opportunity,  the  respective  needs and desires of
both parties, and the management of the opportunity.

         With respect to any merger or acquisition,  and depending  upon,  among
other things, the target company's assets and liabilities, our stockholders will
in all likelihood hold a substantially  lesser percentage  ownership interest in
us following any merger or acquisition.  The percentage ownership may be subject
to  significant  reduction in the event we acquire a target  company with assets
and expectations of growth.  Any merger or acquisition can be expected to have a
significant   dilutive   effect  on  the   percentage  of  shares  held  by  our
stockholders.

         We  will   participate  in  a  business   opportunity  only  after  the
negotiation and execution of appropriate written business  agreements.  Although
the terms of such agreements  cannot be predicted,  generally we anticipate that
such agreements will (i) require specific  representations and warranties by all
of the parties;  (ii) specify certain events of default;  (iii) detail the terms
of closing and the  conditions  which must be  satisfied  by each of the parties
prior to and after such  closing;  (iv)  outline  the  manner of bearing  costs,
including costs associated with the Company's attorneys and accountants; (v) set
forth remedies on defaults; and (vi) include miscellaneous other terms.

                                       32

<PAGE>

         As stated  above,  we will not  acquire or merge with any entity  which
cannot provide  independent  audited  financial  statements  within a reasonable
period of time after closing of the proposed transaction.  We are subject to all
of the  reporting  requirements  included  in the 1934  Act.  Included  in these
requirements as part of a Current Report on Form 8-K,  required to be filed with
the SEC  upon  consummation  of a  merger  or  acquisition,  as well as  audited
financial  statements  included in an Annual Report on Form 10-K (or Form 10-KSB
as  applicable).  If such  audited  financial  statements  are not  available at
closing, or within time parameters necessary to insure our compliance within the
requirements of the 1934 Act, or if the audited financial statements provided do
not conform to the  representations  made by that  business to be acquired,  the
definitive closing documents will provide that the proposed  transaction will be
voidable,  at the discretion of our present  management.  If such transaction is
voided, the definitive closing documents will also contain a provision providing
for reimbursement for our costs associated with the proposed transaction.

Competition
-----------------

         We believe we are an  insignificant  participant  among the firms which
engage in the acquisition of business opportunities.  There are many established
venture capital and financial concerns that have significantly greater financial
and personnel  resources and  technical  expertise  than we have. In view of our
limited  financial  resources  and  limited  management  availability,  we  will
continue  to  be at a  significant  competitive  disadvantage  compared  to  our
competitors.

Accounting Pronouncements


     In  November  2004,  the FASB  issued  SFAS No.  151,  "Inventory  Costs an
amendment of ARB No.43,  Chapter 4." This Statement clarifies the accounting for
abnormal amounts of idle facility  expense,  freight,  handling costs and wasted
materials.  This  Statement is effective for  inventory  costs  incurred  during
fiscal years beginning after June 15, 2005. The initial  application of SFAS No.
151 will have no impact on our financial statements.

            In December 2004, the FASB issued SFAS No. 152, "Accounting for Real
Estate  Time-Sharing  Transactions - an amendment of FASB  Statements No. 66 and
67." This Statement  references the financial  accounting and reporting guidance
for real estate time-sharing transactions that is provided in AICPA Statement of
Position 04-2,  "Accounting  for Real Estate  Time-Sharing  Transactions."  This
Statement  also states that the guidance  for  incidental  operations  and costs
incurred to sell real estate projects does not apply to real estate time-sharing
transactions.  This  Statement is effective for financial  statements for fiscal
years  beginning  after June 15, 2005.  The initial  application of SFAS No. 152
will have no impact on our financial statements.

            In  December  2004,  the FASB issued  SFAS No.  153,  "Exchanges  of
Nonmonetary  Assets - a replacement of APB Opinion No. 20 and FASB Statement No.
3." This Statement eliminates the exception for nonmonetary exchanges of similar
productive  assets and  replaces it with a general  exception  for  exchanges of
nonmonetary assets that do not have commercial substance. A nonmonetary exchange
has commercial  substance if the future cash flows of the entity are expected to
change  significantly  as a result of the exchange.  This Statement is effective
for nonmonetary asset exchanges occurring in fiscal periods beginning after June
15, 2005. We do not expect application of SFAS No. 153 to have a material affect
on our financial statements.

            In December  2004,  the FASB issued a revision to FASB Statement No.
123,  Accounting for Stock Based  Compensation.  This  statement  supersedes APB
Opinion  No. 25,  Accounting  for Stock  Issued to  Employees,  and its  related
implementation guidance. This Statement establishes standards for the accounting
for transactions in which an entity  exchanges its equity  instruments for goods
or  services.  It  also  addresses   transactions  in  which  an  entity  incurs

                                       33

<PAGE>

liabilities  in exchange for goods or services  that are based on the fair value
of the  entity's  equity  instruments  or that may be settled by the issuance of
those equity instruments. We do not believe that the adoption of SFAS No. 123( R
) will  have a  material  impact  on our  financial  conditions  or  results  of
operation

         In March 2005, the FASB Interpretation No.47 "FIN 47" was issued, which
clarifies certain terminology as used in FASB Statement No. 143, "Accounting for
Asset  Retirement  Obligations".  In addition it clarifies  when an entity would
have  sufficient  information to reasonably  estimate the fair value of an asset
retirement obligation. FIN 47 is effective no later than the end of fiscal years
ending after December 15, 2005.  Early  adoption of FIN 47 is encouraged.  We do
not  believe  that the  adoption  of FIN 47 will have a  material  impact on our
financial conditions or results of operation.

            In May 2005,  the FASB issued FASB Statement No. 154, which replaces
APB  Opinion  No.20 and FASB No.  3. This  Statement  provides  guidance  on the
reporting of accounting  changes and error corrections.  It established,  unless
impracticable  retrospective  application as the required method for reporting a
change  in   accounting   principle  in  the  absence  of  explicit   transition
requirements  to a  newly  adopted  accounting  principle.  The  Statement  also
provides guidance when the  retrospective  application for reporting of a change
in accounting  principle is  impracticable.  The reporting of a correction of an
error by restating  previously issued financial  statements is also addressed by
this Statement.  This Statement is effective for financial statements for fiscal
years  beginning after December 15, 2005.  Earlier  application is permitted for
accounting  changes and  corrections  of errors made in fiscal  years  beginning
after the date this Statement is issued.  We do not believe that the adoption of
FASB Statement No. 154 will have a material  impact on our financial  conditions
or results of operation.

            In February  2006,  the FASB issued FASB Statement No. 155, which is
an amendment of FASB Statements No. 133 and 140. This Statement; a) permits fair
value  remeasurement  for any  hybrid  financial  instrument  that  contains  an
embedded derivative that otherwise would require bifurcation, b) clarifies which
interest-only strip and principal-only strip are not subject to the requirements
of  Statement  133,  c)  establishes  a  requirement  to evaluate  interests  in
securitized   financial  assets  to  identify  interest  that  are  freestanding
derivatives or that are hybrid  financial  instruments  that contain an embedded
derivative  requiring  bifurcation,  d) clarifies that  concentrations of credit
risk in the  form of  subordination  are not  embedded  derivatives,  e)  amends
Statement  140 to eliminate  the  prohibition  on a  qualifying  special-purpose
entity  from  holding a  derivative  financial  instrument  that  pertains  to a
beneficial  interest other than another derivative  financial  instrument.  This
Statement is effective for financial statements for fiscal years beginning after
September 15, 2006.  Earlier  adoption of this  Statement is permitted as of the
beginning of an entity's fiscal year, provided the entity has not yet issued any
financial  statements  for that fiscal year. We do not believe that the adoption
of  FASB  Statement  No.  155  will  have a  material  impact  on our  financial
conditions or results of operation

            In March 2006,  the Financial  Accounting  Standards  Board (`FASB')
issued  FASB  Statement  No. 156,  which  amends FASB  Statement  No. 140.  This
Statement  establishes,  among other things,  that accounting for all separately
recognized  servicing  assets and servicing  liabilities.  This Statement amends
Statement 140 to require that all  separately  recognized  servicing  assets and
servicing liabilities be initially measured at fair value, if practicable.  This
Statement  permits,  but  does  not  require,  the  subsequent   measurement  of
separately  recognized servicing assets and servicing liabilities at fair value.
An entity that uses  derivative  instruments  to mitigate the risks  inherent in
servicing  assets and  servicing  liabilities  is  required to account for those
derivative instruments at fair value. Under this Statement,  an entity can elect
subsequent  fair value  measurement  to account  for its  separately  recognized
servicing assets and servicing  liabilities.  By electing that option, an entity
may simplify its  accounting  because this Statement  permits  income  statement

                                       34

<PAGE>

recognition of the potential offsetting changes in fair value of those servicing
assets  and  servicing  liabilities  and  derivative  instruments  Is  the  same
accounting  period.  This  Statement is effective for financial  statements  for
fiscal  years  beginning  after  September  15, 2006.  Earlier  adoption of this
Statement is permitted as of the beginning of an entity's fiscal year,  provided
the entity has not yet issued any financial  statements for that fiscal year. We
do not believe that the adoption of FASB  Statement No. 156 will have a material
impact on our financial conditions or results of operation.

Effects of Inflation

         Although we cannot accurately anticipate the effect of inflation on our
operations, we do not believe that inflation has had, or is likely in the future
to have, a material effect on our operating results or financial condition.

ITEM 3.  Controls and Procedures

            As of the end of the period covered by this report,  we conducted an
evaluation,  under  the  supervision  and with the  participation  of our  Chief
Executive Officer and Chief Financial  Officer,  of our disclosure  controls and
procedures  (as defined in Rules  13a-15(e) and  15d-15(e)  under the 1934 Act).
Based on this  evaluation,  the Chief  Executive  Officer  and  Chief  Financial
Officer  concluded that our disclosure  controls and procedures are effective to
ensure that  information  required to be disclosed by us in reports that we file
or submit under the 1934 Act is  recorded,  processed,  summarized  and reported
within the time periods  specified  in the  Securities  and Exchange  Commission
rules and forms.  There was no change in our  internal  control  over  financial
reporting during our most recently  completed fiscal quarter that has materially
affected,  or is reasonably  likely to materially  affect,  our internal control
over financial reporting.

PART II  OTHER INFORMATION

Item 1.  Legal Proceedings

         On February  23, 2006 the United  States Court of Appeals for the Ninth
Circuit affirmed the dismissal with prejudice of a consolidated,  putative class
action  lawsuit  alleging  securities  violations by us,  Richard M. Stack,  our
former CEO,  and Horace M. Hertz,  our former  CFO.  The lawsuit was  originally
filed on October 11, 2001 in the United  States  District  Court for the Central
District of  California,  alleging that our Form 10-Q  financial  statements for
quarters  ended  September  30, 1999,  December 31, 1999 and March 31, 2000 were
false and  misleading.  Since the inception of the lawsuit,  we have  maintained
that we  considered  the  lawsuit to be without  merit,  and that we intended to
vigorously defend against the claims.

         In concluding that we, Mr. Stack,  and Mr. Hertz had been sued in error
and in affirming  the lower  court's  dismissal of the lawsuit,  on February 23,
2006, the Ninth Circuit found that "[t] he totality of [plaintiff's] allegations
are  insufficient  under  the  heightened  pleading  standard  of  the  [Private
Securities  Litigation  Reform  Act of 1995] to  raise a strong  inference  that
Defendants  acted with  deliberate  or  conscious  recklessness  in issuing  the
financial statements."

         This is the fifth  time that the  Courts  have ruled in favor of us and
against the  shareholders  who have brought this suit against us. On each of the
previous  occasions the  shareholders who have brought this suit against us have
filed an appeal  against the  decision of the Courts.  There can be no assurance
that the  shareholders  who have  brought  this suit  against us will not file a
further  appeal against the Courts' latest ruling in which case we will continue
to vigorously defend against the claims.

            Effective June 30, 2003 we made the decision to  discontinue  all of
its remaining operating businesses and are now focused on reaching  satisfactory
negotiated  settlements  with its outstanding  creditors,  vigorously  defending
against any further  appeal that may be made  against our  currently  successful
defense of the law suit  brought  against  us by  certain  of our  shareholders,
bringing our financial records and SEC filings up to date,  seeking a listing on
the over the  counter  bulletin  board,  raising  debt and,  or,  equity to fund
negotiated  settlements  with our  creditors  and to meet our ongoing  operating

                                       35

<PAGE>

expenses and attempting to merge with another entity with experienced management
and  opportunities for growth in return for shares of our common stock to create
value for our shareholders. There can be no assurance that this series of events
will be successfully completed.

            We currently  have no assets or ongoing source of income but believe
that the proceeds from our  Directors' and Officers'  insurance  policy would be
sufficient  to meet the legal cost  incurred in  defending  any  further  appeal
against the Court's decision.  However,  there is no assurance that the proceeds
from our Directors' and Officers'  insurance  policy would be sufficient to meet
the legal cost  incurred in  defending  any further  appeal  against the Court's
decision and if they are exhausted there are no further funds to defend the suit
and we would have no alternative  but to file for  bankruptcy.  Moreover,  if we
were to lose an appeal  against  the Court's  decision  it is unlikely  that the
proceeds from the Directors' and Officers'  insurance policy would be sufficient
to cover any damages assessed and again we would have no alternative but to file
for  bankruptcy.  In the meantime,  it is unlikely that we will be able to merge
with another entity with experienced  management and opportunities for growth in
return for shares of its common stock to create value for its shareholders until
the law suit has finally be settled on a basis that is satisfactory to us.

Item 2.  Changes in Securities.

All details of changes in our  securities  are set out in Note 8.  Shareholders'
Equity above.

Item 3.  Defaults upon Senior Securities

All details of our  defaults in respect of our debt are set out in Note. 7 Notes
Payable.

We are in default on a number of operating and capital leases either directly or
as guarantor for our subsidiary companies.  These liabilities have been included
in the balance of our accounts payable. We will attempt to negotiate  settlement
of all of our  shortfalls to creditors in respect of these  defaults upon senior
securities.

Item 4.  Submission of Matters to Vote of Security Holders

No matters were  submitted by us to a vote of our  security  holders  during our
fiscal  years ended June 30, 2001 through  June 30, 2005 or  subsequent  to that
date

Item 5.  Other Information.

None

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

a.       Exhibits.

None

b.       Reports on Form 8-K.

On September 15, 2005 we filed a report on Form 8-K appointing  Larry  O'Donnell
CPA PC as our independent accountant.

On  December  9,  2005 we  filed  a  report  on Form  8-K/A  in  respect  of the
appointment of Larry O'Donnell CPA PC as our independent accountant.

On March 16, 2006 we filed a report on Form 8-K  announcing  the  appointment of
two new, non-executive directors.

                                       36

<PAGE>

On March 28, 2006 we filed a report on Form 8-K  reporting  the  decision of the
United  States Court of Appeals for the Ninth Circuit in respect of the law suit
brought against us by certain of our shareholders.
















                                       37

<PAGE>

                                   SIGNATURES

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


                                    ASPEON, INC,
                                    (Registrant)




Date: May 12, 2005                  /s/     David J. Cutler
                                    -------------------------------------

                                            David J. Cutler,
                                            Chief Executive Officer
                                            Chief Financial Officer.









                                       38