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 SEPTEMBER 30, 2003.

                                       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 Identi
   incorporation or organization)                            -fication No.)

                4704 Harlan St, Suite 420, Denver, Colorado 80212
                -------------------------------------------------
                    (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 [ ] No [ X ]

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 October 25, 2005
              -----                             ----------------------------
Common Stock, $ 0.01 par value                    9,436,225 shares

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



<PAGE>

<TABLE>
<CAPTION>

                                      INDEX

                                  ASPEON, INC.


PART I - FINANCIAL INFORMATION

<S>                                                                             <C>
Item 1.  Financial Statements (Unaudited)                                       PAGE

Consolidated Balance Sheet - September 30, 2003.                                 F-1

Consolidated Statements of Operations -      Three Months ended September 30,    F-2
2003.

Consolidated Statement of Cash Flows - Three Months ended September 30,          F-3
2003.

Notes to Consolidated Financial Statements.                                      F-4 - F-23


Item 2.           Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                            3

Item 3.           Controls and Procedures                                       15


PART II - OTHER INFORMATION

Item 1.           Legal Proceedings                                             15
Item 2.           Changes in Securities                                         16
Item 3.           Defaults on Senior Securities                                 16
Item 4.           Submission of Matters to a Vote of Security Holders           16
Item 5.           Other Information                                             17
Item 6.           Exhibits and Reports on Form 8-K.                             17

Unaudited Extracts From 2001 - 2003 Consolidated Financial Statements           F-24 - F-29
</TABLE>








                                       2



<PAGE>

Part I.   FINANCIAL INFORMATION

Item I. Financial Statements

<TABLE>
<CAPTION>

                                      Aspeon, Inc.
                               Consolidated Balance Sheet
                                      (Unaudited)



                                                                                           September 30,
                                                                                                2003
                                                                                         -----------------
<S>                                                                                      <C>
ASSETS

Current Assets
      Cash & Cash Equivalents                                                            $        114,432
      Accounts Receivable                                                                         388,405
      Other Receivables                                                                           138,963
      Inventory                                                                                     4,149
      Prepaid Expenses                                                                            147,314
                                                                                         -----------------
                  Total Current Assets                                                            793,263

Fixed Assets                                                                                      413,371

Other Assets                                                                                        4,290
                                                                                         -----------------
TOTAL ASSETS                                                                             $      1,210,924
                                                                                         =================

LIABILITIES & STOCKHOLDERS' DEFICIT

Current Liabilities
      Accounts Payable                                                                   $      9,825,093
      Unearned Income & Customer Deposits                                                         257,523
      Accrued Expenses                                                                            772,726
      Notes Payable                                                                               209,000
      Deferred Earnouts                                                                         1,123,869
                                                                                         -----------------
                  Total Current Liabilities                                                    12,188,211

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                                                                     (95,950,009)
                                                                                         -----------------
                  Total Stockholders' Deficit                                                 (10,977,287)
                                                                                         -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                              $      1,210,924
                                                                                         =================
</TABLE>

        See accompanying Notes to Consolidated Financial Statements.

                                      F-1

<PAGE>

                                  Aspeon, Inc.
                     Consolidated Statements of Operations
                                  (Unaudited)

                                                           Three Months Ended
                                                              September 30,
                                                                   2003
                                                            -----------------
Revenue
      Products                                              $        457,754
      Services                                                       293,937
                                                            -----------------
      Total Revenue                                                  751,691

Cost of Sales
      Products                                                       725,052
      Services                                                       104,448
                                                            -----------------
      Total Cost of Sales                                            829,500
                                                            -----------------
Gross Profit / (Loss)                                                (77,809)

Operating Expenses / (Income)
      General & Administrative Expenses                              356,067
      Selling & Marketing Expenses                                    12,624
      Depreciation                                                    60,559
      Gain on Settlement of Litigation                            (1,007,211)
                                                            -----------------
      Total Operating Expenses / (Income)                            577,961

      Operating Profit / (Loss)                                      500,152

Interest and Other Income / (Expenses) Net                            (3,237)

Profit / (Loss) before Income Taxes                                  496,915

Provision for Income Taxes                                              -
                                                            -----------------
Net Profit / (Loss)                                         $        496,915
                                                            =================

NET PROFIT / (LOSS) PER COMMON SHARE

      Basic & Diluted                                                  $0.05
                                                            =================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

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

            See accompanying Notes to Consolidated Financial Statements.

                                      F-2

<PAGE>

<TABLE>
<CAPTION>

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

                                                                                Three Months Ended
                                                                                   September 30,
                                                                                       2003
                                                                                -----------------
<S>                                                                             <C>
CASH FLOW PROVIDED BY / (USED IN) OPERATING ACTIVITIES

NET  PROFIT / (LOSS)                                                            $        496,915

ADJUSTMENTS TO RECONCILE NET PROFIT / (LOSS) TO NET CASH
PROVIDED BY / (USED IN) OPERATING ACTIVITIES
      Depreciation                                                                        60,559
      Gain on Settlement of Litigation                                                (1,007,211)
      Net Cash Received on Settlement of Litigation                                      136,000

CHANGES IN OPERATING ASSETS & LIABILITIES
      (Increase)/Decrease in Accounts Receivable                                         598,418
      (Increase)/Decrease in Other Receivables                                          (116,925)
      (Increase)/Decrease in Inventory                                                   582,277
      (Increase)/Decrease in Prepaid Expenses                                             64,095
      Increase/(Decrease) in Accounts Payable                                            (86,493)
      Increase/(Decrease) in Unearned Income & Customer Deposits                        (184,935)
      Increase/(Decrease) in Accrued Expenses                                            (30,577)
                                                                                -----------------
      Total Cash Flow provided by / (used in) Operating Activities                       512,123

CASH FLOW FROM INVESTING ACTIVITIES
      Decrease in Other Assets                                                               874
      Purchase of Fixed Assets                                                              (891)
      Proceeds from Sale of Fixed Assets                                                   2,225
                                                                                -----------------
      Total Cash Flow provided by / (used in) Investing Activities                         2,208

CASH FLOW FROM FINANCING ACTIVITIES
      Repayment of Notes Payable                                                        (401,430)
                                                                                -----------------
      Total Cash Flow provided by / (used in)  Financing Activities                     (401,430)

INCREASE / (DECREASE) IN CASH & CASH EQUIVALENTS                                $        112,901
                                                                                =================

Cash and Cash Equivalents at the beginning of the period                        $          1,531
                                                                                =================
Cash and Cash Equivalents at the end of the period                              $        114,432
                                                                                =================

SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid for interest                                                          $          3,129
                                                                                -----------------
Cash paid for income tax                                                        $              0
                                                                                -----------------
</TABLE>

             See accompanying Notes to Consolidated Financial Statements.

                                          F-3



<PAGE>



                                  ASPEON, INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Note. 1           General

         Aspeon, Inc. ("Aspeon" or the "Company",  which may also be referred to
as "we",  "us" or "our") was  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 4704 Harlan Street,  Suite 420, Denver,  Colorado,  80212
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,  winning the outstanding
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") (collectively  "RGB/Jade"),  (subsequently
renamed Javelin  Holdings  International  Limited (UK)),  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 area  network 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

                                      F-4

<PAGE>

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
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 had experienced
negative cash flows from our operations since inception.  As at June 30, 2000 we

                                      F-5

<PAGE>

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  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 the 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 the shares of 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 the
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  has once again
appealed  against the dismissal and the appeal is anticipated to be heard before
the end of 2005.

         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

                                      F-6

<PAGE>

related to an  adjustment  to increase the amount  recorded  for the  beneficial
conversion  feature associated with the issuance of our Series A 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 the  shares of our common  stock were
delisted  from Nasdaq.  As we were in arrears with our filings with the SEC, our
the shares of our common  stock were not  eligible  to be traded 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 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.  The
relegation  of the trading in shares of our common  stock 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
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

                                      F-7

<PAGE>

         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  fiscal  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 in, 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  remain as
outstanding liabilities of Aspeon and CCI.

         Following the establishment of 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

                                      F-8

<PAGE>

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 traded 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,  winning the
outstanding law suit brought against us by certain of our shareholders, bringing
our financial records and SEC filings up to date, seeking re-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. The due diligence process is yet to
be  finalized  and no shares of our common  stock have been issued in respect of
this agreement as yet.

         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.  Since  that  date Mr.  Cutler  has
continued  to make  further  advances  to us 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.  We  have  had no  response  to our fax to the  SEC  and  there  can be no
assurance that we will not be deregistered by the SEC in due course.

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

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
three month period ended  September 30, 2003 are not  necessarily  indicative of
the results that may be expected for the year ended June 30, 2004.

         Due to the dispute  with our  previous  auditors,  PWC, and our lack of
funds,  the last Form 10-K we was filed in respect of our  financial  year ended
June 30,  2000 and the last Form 10-Q we filed was in  respect  of the three and
nine month period ended March 31,  2001.Unaudited  extracts  from our  financial
statements  for the  financial  years June 30,  2001  through  June 30, 2003 are
attached on page 41 below. We do not intend to have these accounts audited as we
believe  that the cost of  completing  such audits  would  exceed any benefit to
shareholders.

                                      F-9

<PAGE>


Note. 3           Liquidity

         As of September 30, 2003, we had $114,000 cash on hand, $1.2 million of
assets,  were in the process of terminating our last operating  business and had
no other source of income,  outstanding  liabilities  in excess of $12.1 million
and an outstanding law suit brought against us by certain of our shareholders.

         As of June 30,  2005,  we had $0 cash on hand,  $26,300 of  assets,  no
operating  business  or other  source  of  income,  outstanding  liabilities  of
approximately  $8 million  and an  outstanding  law suit  brought  against us by
certain of our shareholders.

         Consequently 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.

         If we were to lose the  outstanding  law  suit  brought  against  us by
certain of our shareholders it is unlikely that the proceeds from our Directors'
and Officers'  insurance policy would be sufficient to meet the damages assessed
and we would have no alternative but to file for bankruptcy.

         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.  Since  that  date Mr.  Cutler  has
continued  to make  further  advances  to us 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.

<TABLE>
<CAPTION>

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:

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


                                                                                assets transferred to the
                                                                                trustee for the assignment


                                      F-10

<PAGE>

                                                                                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.

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.

                                      F-11

<PAGE>

Inventories -- Inventories at September 30, 2003 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
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.

                                      F-12

<PAGE>

 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.

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 ended
September  30, 2003 our net income / (loss) was  identical to our  comprehensive
income / (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  ended  September  30, 2003 as 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

                                      F-13

<PAGE>

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
ended  September 30, 2003  comprised  only one segment and as such,  adoption of
SFAS No. 131 does not impact the disclosures made in our financial statements.

Note. 7           Lines of Credit, Debt & Notes Payable

            In June 1998, we and our subsidiaries  obtained a credit facility of
$7,500,000 from an unrelated financial institution.  The credit facility was for
three  years to expire in June 2001 and  consisted  of a line of credit of up to
$6,000,000 and a term loan of $1,500,000.  The credit facility contained a 0.50%
per annum unused line of credit fee, which was based on the  difference  between
the borrowing capacity and outstanding balance.

            Borrowings under the term loan were  collateralized by substantially
all of our  assets,  bore  interest  at 13.65% per annum and were  repayable  at
$25,000 per month with all unpaid  principal  and interest due in June 2001.  At
June 30, 2000, borrowings  outstanding under the term loan amounted to $900,000.
We were not  permitted to pay cash  dividends to common  stockholders  under the
terms  of the  credit  facility  without  approval  of the  unrelated  financial
institution.

            Under the terms of the credit facility,  we were permitted to borrow
up to 80% of  eligible  accounts  receivable  (as  defined)  and 50% of eligible
inventory (as defined) with monthly interest  payments based upon the prime rate
of a  national  financial  institution  plus 1.75%  (9.5% as of June 30,  2000).
Borrowings under the line of credit were  collateralized by substantially all of
our assets. At June 30, 2000, borrowings  outstanding under the line amounted to
$2,497,000.

            The credit facility contained certain  restrictive monthly financial
and  non-financial  covenants  (e.g.,  limitation  on capital  expenditures  and
indebtedness).  We were required to maintain a stated current ratio,  net worth,
senior debt service  coverage ratio and total debt service  coverage  ratio.  At
June 30, 2000, we were in default of certain non-financial covenants. In October
2000,  we obtained a waiver on all defaults  through  June 30, 2000  pursuant to
certain  terms and  conditions  including  accelerating  term  loan  repayments,
accruing  interest on the term loan at the default  rate of 11.5%,  and limiting
borrowings to approximately $3,538,000.

         At September 30, 2000, we had borrowings outstanding under our domestic
line of credit  facility  and term loan  amounting  to  $2,714,900  and $825,000
respectively.

         The term loan was repaid in full in December  2000.  At that time,  the
revolving line of credit facility was limited to aggregate borrowings,  which at
no time was to exceed $3,538,000.

         In November 2000,  additional events of default occurred under the loan
agreement.  In March  2001,  we  obtained  from the  lender a  forbearance  from
exercising  its rights and remedies in terms of the credit  facility to allow us
to obtain  financing  sufficient  to fully repay our  obligations.  Terms of the
forbearance agreement provided aggregate outstanding principal be limited to the
lesser of $1,375,000 less any loan reserves or the sum of:

         i) an amount equal to 80% of the our net eligible receivables; plus

         ii) an amount not to exceed the lesser of:

         A) 50% of the value of our eligible inventory,  calculated at the lower
         of cost or market value and determined on the FIFO basis; or

                                      F-14

<PAGE>

         B) $675,000  provided  that,  commencing on March 19, 2001,  and on the
         first day of each week  thereafter  such  amount  shall be  reduced  by
         $50,000 per week; less

         iii) any Loan Reserves.

         Interest on the outstanding obligations accrued at the default interest
rate of 13.25% per annum as of September 30, 2000.

         In accordance with the March 2001 forbearance agreement,  the revolving
line of credit facility  principal  balance reduced on a weekly  scheduled basis
until  expiration of the loan  agreement on June 8, 2001.  On May 14, 2001,  the
line of credit facility was repaid in full.

         Jade had a line of credit facility of approximately  $1,800,000 from an
unrelated  financial  institution.  Borrowings  under  the line of  credit  were
collateralized  by all of the assets of Jade and bore  interest at the U.K. Base
rate plus 2% (7.7% at September  30, 2000).  The credit  facility was renewed in
October  2000  through  August  2001  and was  subsequently  renewed  again.  At
September  30,  2000,  borrowings  under  the  line  amounted  to  approximately
$600,000.  Availability  under  the line at  September  30,  2000  totaled  $1.2
million. Borrowings under the line were restricted to the operations of Jade and
were  not to be used to  support  our  other  operations.  At  March  31,  2001,
borrowings  under the line a borrowings under the line amounted to approximately
$656,700. Availability under the line at March 31, 2001 totaled $1.1 million. We
did not guarantee  this line of credit which ceased to be a liability of ours on
the sale of RGB in March 2002.

          In December 2000, Javelin Europe obtained a line of credit facility of
approximately  $1,000,000  collateralized by substantially all of its assets and
bore  interest at 1.75% over the lenders  Base Rate.  This  facility  expired in
August 2001 at which date it was  further  extended.  Borrowings  under the line
were  restricted to the  operations  of Javelin  Europe and could not be used to
support our other  operations.  At March 31, 2001,  borrowings  under the line a
borrowings under the line amounted to approximately $297,200. Availability under
the line at March 31, 2001 totaled $327,700  million.  We did not guarantee this
line of credit which  ceased to be a liability  ours on the sale of RGB in March
2002.

         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 other our operations. We provided a guarantee for this facility that was
to be released on the sale of Javelin  Australia  in January 2003 and in respect
of which we were indemnified by the purchaser of Javelin Australia.

         On September 12, 2002 we entered into a Secured Convertible  Promissory
Note Purchase  Agreement with three  individuals.  Under that  agreement,  those
three individuals, who were Richard Stack, one of our directors, Kenneth Kadlec,
our Vice President of Engineering,  and Horace Hertz, subsequently a director of
ours, loaned to us $125,000,  $50,000 and $75,000,  respectively.  Each of those
loans  was  represented  by a  Secured  Convertible  Promissory  Note,  and bore
interest  at the rate of ten  percent  per annum.  Interest on the loans was due
monthly,  and the principal amount of the loans was due on the first anniversary
of the loans.  Repayment  of the loans was  secured by a  security  interest  in
substantially  all of  our  assets.  The  principal  amount  of  the  loans  was
convertible at any time at the election of the lenders into shares of our common
stock  at a  conversion  price  of  $0.08  per  share.  In  connection  with the
consummation of these loans,  Robert Nichols and Edward Brooks resigned from our
Board of  Directors,  and Horace  Hertz was  elected to our Board of  Directors.
These  Secured  Convertible  Promissory  Notes were repaid in full in  September
2003.

                                      F-15

<PAGE>

         As at September 30, 2003 the balance of notes payable  represented  two
notes payable to two  individuals  who had previously sold their business to us.
We had renegotiated the terms of the deferred earnout due to them on the sale of
their business to us such that these notes payable  represented  the balance due
to them.  We were in default in repayment of these notes payable as at September
30, 2003.  Effective  January 1, 2004,  one of the two note  holders  elected to
become part of, and be bound by the terms of, the  assignment for the benefit of
Aspeon and CCI  creditors.  The note payable to the remaining note holder with a
balance of $128,000 remains an outstanding liability of ours.

            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.  Since  that  date Mr.  Cutler  has
continued  to make  further  advances  to us 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 that Mr. Cutler will provide
us with further funding in the future.

Note. 8           Mandatorily Redeemable Series A Preferred Stock
         In March 2000,  we  completed a private  placement  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
at an  initial  exercise  price of $17.00  per share  and a warrant  to  acquire
1,250,000 shares of common stock of our wholly owned subsidiary company,  Aspeon
Solutions,  at an exercise price of $5.00 per share.  Proceeds to us amounted to
$9,568,400, net of $431,600 in issuance costs.


         The  net  proceeds  from  the  issuance  of the  Preferred  Stock  were
allocated based on the relative fair values of each equity  instrument  using an
independent valuation as follows:




Preferred Stock                                          $        5,274,500
Warrants, Aspeon                                                  3,426,600
Warrants, Aspeon Solutions                                          867,300
                                                         ------------------

 Total net proceeds                                      $        9,568,400
                                                         ==================


         The Preferred Stock  conversion price was less than the market value of
our common stock on the date of issuance;  accordingly, we recorded a beneficial
conversion  feature equal to the difference between the conversion price and the
fair value of the common  stock,  multiplied  by the number of shares into which
the Preferred Stock was convertible  (intrinsic  value). The resultant value was
limited to the amount  allocated to the Preferred  Stock of  $5,274,500  and was
charged to retained  earnings,  to the extent available,  and paid in capital on
the issuance date, and increased the net loss available to common  stockholders.
The  Preferred  Stock  discount  that  resulted  from the  allocation of the net
proceeds to the other equity  instruments  issued was accreted  over the minimum
period from the date of issuance to the date on which the Preferred  Stock could
first be redeemed at our  initiative  (March  2002),  and increased the net loss
available to common  stockholders  by  $2,462,400  for the three and nine months
ended March 31, 2001.

         The holder of the Preferred Stock  ("Preferred  Stockholders")  had the
following  rights: i) the right of first offer for the subsequent sale of equity
securities by us through March 2001, ii) the right to exchange  Preferred  Stock
for equity  securities  subsequently  issued by us, through September 2001, iii)
the option to exchange the Preferred  Stock for shares of the preferred stock of
Aspeon Solutions  following an initial public offering of that company and based
on the  trading  volume of the  company's  common  stock,  as  defined,  and iv)
registration  rights for the shares of common stock issuable upon the conversion
of the Preferred Stock.

                                      F-16

<PAGE>

         The  Preferred  Stock also  contained  the  following  preferences:  i)
cumulative  dividends  at an annual  rate of 6%,  payable  quarterly  in cash or
common  stock at the our  option  commencing  in  April  2000,  ii)  liquidation
preference  equal to the original  issuance  price plus unpaid  dividends,  iii)
conversion into common stock at any time after March 2000 at a conversion  price
equal to the lower of (a) $16.00 or (b) the average of the three lowest  closing
bid prices of our common stock during the 10 day period prior to the conversion,
in either case  subject to a maximum  number of shares of common stock which may
be issued upon conversion of the Preferred  Stock,  which maximum  initially was
set at 1,250,000  shares and which is subject to adjustments,  iv) redemption of
the Preferred  Stock by us in March 2002 at the original  issuance price ($1,000
per share) plus unpaid dividends,  or at our option if certain conditions remain
satisfied, as defined, in shares of common stock, and v) mandatory redemption if
certain events occur, as defined,  at a redemption price equal to the greater of
(a) the aggregate value of the Preferred Stock being redeemed  multiplied by one
hundred and twenty-five  percent (125%) and (b) an amount determined by dividing
the aggregate  value of the Preferred  Shares being  redeemed by the  conversion
price in effect on the mandatory  redemption  date and multiplying the resulting
quotient by the average closing trade price for the common stock on the five (5)
trading days immediately  preceding (but not including) the mandatory redemption
date.

         In August  2000,  the  holder  of 150  shares  of our  Preferred  Stock
converted  such  shares into  53,054  shares of our common  stock at a per share
conversion  price of  $2.58.The  issuance  of the common  stock was exempt  from
registration pursuant to Section 3(a)(9) of the Securities Act of 1933.

         During the nine  months  ended  March 31,  2001,  we paid  $553,400  in
dividends to the  Preferred  Stockholder.  As of March 31, 2001,  we had accrued
dividends  of $40,000  that have been  recorded as an increase to the  Preferred
Stock carrying value.

         The components of the accretion of the mandatory  redeemable  preferred
stock included in the statements of stockholders'  equity for the three and nine
months ended March 31, 2001 were as follows:

                                                Three months         Nine months
                                                   Ended                Ended
                                               ---------------   ---------------
                                               March 31, 2001     March 31, 2001
Discount accretion to stated face value        $ --              $  4,138,400
Premium on mandatory redemption accretion        --                 2,462,400
Dividend recordation                              147,800           443,500
                                               ---------------   ---------------

                                               $  147,800        $  7,044,300
                                               ===============   ===============


         In October  2000, a notice of default was received  from the  Preferred
Stockholders  due to our failure to timely file our Form 10-K and the suspension
of trading of our common stock by Nasdaq.  In accordance  with the provisions of
certain  agreements  related to the Preferred  Stock we were required to pay the
lesser of 1.5% or the  highest  rate  allowed by  applicable  law, of the stated
value of the Preferred  Stock  ($9,850,000)  for each thirty calendar day period
during  which   defaults   remain  in  connection   with  the  Preferred   Stock
(approximately  $147,800 per month). As a result of the defaults not being cured
within ten days of the default  notice,  the  conversion  price of the Preferred
Stock was reduced and the Preferred  Stockholder  had the right to require us to
redeem the Preferred Stock.

         For the three and nine month  period  ended  March 31,  2001 we accrued
default  interest of $390,900  and  $914,000,  respectively,  as  calculated  in
accordance  with the provisions of the preferred  stock agreement as an increase
to the Preferred Stock carrying value.

                                      F-17

<PAGE>

         In January 2001, the Preferred  Stockholders served us with a mandatory
redemption  notice in accordance with the terms of the Preferred Stock since our
common stock was no longer listed on the Nasdaq  National Market or the New York
Stock Exchange.  We were not in a position to comply with the redemption  demand
and entered into  negotiations  with the holder of the Preferred  Stock to alter
the terms of the agreement.

         The terms of the  Preferred  Stock  provide  that until the  redemption
price was paid, the redemption  price would earn interest at a rate equal to the
lower of 24% per annum or the highest rate permitted by applicable law. At March
31,  2001,  the  approximate  redemption  value  for  the  Preferred  Stock  was
$13,267,400,  including interest at the rate of 24% per annum. The holder of the
Preferred  Stock  had the  right to elect by  delivering  written  notice  to us
("Election  Notice") to regain its rights as a holder of the Preferred Stock. If
the holder of the Preferred Stock had delivered us an Election Notice,  then the
conversion  price for the Preferred Stock would have been reduced by 1% for each
day after February 9, 2001 that we failed to pay the redemption price, until the
day that the Election  Notice was delivered to us;  provided that the conversion
price could not be reduced by more than 50%. The Preferred  Stockholder  elected
not to deliver to us an Election Notice, and therefore,  the conversion price in
effect on the date of  conversion of the Preferred  Stock,  if converted,  would
have been reduced by 50%. The terms of the  Preferred  Stock  provided  that the
maximum  number of shares of common  stock  which  could have be issued upon the
conversion of the Preferred Stock initially was set at 1,250,000 shares (subject
to  certain  adjustments);  provided  that such  amount  would be  increased  in
proportion to any decrease in the conversion  price  resulting from a redemption
default. Accordingly, as a result of the redemption default, the 1,250,000 share
limitation  was  increased to 1,875,000  shares.  Shares of Preferred  Stock not
converted  into shares of common stock prior to the March 2002  maturity date of
the  Preferred  Stock would have been  required to be redeemed on such  maturity
date.

         On May 1, 2002, we signed an agreement with the Preferred  Stockholders
under which, in return for a cash payment of $447,500 by us (a) we were released
from all  liabilities  relating  to the 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 were cancelled;  and (d) a Warrant  previously issued by our
subsidiary,  Aspeon  Solutions,  Inc.,  entitling the holder thereof to purchase
1,250,000 shares of the common stock of Aspeon Solutions was cancelled.

         We believe that the settlement had a net positive effect on our balance
sheet of approximately $19 million.

Note. 9  Stockholders' Equity

Common Stock

         Since our Form 10K issued in respect of the fiscal  year ended June 30,
2000 the only issue of common stock to have taken place was in August 2000;  150
shares of Preferred Stock plus accrued and unpaid  dividends were converted into
53,054 shares of our common stock valued at $94,700.  The issuance of the common
stock was exempt from registration pursuant to Section 3(a)(9) of the Securities
Act of 1933

         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. The due diligence process is yet to
be  finalized  and no shares of our common  stock have been issued in respect of
this agreement as yet.

                                      F-18

<PAGE>

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.

            As at June 30, 2000 we had a total of 2,336,967 options  outstanding
with  exercise  prices  between  $3.78 and $8.04 per share,  a weighted  average
exercise price of $7.92 and an average  remaining life of 5.8 years.  656,258 of
these options had vested at an average exercise price of $7.62.

            During the fiscal year June 30, 2001,  2,107,500  stock options were
issued at an exercise price of $4.00.

            During the fiscal year ended June 30, 2002,  1,655,000 stock options
were  issued at an  exercise  price of $0.35 and 600,000  with  exercise  prices
ranging from $0.50 to $1.50.

            During the fiscal year ended June 30, 2003,  2,000,000 stock options
were issued at an exercise  price of $0.07 and 600,000 with an exercise price of
$0.06.

            During the fiscal  years  ended June 30,  2004 and June 30 2005,  no
stock options were issued.

            Subsequent to June 30, 2000, no stock options were exercised

            During the fiscal  years ended June 20, 2001 to June 30,  2003,  all
outstanding  stock options were  cancelled  except for the following  which were
outstanding as at September 30, 2003:

                                      F-19

<PAGE>

                                                                    WEIGHTED
                                                                    AVERAGE
                                               OPTIONS           EXERCISE PRICE

Options outstanding beginning of
period................                          850,000              $0.063
  Granted..........................                  --                  --
  Exercised........................                  --                  --
  Canceled.........................                  --                  --
                                               -----------          ----------
Options outstanding................             850,000              $0.063
                                               ===========          ==========
Options exercisable................             466,667             $0.063
                                               ===========          ==========

            All the above  options were  cancelled  during the fiscal year ended
June 30, 2005 with the resignation of Richard P Stack in April 2005.

Warrants

            In  connection  with our  initial  public  offering,  we issued  the
representatives  of the  underwriters a warrant to purchase 85,000 shares of our
common stock at $6.25 per share.  During the year ended June 30, 1998,  warrants
to purchase  65,570 shares of our common stock were exchanged into 36,362 shares
of common  stock  through a  cashless  exercise.  During the year ended June 30,
1999, warrants to purchase 19,430 shares of our common stock were exchanged into
10,790 shares of common stock through a cashless  exercise.  As of June 30, 1999
there were no warrants outstanding.

            In  connection  with the  credit  facility  described  in Note 7, we
issued  warrants to  purchase  100,000  shares of its common  stock at $9.00 per
share to the financial institution and warrants to purchase 35,000 shares of its
common stock at prices ranging from $9.36 to $12.65 to its independent financial
advisors. The fair value of these warrants was estimated at $621,900 at the date
of grant using a  Black-Scholes  pricing  model with the  assumptions  described
above. The fair value of the warrants was reflected as deferred  financing costs
included  in other  assets and in  additional  paid in  capital  in our  balance
sheets. As of June 30, 2000,  deferred financing costs of $312,900 were included
in other assets. The warrants expired unexercised in June 2003.

            In March  2000,  we issued  warrants a warrant  to  acquire  583,334
shares of our common stock at an initial  exercise price of $17.00 per share and
a warrant  to  acquire  1,250,000  shares of common  stock of our  wholly  owned
subsidiary,  Aspeon Solutions,  Inc., at an exercise price of $5.00 per share in
connection  with its  issuance of our  Preferred  Stock (Note 8). On May 1, 2002
both of these warrants were  cancelled as part of our negotiated  settlements of
the liabilities outstanding with our Preferred Shareholders.

            Consequently  as at September 30, 2003 no warrants were  outstanding
and none have been issued subsequently.

Note. 10 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. 11 Related Party Transactions

         On August 10, 1999,  we loaned  $116,000 to Edmund  Brooks,  one of our
directors and the Chief Executive Officer of our Javelin Systems  division.  The
loan bore  interest at an annual rate of 6% per annum.  The loan was made to Mr.
Brooks for personal  reasons.  The loan was secured by a pledge of 39,000 shares
of common stock of AFC Enterprises, Inc. owned by Mr. Brooks. The loan principal
and interest  was repaid in December  2001 subject to a discount of 8% in return
for repayment of the loan prior to its due date of August 2002.

         On September  25, 1999, we loaned  $80,000 to Andrew F. Puzder,  one of
our  directors.  The loan bore  interest at an annual rate of 6% per annum.  The

                                      F-20

<PAGE>

loan was made to Mr.  Puzder for  personal  reasons.  The loan was  secured by a
pledge of Mr. Puzder's option to purchase 30,000 shares of our Common Stock. The
loan principal and interest was repaid in full in November 2000.

         In April  2000,  we loaned  $300,000  to Richard P.  Stack,  one of our
directors and our Chief Executive  Officer.  The loan bore interest at an annual
rate of 6.6% per annum. The loan was made to Mr. Stack for personal reasons. The
loan principal and interest was repaid in full in September 2000.

         In August 2000, the company loaned $400,000 to Richard P. Stack, one of
our  directors  and our Chief  Executive  Officer.  The loan bore interest at an
annual  rate of 6.6% per  annum.  The loan was made to Mr.  Stack  for  personal
reasons. The loan principal and interest was repaid in full in September 2000.

         On September 12, 2002 we entered into a Secured Convertible  Promissory
Note Purchase  Agreement with three  individuals.  Under that  agreement,  those
three individuals, who were Richard Stack, one of our directors, Kenneth Kadlec,
our Vice  President of  Engineering,  and Horace  Hertz,  loaned to us $125,000,
$50,000 and  $75,000,  respectively.  Each of those loans was  represented  by a
Secured  Convertible  Promissory  Note,  and  bore  interest  at the rate of ten
percent per annum.  Interest  on the loans was due  monthly,  and the  principal
amount of the loans was due on the first anniversary of the loans.  Repayment of
the loans was secured by a security interest in substantially all of our assets.
The principal amount of the loans was convertible at any time at the election of
the lenders into shares of our common  stock at a conversion  price of $0.08 per
share.  In connection with the  consummation of these loans,  Robert Nichols and
Edward Brooks resigned from our Board of Directors, and Horace Hertz was elected
to our Board of  Directors.  These  Secured  Convertible  Promissory  Notes were
repaid in full in September 2003.

         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. The due diligence process is yet to
be  finalized  and no shares of our common  stock have been issued in respect of
this agreement as yet.

            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.  Since  that  date Mr.  Cutler  has
continued  to make  further  advances  to us 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 is no assurance that Mr. Cutler will continue to
provide us with further funding in the future.

Note. 12  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 us and our  officers.  On  September  20,  2001,  the lead
plaintiff in the class action suit  appealed  against the dismissal of the case.

                                      F-21

<PAGE>

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 has once again the dismissal and the appeal is anticipated to
be heard before the end of 2005.  At present we believe  that the proceeds  from
our  Directors'  and Officers'  insurance  policy will be sufficient to meet the
legal cost incurred in defending the consolidated law suit. However, there is no
assurance that the proceeds from our Directors' and Officers'  insurance  policy
will be sufficient to meet the legal cost incurred in defending the consolidated
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 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.

Note. 13  Subsequent Events

                  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.

         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,  winning the
outstanding 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

                                      F-22

<PAGE>

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. The due diligence process is yet to
be  finalized  and no shares of our common  stock have been issued in respect of
this agreement as yet.

         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.  Since  that date David J Cutler has
continued  to make  further  advances  to us 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 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.  We  have  had no  response  to our fax to the  SEC  and  there  can be no
assurance that we will not be deregistered by the SEC in due course.

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






                                      F-23

<PAGE>

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,  win the  outstanding  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,  winning the outstanding
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") (collectively  "RGB/Jade"),  (subsequently
renamed Javelin  Holdings  International  Limited (UK)),  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 area  network and wide area  network  support,  maintenance  and
repair, and help desk support.

                                       3

<PAGE>

             - 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.

         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.

                                       4

<PAGE>

         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 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  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 the 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.

                                       5

<PAGE>

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 the shares of 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 the
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  has once again
appealed  against the dismissal and the appeal is anticipated to be heard before
the end of 2005.

         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 Series A 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 the  shares of our common  stock were
delisted  from Nasdaq.  As we were in arrears with our filings with the SEC, our
the shares of our common  stock were not  eligible  to be traded 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 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


                                       6
<PAGE>

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.  The
relegation  of the trading in shares of our common  stock 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
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.


                                       7
<PAGE>

         During  fiscal  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 in, 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  remain as
outstanding liabilities of Aspeon and CCI.

         Following the establishment of 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 traded 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,  winning the
outstanding law suit brought against us by certain of our shareholders, bringing
our financial records and SEC filings up to date, seeking re-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. The due diligence process is yet to
be  finalized  and no shares of our common  stock have been issued in respect of
this agreement as yet.

         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


                                       8
<PAGE>

statements  and SEC  reporting  up to  date.  Since  that  date Mr.  Cutler  has
continued  to make  further  advances  to us 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.  We  have  had no  response  to our fax to the  SEC  and  there  can be no
assurance that we will not be deregistered by the SEC in due course.

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

LIQUIDITY AND CAPITAL RESOURCES

         As of September 30, 2003, we had $114,000 cash on hand, $1.2 million of
assets,  were in the process of terminating our last operating  business and had
no other source of income,  outstanding  liabilities  in excess of $12.1 million
and an outstanding law suit brought against us by certain of our shareholders.

         As of June 30,  2005,  we had $0 cash on hand,  $26,300 of  assets,  no
operating  business  or other  source  of  income,  outstanding  liabilities  of
approximately  $8 million  and an  outstanding  law suit  brought  against us by
certain of our shareholders.

         Consequently 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.

         If we were to lose the  outstanding  law  suit  brought  against  us by
certain of our shareholders it is unlikely that the proceeds from our Directors'
and Officers'  insurance policy would be sufficient to meet the damages assessed
and we would have no alternative but to file for bankruptcy.

         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.  Since  that  date Mr.  Cutler  has
continued  to make  further  advances  to us 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


                                       9
<PAGE>

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.  We  have  had no  response  to our fax to the  SEC  and  there  can be no
assurance that we will not be deregistered by the SEC in due course.

Results of Operations - Three Months Ended September 30, 2003

         Revenue,  Revenue for the three  months  ended  September  30, 2003 was
$752,000.  Our only operating  business  during the three months ended September
30,  2003  was  CCI as all our  other  operating  businesses  had  been  sold or
terminated in prior fiscal periods.  $458,000 of our revenue related to products
sold by CCI in the period  July 1, 2003  through  August 3, 2003 when CCI ceased
production,  and $294,000 to services  provided by CCI, the majority  though the
use of subcontractors, in the period July 1, 2003 through September30, 2003. CCI
ceased all operations effective December 31, 2003.

         Cost of Sales,  Cost of sales for the three months ended  September 30,
2003 was  $830,000,  $725,000  relating to the cost of  supplying  products  and
$105,000  to the cost of  providing  services.  Our focus in the  period  was to
generate  maximum  cash flow for our  creditors  during  the  close  down of our
operations  rather than  attempting to maximize  profits.  Consequently  we used
existing  inventory  that had  already  been  paid for to  manufacture  and sell
products that  generated  revenue and cash for our creditors  even if such sales
were at less than the historic cost of sales.

         Gross Profit / (Loss),  Gross loss for the three months ended September
30, 2003 was $78,000, or 10% of revenue, for the reasons set out above.

         General  and  Administrative   Expenses.   General  and  administrative
expenses for the three months ended September 30, 2003, were $356,000.  $268,000
related to the overhead  costs of operating CCI production  operations  prior to
their  termination  effective August 3, 2003 and its service  operations for the
three months to September 30, 2003. The balance of $88,000  related to the costs
of  Aspeon,   principally  Directors'  and  Officers'  insurance  ($47,000)  and
director's and consultants' remuneration ($38,000) incurred in the close down of
our operation.

         Selling and Marketing Expenses,  Selling and marketing expenses for the
three months ended  September 30, 2003 were  $13,000.  These related to expenses
incurred by CCI prior to the termination of its operations.

         Depreciation, Depreciation expense for the three months ended September
30, 2003 was $61,000 and related to the equipment  used by CCI during the period
in which it operated.

         Gain on Settlement of  Litigation,  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


                                       10
<PAGE>

         Profit / (Loss) from  Operations.  Profit from  operations was $500,000
for the three  months  ended  September  30, 2003 due to the  factors  described
above.

     Net Interest and Other Income / (Expense). Other expense, net for the three
months  ended  September  30, 2003 was $3,000  largely  relating to the interest
expense on notes payable provided to us by certain of our directors and officers

         Provision for Income Taxes.  No provision for income taxes was required
in the three months ended  September 30, 2003 as we had  significant  tax losses
brought forward from prior years.

         Net Profit / (Loss) and Comprehensive  Profit / (Loss).  Net profit for
the three  months  ended  September  30,  2003 was  $497,000  due to the factors
outlined above.

         The comprehensive  profit was identical to the net profit for the three
months ended September 30, 2003.

Cash Flow Information

         For the three months ended  September 30, 2003,  net cash  generated in
operations was $512,000. Net profit,  adjusted for non-cash items, resulted in a
negative cash flow of  $(314,000).  However,  we were able to generate  positive
cash flow of $826,000 from the movement in our operating  assets and liabilities
through aggressive  collection of accounts receivable ($598,000) and liquidation
of our existing  inventory  ($582,000)  that enabled us to generate the positive
cash flow from operations.

         $2,000 positive cash flow was generated by our investing  activities in
the three months ended September 30, 2003 largely from the sale of fixed assets.
The sale of fixed  assets  was in  respect  of  assets  which had  already  been
restated at fair value in prior  fiscal  periods and  consequently  generated no
gain or loss on sale.

         Cash flow  used in  financing  activities  was  $401,000  for the three
months ended  September 30, 2003 relating to the repayment of outstanding  notes
payable provided to us by certain of our directors and officers.

PLANNED OPERATIONS

         Our plan of operation is to reach satisfactory  negotiated  settlements
with our outstanding creditors,  win the outstanding 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 re-listing on the
over the counter  bulletin  board and attempt 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,  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


                                       11
<PAGE>

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.

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.


                                       12
<PAGE>

         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.

         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.


                                       13
<PAGE>

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 January,  2004 the Financial  Accounting  Standards Board (`the FASB') issued
Statement of Financial  Accounting  Standards No. 132 (revised 2003) "Employers'
Disclosures about Pensions and Other Postretirement  Benefits",  an amendment of
FASB  Statements  No.  87,  88,  and  106.  The  Statement  revises   employers'
disclosures  about pension plans and other  postretirement  benefit  plans.  The
statement  retains the disclosure  requirements  contained in FASB Statement No.
132, which it replaces,  and requires  additional  annual  disclosures about the
assets,  obligations,  cash  flows,  and net  periodic  benefit  cost of defined
benefit pension plans and other defined benefit  postretirement plans. Statement
No. 132R requires us to provide  disclosures in interim periods for pensions and
other  postretirement  benefits.  The initial  application of SFAS No. 132R will
have no impact on our financial statements.

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 May 2005,  the FASB issued SFAS No. 154,  "Accounting  Changes and Error - an
amendment  of APB  Opinion  No.  29." This  Statement  applies to all  voluntary
changes in  accounting  principle.  It also  applies to changes  required  by an
accounting  pronouncement in the usual instance that the pronouncement  does not
include specific transition  provisions.  When a pronouncement includes specific
transition  provisions,   those  provisions  should  be  followed.   Opinion  20
previously  required  that most  voluntary  changes in  accounting  principle be
recognized by including in net income of the period of the change the cumulative
effect of changing to the new  accounting  principle.  This  Statement  requires
retrospective  application to prior periods' financial  statements of changes in
accounting  principle,  unless  it is  impracticable  to  determine  either  the


                                       14
<PAGE>

period-specific  effects of the cumulative effect of the change.  This Statement
is effective for  accounting  changes and  corrections  of errors made in fiscal
years  beginning  after December 15, 2005. We do not expect  application of SFAS
No. 154 to have a material affect on our financial statements.

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

            In October 1999,  we, and two former  officers of DTI, were named as
defendants in a breach of contract and intentional tort action brought by Daniel
Boudwin who claimed rights to computer  software  products once offered for sale
by certain of our subsidiaries. This action was taken in Pennsylvania's Delaware
Court of Common Pleas.  The plaintiff was seeking payment of one-half of all the
sales proceeds of the  commercial  software  product line of "Special  Delivery"
from  February 1997 and made claim to one-half of the asset  purchase  price (as
apportioned to the "Special  Delivery"  asset) paid by us to the shareholders of
DTI in April 1999. We and our  subsidiaries had  indemnification  rights against
one of the selling  shareholders  in  connection  with his  representations  and
warranties made about "Special Delivery" in various  documents.  Although we and
our subsidiaries  supported the selling shareholder's  position as it related to
the  plaintiff  in this  action,  cross-claims  were filed  against  the selling
shareholder for indemnification and contribution for further protection.  During


                                       15
<PAGE>

2001 we settled the case by stipulated judgment and a one off payment of $65,000
in full and final  settlement of any and all outstanding  liabilities in respect
of this case.

         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  has once again
appealed  against the dismissal and the appeal is anticipated to be heard before
the end of 2005.

     In May 2000, we and a distributor  were named as defendants in an action in
the United States  District Court of Middle North  Carolina  brought by a former
customer  of  the  distributor.  In  the  case,  entitled  Performance  Oriented
Solutions, Inc. vs Scansource, Inc., and Javelin Systems, Inc., Case No: 1:00 CV
621 (M.D.N.C.),  the plaintiff  alleged certain  misrepresentations  made by the
defendants,  consequently  resulting in lost profits and incidental  losses.  In
addition,  the plaintiff was seeking punitive  damages.  The case was settled by
Stipulation  of  Voluntary  Dismissal  and a one off payment of $90,000 by us in
full and final  settlement of any and all liabilities  arising in respect of the
case.

         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. 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. 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.

Item 2.  Changes in Securities.

All details of changes in our  securities  are set out in Note 9.  Shareholders'
Equity above.

Item 3.  Defaults upon Senior Securities

All details of our defaults in respect of our debt and our  Preferred  Stock are
set out in Note. 7 Line of Credit,  Debt & Notes Payable and Note. 8 Mandatorily
Redeemable Series A Preferred Stock

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, 2003 or  subsequent  to that
date


                                       16
<PAGE>

Item 5.  Other Information.

None

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

a.       Exhibits.

10.1 (1)       Agreement  relating  to the  purchase  of the whole of the issued
               share capital of Javelin Holdings International Limited.

10.1 (2)       Mutual  Release  and  Settlement  Agreement  dated as of March 22
               between the Company and Castle Creek Technology Partners LLC.

10.1 (3)       Secured  Convertible  Promissory  Note Purchase  Agreement  dated
               September 12, 2002 entered into by Aspeon,  Inc.,  Richard Stack,
               Kenneth Kadlec and Horace Hertz.

10.2 (3)       Security dated  September 12, 2002 entered into by Aspeon,  Inc.,
               Richard Stack, Kenneth Kadlec and Horace Hertz.

2.0(4)         Share Sale  Agreement  dated  January  17, 2003  entered  into by
               Aspeon, Inc. and Matthew James Maley.

     (1)  Filed as an exhibit to our  Current  Report on Form 8-K dated April 8,
          2002 and incorporated herein by reference.

     (2) Filed as an  exhibit  to our  Current  Report on Form 8-K dated May 14,
         2002 and incorporated herein by reference.

     (3)  Filed as an exhibit to our Current Report on Form 8-K dated  September
          27, 2002 and incorporated herein by reference.

     (4)  Filed as an exhibit to our Current  Report on Form 8-K dated  February
          3, 2003 and incorporated herein by reference.

b.       Reports on Form 8-K.

Since  the last Form 10-Q file in  respect  of the three and nine  month  period
ended March 31, 2001 we have filed the following reports on Form 8-K:

On August 23, 2001 we filed a report on Form 8-K reporting that we and our Chief
Executive  Officer had filed a six count compliant  against our former auditors,
PricewaterhouseCoopers LLP.

On September  20, 2001 we filed a report on Form 8-K  reporting  that the United
States District Court had dismissed with prejudice the class action suit brought
against us, our Chief Executive Officer and former Chief Financial Officer.

On October 16, 2001 we filed a report on Form 8-K reporting:

                1)    that the  plaintiffs  in the class action suit  previously
                      filed against us, our Chief  Executive  Officer and former
                      Chief  Financial  Officer,  had taken an  appeal  from the
                      order of the United States  District Court which dismissed
                      the suit with  prejudice and entered  judgment in favor of
                      the registrant and its officers, and

                2)    our unaudited financial  results for the fiscal year ended
                      June 30, 2001.


                                       17
<PAGE>

On November 21, 2001 we filed a report on Form 8-K reporting

                1)  our unaudited  financial  results for the three months ended
                    September 30, 2001, and

                2)  our  appointment  of Robert D. Nichols as our  President and
                    Chief Executive Officer.

On April 8,  2002 we filed a  report  on Form 8-K  reporting  the sale of our UK
holding company,  Javelin Systems (Europe) Ltd. and its subsidiary  companies to
an investment group which included members of the existing UK management team.

On May 14, 2002 we filed a report on Form 8-K  reporting an  agreement  with the
holder of our  Preferred  Shares to cancel the  Preferred  Shares,  warrants for
shares  of our  common  stock  and  warrants  for  shares  in our  wholly  owned
subsidiary company, Aspeon Solutions, in return for a one time cash payment.

On  September  27,  2002 we filed a report  on Form  8-K  reporting  that we had
entered into a Secured Convertible Promissory Note Purchase Agreement with three
individuals who were directors and officers of us.

On  February  3,  2003 we filed a report on Form 8-K  reporting  the sale of our
Australian  subsidiary  company,  Aspeon Systems (Asia Pacific) Pty. Ltd, to Mr.
Matthew Maley, general manager of that subsidiary.

On May 4, 2005 we filed a report on Form 8-K reporting the  appointment of David
J Cutler as our director, President, Chief Executive Officer and Chief Financial
Officer and the resignation of Richard P Stack from those positions.

On May 11, 2005 we filed a report on Form 8-K reporting  that David J Cutler had
entered into an agreement with Frank G Blundo, Jr. PC, 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 our shares to be determined.

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


                                       18
<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: October 25, 2005              /s/    David J. Cutler
-----------------------             -------------------------------------
                                      David J. Cutler,
                                      Chief Executive Officer
                                      Chief Financial Officer.















                                       19

<PAGE>

                 UNAUDITED EXTRACTS FROM 2001 - 2003 FINANCIAL STATEMENTS


<TABLE>
<CAPTION>

                                          ASPEON, INC.
                                   CONSOLIDATED BALANCE SHEET
                                          AS AT JUNE 30

                                                          2000         2001        2002        2003
                                                        Audited      Unaudited   Unaudited    Unaudited
              ASSETS
<S>                                                 <C>           <C>           <C>          <C>
Current assets

     Cash and cash equivalents                       $  8,853,200 $  1,179,100      234,900   $     1,500
     Investments                                        1,025,200            0            0             0
     Accounts receivable                               12,856,000    6,502,900    1,762,800       986,800
     Inventories                                       20,666,300    7,184,600      441,800       586,400
     Income tax receivable                              2,713,700            0            0             0
     Prepaid expenses and other current assets          1,955,600    1,073,500      407,300       233,500
                                                       -----------  ----------- -----------   -----------
              Total current assets                     48,070,000   15,940,100    2,846,800     1,808,200

Property and equipment, net                             5,525,900    3,136,600      577,700       473,200
Goodwill                                               36,627,700   11,224,900      500,000             0
Other intangible assets                                   782,200            0            0             0
Other assets, net                                         777,700      330,900      106,600         5,200
                                                       -----------  ----------- -----------   -----------
              Total assets                           $ 91,783,500 $ 30,632,500    4,031,100   $ 2,286,600
                                                       ===========  =========== ===========   ===========

              LIABILITIES, MANDATORILY REDEEMABLE SECURITIES  AND SOCKHOLDERS' EQUITY / (DEFICIT)

Current liabilities

     Line of credit                                  $  3,189,000 $    967,700            0 $           0
     Manditorily redeemable preferred stock (in
     default)                                                   0   13,969,200            0             0
     Accounts payable                                  10,598,600    8,824,200    5,565,700    10,780,800
     Accrued expenses                                   7,249,200    2,960,400    1,289,400       803,300
     Current maturities of long-term debt               1,037,600      590,100      827,100       610,400
     Purchase price payable for acquisitions                    0    2,126,400    1,123,900     1,123,900
     Customer deposits and unearned income              2,772,800    2,062,700      786,000       442,400
     Income taxes payable                                       0      199,100        9,100             0
                                                       -----------  -----------  -----------    ----------
              Total current liabilities                24,847,200   31,699,800    9,601,200    13,760,800

Long-term debt, net of current portion                    305,200      857,300    1,690,900             0
Purchase price payable for acquisitions                 1,868,200            0            0             0
Other                                                     277,400       35,300            0             0
                                                       -----------  -----------  -----------    ----------
              Total liabilities                        27,298,000   32,592,400   11,292,100    13,760,800

Manditorily redeemable Series A preferred stock
$0.01 par value, 10,000 issued and outstanding          6,042,100            0            0             0
Manditorily redeemable warrants                         3,426,600    3,426,600            0             0
Manditorily redeemable minority interest warrants         867,300            0            0             0

Stockholders' equity / (deficit)

     Preferred stock, $0.01 par value, 990,000 shares
     authorized (1,000,000 authotized net of 10,000
     designated as mandatorily redeemable stock);
     no shares issued and outstanding                           0            0            0             0
     Common Stock, $0.01 par value, 20,000,000 shares
     authorized 9,436,215 (2000 - 9,383,161) and
     issued and outstanding                                93,800       94,400       94,400        94,400
     Additional paid in capital                        65,049,500   65,143,600   84,938,400    84,938,400
     Treasury stock                                             0      (60,000)     (60,000)      (60,000)
     Accumulated deficit                              (10,025,900) (68,962,100) (92,618,900)  (96,518,900)
     Accumulated other comprehensive (loss) / profit     (967,900)  (1,602,400)     385,100        71,900
                                                       -----------  -----------  -----------    ----------
              Total  stockholders' equity / (deficit)  54,149,500   (5,386,500)  (7,261,000)  (11,474,200)


              Total liabilities, mandatorily redeem-
              able securities, and stockholders'
                                                       -----------  -----------  -----------    ----------
              equity / (deficit)                     $ 91,783,500 $ 30,632,500    4,031,100   $ 2,286,600
                                                       ===========  ===========  ===========    ==========
</TABLE>


                                              F-24

<PAGE>

<TABLE>
<CAPTION>

                                          ASPEON, INC.
                              CONSOLIDATED STATEMENTS OF OPERATIONS
                               FOR THE TWELVE MONTHS ENDED JUNE 30

                                                       2000            2001            2002            2003
                                                      Audited       Unaudited       Unaudited       Unaudited
<S>                                               <C>             <C>             <C>             <C>
Revenues
     Products                                     $  54,902,300   $  40,883,600   $  22,131,700   $  10,749,100
     Services                                        26,142,900      20,227,000      10,406,600       2,476,000
                                                    ------------    ------------    ------------    ------------
Total revenues                                       81,045,200      61,110,600      32,538,300      13,225,100

Cost of revenues
     Products                                        40,973,800      38,811,400      19,173,100       8,345,500
     Services                                        20,300,100      16,550,900       9,622,200       1,331,400
                                                    ------------    ------------    ------------    ------------
Total cost of revenues                               61,273,900      55,362,300      28,795,300       9,676,900
                                                    ------------    ------------    ------------    ------------
Gross profit                                         19,771,300       5,748,300       3,743,000       3,548,200

Operating expenses
     Research and development                         1,968,000       1,285,200         779,300         503,200
     Selling and marketing                            8,396,900       6,622,700       2,550,300         789,300
     General and administrative                      19,189,800      25,703,100       9,704,800       4,412,700
     Impairment charge                                        0      23,531,000      12,874,100       1,850,900
     Gain on settlement of litigation                         0               0               0               0
     Gain on assignment for the benefit of creditors          0               0               0               0
                                                    ------------    ------------    ------------    ------------
Total operating expenses                             29,554,700      57,142,000      25,908,500       7,556,100

Income / (loss) from operations                      (9,783,400)    (51,393,700)    (22,165,500)     (4,007,900)

Interest expense                                       (807,800)     (2,395,800)     (1,731,700)        (58,000)
Interest income                                         422,800         360,600          21,100           4,300
Other income (expense), net                             (82,300)      1,026,300         661,900         161,500
                                                    ------------    ------------    ------------    ------------
Income (loss) before income tax and                 (10,250,700)    (52,402,600)    (23,214,200)     (3,900,100)
cumulative effect of accounting change

Income tax (expense) / benefit                          949,500        (159,200)         (1,800)            100
                                                    ------------    ------------    ------------    ------------
Income (loss) before cumulative effect of            (9,301,200)    (52,561,800)    (23,216,000)     (3,900,000)
accounting change

Cumulative effect of accounting change                        0         817,600               0               0
                                                    ------------    ------------    ------------    ------------
Net  income / (loss)                                 (9,301,200)    (51,744,200)    (23,216,000)     (3,900,000)


Accretion of mandatorily redeemable                  (6,090,500)     (7,192,057)              0               0
Series A Preferred stock discounts and dividends
                                                    ------------    ------------    ------------    ------------
Net income (loss) available to common stockholders $(15,391,700)  $ (58,936,257)  $ (23,216,000)  $  (3,900,000)
                                                    ============    ============    ============    ============

Basic and Dilured income (loss) per share:
     Before cumulative effect of accounting change $      (1.67)  $       (6.35)  $       (2.46)  $       (0.41)
     Cumulative effect of accounting change                0.00            0.09            0.00            0.00
                                                    ------------    ------------    ------------    ------------
     Net income (loss)                             $      (1.67)  $       (6.26)  $       (2.46)  $       (0.41)
                                                    ============    ============    ============    ============

Shares used in computing income (loss) per common share:

     Basic and Diluted                                9,243,079       9,411,345       9,436,215       9,436,215
                                                    ============    ============    ============    ============
</TABLE>


                                              F-25

<PAGE>

<TABLE>
<CAPTION>

ASPEON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED JUNE 30

                                                                       Audited            Unaudited           Unaudited
                                                                         2000                2001                2002
<S>                                                                     <C>                <C>                 <C>
Operating Activities
Net income (loss)                                                       (9,301,200)        (51,745,000)        (23,215,900)
Adjustments to reconcile net income (loss) to net cash
uesd in operating activities:
      Cumulative effect of accounting change                                     0            (817,600)
      Depreciation and amortization                                      4,962,800           4,566,100           2,842,000
      Warrant valuation adjustment                                               0            (137,800)
      Write off purchased software                                         136,400                   0
      Amortization of deferred financing costs                             304,700                   0
      Amortization of deferred stock - based compensation                  121,100              83,200
      Gain on disposal of assets                                                            (1,252,900)          2,449,800
      Impairment charge                                                          0          23,530,900           4,826,300
      Write off assets                                                                       1,652,500
      Deferred income taxes                                                530,900                   0
      Deferred rent expense                                                 67,900                   0
      Penalty interest on manual redeemable preferred stock                      0           1,467,200           1,662,300
Non-cash allowances                                                                          5,265,200           5,498,400
      Inventories                                                          629,400                   0
      Accounts receivable                                                  355,200                   0
      Warranty                                                              18,300                   0
Changes in operating assets liabilities, net of acquisitions
      Accounts receivable                                                3,298,100           3,515,300           1,760,000
      Inventories                                                       (6,755,900)         10,392,200           5,625,300
      Income taxes receivable                                           (2,713,700)          2,713,700
      Prepaid expenses and other current assets                           (118,200)            400,900             657,800
      Other assets                                                          (6,400)            524,900             224,300
      Accounts payable                                                   2,705,900          (1,546,800)         (1,277,200)
      Accrued expenses                                                   3,997,000          (3,892,500)           (636,900)
      Customer deposits                                                    948,900            (283,400)           (763,000)
      Deferred revenues                                                    247,600            (318,600)           (513,700)
      Income taxes payable                                              (1,517,400)                  0

                                                                    ---------------     ---------------     ---------------
Net cash used in operating activities                                   (2,070,400)         (5,882,500)           (860,500)

Investing Activities
      Purchase of equipment                                             (3,528,500)         (1,013,600)                  0
      Cash received from (paid for) purchased businesses                (7,953,600)           (427,000)                  0
      Proceeds from sale of fixed assets                                         0             900,000                   0
      Investment in securities                                           6,446,800                   0                   0
      Proceeds from sale of investments                                          0           1,037,300                   0
      Notes receivable due from related parties                           (496,000)           (400,000)                  0
      Repayment of notes due from related parties                                0             706,000                   0

                                                                    ---------------     ---------------     ---------------
Net cash used in investing activities                                   (5,531,300)            802,700                   0

                                              F-26

<PAGE>


Financing Activities
      Net borrowings (repayments) under line of credit                   1,137,400          (1,691,200)           (862,200)
      Proceeds from issuance of long-term debt
      Payments of notes payable to related parties                         (33,900)
      Payment of notes payable                                            (309,500)           (574,100)           (303,700)
      Principal payments on capital leases                                (108,900)            249,900           1,115,300
      Deferred financing costs
      Net proceeds from issuance of Preferred Stock                      9,568,400
      Exercise of stock options and warrants                               916,600
      Preferred Stock dividend paid                                        (40,000)           (553,300)           (447,500)

                                                                    ---------------     ---------------     ---------------
Net cash provided by financing activities                               11,130,100          (2,568,700)           (498,100)

Effect of exchange rate changes on cash                                   (316,700)            (25,600)            414,400

Increase (decrease) in cash and cash equivalents                         3,211,700          (7,674,100)           (944,200)
                                                                                                                  (944,200)
Cash and cash equivalents at the beginning of the period                 5,641,500           8,853,200           1,179,100

                                                                    ---------------     ---------------     ---------------
Cash and cash equivalents at the end of the period                       8,853,200           1,179,100             234,900
                                                                    ===============     ===============     ===============

Supplemental disclosure of cash flow information:

Income tax paid                                                          1,425,900
                                                                    ===============

Interest paid                                                              436,000
                                                                    ===============
</TABLE>



                                              F-27

<PAGE>

<TABLE>
<CAPTION>

                                           APEON, INC.
                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY / (DEFICIT)

                                         Common Stock      Additional   Deferred                             Accumulated
                                                           Paid - in   Stock-based  Treasury  Accumulated    Comprehensive
                                       Shares     Amount    Capital    Compensation  Stock      Deficit      Loss           Total

                                         #          $          $          $            $           $          $              $

<S>                                  <C>        <C>        <C>           <C>       <C>        <C>           <C>         <C>
Balance, June 30, 1999  - audited    8,887,203  $ 88,900   $55,800,700   $(6,700)  $      0   $ 3,799,700   $  (72,200) $59,610,400

Shares issued in connection with       104,802     1,000     2,059,700      -          -           -            -         2,060,700
the acquisition of Monument

Shares issued in connection with       271,256     2,700     2,565,300      -          -           -            -         2,568,000
the earnout provisions of the
RGB and Jade acquisition

Manditorily redeemable preferred          -          -       3,708,400      -          -       (3,708,400)      -            -
stock beneficial conversion feature

Accretion of manditory                    -          -          -           -          -         (816,000)      -          (816,000)
redeemable stock discount and
dividends

Amortization of deferred stock-           -          -          -          6,700       -           -            -             6,700
based compensation

Exercise of stock options              119,900     1,200       915,400      -          -           -            -           916,600

Comprehensive loss                        -          -            -         -          -       (9,301,200)    (895,700) (10,196,900)
                                     ---------  ---------  ----------- ---------  ----------  ------------ ------------ -----------
Balance, June 30, 2000 - audited     9,383,161    93,800    65,049,500         0          0   (10,025,900)    (967,900)  54,149,500

Conversion of manditorily               53,054       600        94,100                                                       94,700
redeemable preferred stock

Accretion of manditory                                                                         (7,192,000)               (7,192,000)
redeemable stock discount and
dividends

Purchase of Treasury Stock                                                          (60,000)                                (60,000)

Comprenensive loss                                                                            (51,744,200)    (634,500) (52,378,700)
                                     ---------  ---------  ----------- ---------  ----------  ------------ ------------ -----------
Balance, June 30, 2001 - unaudited   9,436,215    94,400    65,143,600         0    (60,000)  (68,962,100)  (1,602,400)  (5,386,500)

Accretion of manditory redeemable                                                                (440,800)                 (440,800)
stock discount and dividends

Comprehensive loss                                                                            (23,216,000)   1,987,500  (21,228,500)

Forgiveness of Deferred Earnouts                               741,000                                                      741,000

Cancellation of Preferred Stock                             15,627,200                                                   15,627,200

Cancellation of Warrants                                     3,426,600                                                    3,426,600
                                     ---------  ---------  ----------- ---------  ----------  ------------ ------------ -----------
Balance, June 30 2002 - unaudited    9,436,215    94,400    84,938,400         0    (60,000)  (92,618,900)     385,100   (7,261,000)

Comprehensive Loss                                                                             (3,900,000)    (313,200)  (4,213,200)
                                     ---------  ---------  ----------- ---------  ----------  ------------ ------------ -----------
Balance, June 30 2003 - Unaudited    9,436,215 $  94,400   $84,938,400 $       0 $  (60,000) $(96,518,900  $    71,900 $(11,474,200)
                                     =========  =========  =========== =========  ==========  ============ ============ ===========
</TABLE>

                                              F-28
<PAGE>

<TABLE>
<CAPTION>

ASPEON, INC
INCOME STATEMENT FOR THE TWELVE MONTHS ENDED
JUNE 30, 2003



                                          Consolidated       CCI           CCI           ASPEON          ASPEON        Consolidated
                                             9 months     12 months       9 months     12 months        9 months        12 months
                                            31-Mar-03     30-Jun-03      31-Mar-03     30-Jun-03        31-Mar-03       30-Jun-03

<S>                                    <C>              <C>            <C>           <C>             <C>             <C>
Revenues
  Products                                 7,612,541      8,007,694     (4,872,557)     2,412,946      (2,411,542)       10,749,082
  Services                                 3,167,007      2,458,941     (3,149,966)             0               0         2,475,982

                                       --------------   ------------   ------------  -------------   -------------   ---------------
Total revenues                            10,779,548     10,466,635     (8,022,523)     2,412,946      (2,411,542)       13,225,064

Cost of revenues
  Products                                 6,647,954      5,623,001     (3,871,526)     2,581,329      (2,635,285)        8,345,473
  Services                                 1,401,232      1,503,144     (1,572,975)             0               0         1,331,401

                                       --------------   ------------   ------------  -------------   -------------   ---------------
Total cost of revenues                     8,049,186      7,126,145     (5,444,501)     2,581,329      (2,635,285)        9,676,874

                                       --------------   ------------   ------------  -------------   -------------   ---------------
Gross profit                               2,730,362      3,340,490     (2,578,022)      (168,383)        223,743         3,548,190

Operating expenses
   Research and development                  406,950                             0        503,150        (406,950)          503,150
   Selling and marketing                     636,121        284,886       (268,651)       413,738        (276,780)          789,314
   General and administrative              3,739,323      2,427,169     (1,792,733)     1,733,353      (1,694,438)        4,412,674
   Impairment charge                               0                             0                              0                 0

                                       --------------   ------------   ------------  -------------   -------------   ---------------
Total operating expenses                   4,782,394      2,712,055     (2,061,384)     2,650,241      (2,378,168)        5,705,138

Income / (loss) from operations           (2,052,032)       628,435       (516,638)    (2,818,624)      2,601,911        (2,156,948)

Interest expense                             (14,872)       (36,875)             0        (15,181)          8,949           (57,978)
Interest income                                2,394            331              0          3,347          (1,761)            4,311
Other income (expense), net                  152,458            772          7,444        173,517        (172,644)          161,547

                                       --------------   ------------   ------------  -------------   -------------   ---------------
Income (loss) before income tax
and cumulative effect of accounting       (1,912,052)       592,663       (509,194)    (2,656,941)      2,436,455        (2,049,068)
change

Income tax (expense) / benefit                   75             75            (75)                                              75

                                       -------------   ------------   ------------  -------------   -------------   ---------------
Income (loss) before cumulative effect   (1,911,977)       592,738       (509,269)    (2,656,941)      2,436,455        (2,048,993)
of accounting change

Cumulative effect of accounting change            0                             0                              0                 0

                                       -------------   ------------   ------------  -------------   -------------   ---------------
Net  income / (loss)                     (1,911,977)       592,738       (509,269)    (2,656,941)      2,436,455        (2,048,993)


Accretion of mandatorily redeemable
Series A Preferred stock discounts
and dividends

                                       -------------   ------------   ------------  -------------   -------------   ---------------
Net income (loss) available to common
stockholders                             (1,911,977)       592,738       (509,269)    (2,656,941)      2,436,455        (2,048,993)
                                       =============   ============   ============  =============   =============   ===============
</TABLE>


                                                              F-29