UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   ----------

                                   FORM 10-KSB

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934

                    FOR THE FISCAL YEAR ENDED JUNE 30, 2001.

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934

                          COMMISSION FILE NO. 000-21477

                                  ASPEON, INC.
              (EXACT NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

              DELAWARE                                 52-1945748
    (STATE OR OTHER JURISDICTION                    (I.R.S. EMPLOYER
  OF INCORPORATION OR ORGANIZATION)              IDENTIFICATION NUMBER)

                       2460 WEST 26th AVENUE, SUITE 380-C
                             DENVER, COLORADO 80211
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                                 (303) 380 9784
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

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

Securities  registered pursuant to Section 12(g) of the Act: COMMON STOCK, $0.01
PAR VALUE

    Check whether the Registrant (1) has filed all reports  required to be filed
by  Section  13 or 15(d)  of the  Securities  Exchange  Act of 1934  during  the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days.
Yes [_]  No [X]

    Indicate by check mark if disclosure of delinquent  filers  pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [_]

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<PAGE>

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

    The  Registrant's  revenues  for its fiscal  year  ended June 30,  2001 were
$61,110,500.

    The  Registrant's  revenues  for its most recent  fiscal year ended June 30,
2005 were $0.

    The   aggregate   market  value  of  the  voting   common   equity  held  by
non-affiliates of the Registrant on August 25, 2006 was approximately $944 based
upon the reported  closing sale price of such shares on the Grey Sheets for that
date. As of August 25, 2006, there were 20,000,000  shares  outstanding of which
9,436,225  shares were held by  non-affiliates.  Shares of common  stock held by
each  officer  and  director  and by  each  person  who  owns  5% or more of the
outstanding  common stock of the Company have been excluded because such persons
are deemed to be affiliates.

    Transitional Small Business Disclosure Format.  Yes [_]  No [X]




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<PAGE>


                                  ASPEON, INC.

                        2001 ANNUAL REPORT ON FORM 10-KSB

                                TABLE OF CONTENTS

 ITEM                              DESCRIPTION                              PAGE
 ----                              -----------                              ----

Item 1.   Description of Business..............................................4

Item 2.   Description of Properties...........................................13

Item 3.   Legal Proceedings...................................................15

Item 4.   Submission of Matters to a Vote of Security Holders.................16

Item 5.   Market for Common Equity and Related Stockholder Matters............17

Item 6.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations...........................................19

Item 7.   Financial Statements................................................45

Item 8.   Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure............................................46

Item 8a.  Controls and Procedures.............................................46

Item 9.   Directors, Executive Officers, Promoters and Control Persons:
          Compliance with Section 16(a) of the Exchange Act...................47

Item 10.  Executive Compensation..............................................51

Item 11.  Security Ownership of Certain Beneficial Owners and
          Management..........................................................54

Item 12.  Certain Relationships and Related Transactions......................56

Item 13.  Exhibits and Reports on Form 8-K....................................57

Item 14.  Principal Accountant Fees and Services..............................60



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<PAGE>

                           FORWARD-LOOKING STATEMENTS

    In addition to historical information,  some of the information presented in
this Annual Report on Form 10-KSB contains  "forward-looking  statements" within
the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform
Act").  Although  Aspeon,  Inc.  ("Aspeon" or the  "Company",  which may also be
referred to as "we", "us" or "our") believes that its  expectations are based on
reasonable  assumptions  within the bounds of its  knowledge of its business and
operations:  there can be no  assurance  that  actual  results  will not  differ
materially from our expectations. Such forward-looking statements are subject to
risks and  uncertainties  that could cause actual  results to differ  materially
from those  anticipated,  including  but not  limited  to, our  ability to reach
satisfactorily negotiated settlements with our outstanding creditors, vigorously
defend  against  any  further  appeal  that may be made  against  our  currently
successful  defense  of the  law  suit  brought  against  us by  certain  of our
shareholders,  bring our financial records and SEC filings up to date, achieve a
listing on the over the counter  bulletin  board,  raise debt and, or, equity to
fund negotiated settlements with our creditors and to meet our ongoing operating
expenses  and  merge  with  another  entity  with  experienced   management  and
opportunities  for growth in return  for  shares of our  common  stock to create
value  for  our  shareholders.   Cautionary   statements  regarding  the  risks,
uncertainties and other factors associated with these forward-looking statements
are  discussed  under  "Risk  Factors"  in this  Form  10-KSB.  You are urged to
carefully consider these factors, as well as other information contained in this
Form 10-KSB and in our other periodic reports and documents filed with the SEC.

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

INTRODUCTION

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

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


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

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

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

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


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<PAGE>


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.

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


                                       5
<PAGE>

amounted to $9.6 million,  net of offering  costs,  which were used primarily to
acquire Monument  Software  Corporation  ("Monument"),  settle future contingent
payments  associated  with the  acquisition  of RCS, hire  management  and staff
personnel,  expand  corporate  facilities and fund our ASP Services  operations.
Monument specialized in the rapid  implementation of enterprise-class  financial
systems with an emphasis on Oracle Financials

During  fiscal 2000,  we  sustained  significant  losses and we had  experienced
negative cash flows from our operations since inception.  As at June 30, 2000 we
were in default of certain covenants under the terms of both our credit facility
and  Preferred  Stock  and were  delinquent  in the  payment  of  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 as Aspeon  Systems (Asia Pacific) Pty Ltd and we merged the operations
of Monument into those of RCS.

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

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

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

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


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<PAGE>

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

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

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

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

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

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

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

During fiscal 2001,  despite our efforts to return to profitability and the sale
of certain of our subsidiaries,  we continued to generate significant losses, to
be in default of certain covenants under the terms of our Preferred Stock, to be
delinquent  in the  payment of various  trade  payables  and had been  unable to
replace  our line of credit  which had been  repaid in full during the course of
the year.  While we had  appointed  new  auditors,  we were  unable to  generate
audited  financial  accounts  due to the lack of  cooperation  from our previous
auditors and consequently were unable to comply with the listing requirements of
either Nasdaq or the over the counter bulletin board. Our relegation to the Pink
Sheets had serious adverse consequences for both the confidence of our customers
or potential  customers and our ability to attract new debt or equity financing.
The  lawsuits  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.


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<PAGE>

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

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

In June 2002 we terminated the activities of RCS.

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

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

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

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

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

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.


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<PAGE>

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

On April 22, 2005, our sole director,  David J Cutler, entered into an agreement
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI creditors, subject to due diligence, to invest up to $50,000 cash
in us for the benefit of our  creditors  in return for a number of shares of our
common stock to be  determined.  Following  the  completion of the due diligence
process  during the three  months ended  December  31, 2005,  it was agreed with
Frank G Blundo,  Jr. P.C.,  trustee of the  assignment for the benefit of Aspeon
and CCI creditors, that Mr. Cutler would invest $20,000 in us for the benefit of
Aspeon and CCI creditors in return for a number of shares of our common stock to
be  determined.  Accordingly  during the three  months  ended  December 31, 2005
$20,000  which had been  placed in escrow  with Frank G Blundo,  Jr. P.C. by Mr.
Cutler was  released  for the  benefit of Aspeon and CCI  creditors.  On May 31,
2006,  based on an  independent  third  party  valuation,  the  majority  of our
independent  directors  approved  the issue of  10,536,775  shares of our common
stock to Mr.  Cutler for the  conversion  of  $14,243  of his debt into  equity.
Following  the issue of these shares of our common stock Mr.  Cutler owned 52.7%
of  our  total  authorized  and  issued  share  capital  and  still  had a  loan
outstanding to us of approximately $175,000.

During the fiscal  year ended June 30,  2005,  our then sole  director,  David J
Cutler,  advanced to us $88,000 by way of loan,  bearing interest at 8%, to meet
our ongoing  operating  expenses  and fund the costs of bringing  our  financial
statements and SEC reporting up to date. In the nine months ended March 31, 2006
Mr. Cutler has made further advances to us of $80,000 by way of loan to meet our
ongoing  operating  expenses  and  fund  the  costs of  bringing  our  financial
statements  and SEC  reporting up to date as required.  Effective  May 31, 2006,
$14,243 of this debt was converted into 10,536,775 shares of our common stock on
the basis of an  independent  third  party  valuation  and the  approval  of the
majority of our  independent  directors.  Following the issue of these shares of
our common stock Mr. Cutler owned 52.7% of our total authorized and issued share
capital and still had a loan outstanding to us of approximately $175,000.  There
is no guarantee that Mr. Cutler will continue to provide  further  funding to us
in the future.

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

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

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

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


                                       9
<PAGE>

the  continued  delinquency  of our SEC  filings  for the  period  April 1, 2001
through June 30, 2003.  In July 2006,  on the basis of further  audit work and a
review of subsequent  events performed by O'Donnell,  O'Donnell has been able to
complete the audit of our June 30, 2001 financial statements as set out on pages
57  through  97  below.  We are  currently  establishing  the  likely  costs and
practicality of completing the SEC filings and related financial  statements for
the period July 1, 2001 through June 30, 2003.

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

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

On May 31, 2006, based on an independent third party valuation,  the majority of
our independent  directors approved the issue of 10,536,775 shares of our common
stock to Mr.  Cutler for the  conversion  of  $14,243  of his debt into  equity.
Following  the issue of these shares of our common stock Mr.  Cutler owned 52.7%
of  our  total  authorized  and  issued  share  capital  and  still  had a  loan
outstanding to us of approximately $175,000.

In July  2006,  on the basis of further  audit  work and a review of  subsequent
events performed by O'Donnell,  O'Donnell has been able to complete the audit of
our June 30, 2001 financial  statements as set out on pages 57 through 97 below.
We are currently  establishing  the likely costs and  practicality of completing
the SEC  filings and related  financial  statements  for the period July 1, 2001
through June 30, 2003.

PLANNED OPERATIONS

Our plan of operation is to reach satisfactory  negotiated  settlements with our
outstanding creditors,  vigorously defending against any further appeal that may
be made against our currently successful defense of the law suit brought against
us by certain of our  shareholders,  bring our financial records and SEC filings
up to  date,  obtain  debt or  equity  finance  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 is can be no  assurance  that this  series of events can be
successfully  completed,  that any such  business will be identified or that any
stockholder will realize any return on their shares after such a transaction has
been completed.  In particular there is no assurance that any such business will
be located or that any stockholder will realize any return on their shares after
such a transaction. 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.  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.


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

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

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


                                       10
<PAGE>

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.

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.


                                       11
<PAGE>

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.

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.

Investment Company Act 1940
---------------------------

Although we will be subject to regulation  under the  Securities Act of 1933, as
amended, and the 1934 Act, we believe we will not be subject to regulation under
the  Investment  Company Act of 1940 (the "1940 Act")  insofar as we will not be
engaged in the business of investing or trading in  securities.  In the event we
engage in business  combinations  that result in us holding  passive  investment
interests in a number of entities,  we could be subject to regulation  under the


                                       12
<PAGE>

1940 Act.  In such event,  we would be  required  to  register as an  investment
company  and  incur  significant  registration  and  compliance  costs.  We have
obtained no formal  determination  from the SEC as to our status  under the 1940
Act  and,  consequently,  any  violation  of the 1940 Act  would  subject  us to
material adverse consequences.  We believe that, currently,  we are exempt under
Regulation 3a-2 of the 1940 Act.

INTELLECTUAL PROPERTY

We hold no patents or patent applications.

EMPLOYEES

As of November 27, 2000 we had approximately  346 full time employees  including
40 employed in sales and  marketing,  273  employed  in  engineering,  technical
support  and   production,   research  and   development   and  33  employed  in
administrative  and support staff.  Unions represented none of our employees and
we considered our employee relations to be good.

Effective June 30, 2003 we terminated all our remaining full time staff.

As of June 30, 2006, we had 1 part-time employee.

FACTORS AFFECTING FUTURE PERFORMANCE

The factors affecting our future performance changed dramatically as a result of
our decision to discontinue the last of our operating  businesses effective June
30, 2003 and the transfer of our remaining assets to the trustee for the benefit
of the  creditors of Aspeon and CCI  effective  January 1, 2004.  Rather than an
operating business, our business is to reach satisfactory negotiated settlements
with our  outstanding  creditors,  vigorously  defend against any further appeal
that  may be made  against  our  currently  successful  defense  of the law suit
brought against us by certain of our  shareholders,  bring our financial records
and SEC  filings  up to date,  obtain  debt  and,  or,  equity  finance  to fund
negotiated  settlements  with our  creditors  and to meet our ongoing  operating
expenses,  seek to be listed 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.  Although there is no assurance that this series of events will be
successfully  completed,  we believe we can successfully complete an acquisition
or merger which will enable us to continue as a going concern.  Any  acquisition
or merger will most likely be dilutive to our existing stockholders.

The factors  affecting our future  performance  are listed and  explained  below
under the section  "Risk  Factors" in  Management's  Discussion  and Analysis of
Financial Condition and Results of Operations.

ITEM 2. DESCRIPTION OF PROPERTIES

Our mailing  address is 2460 West 26th Avenue,  Suite 380-C,  Denver,  Colorado,
80211 and we maintain two small storage units in Dana Point,  California for our
corporate records.

Currently,  we  lease  the  following  facilities,   containing,  in  aggregate,
approximately 250 square feet:

<TABLE>
<CAPTION>

    PROPERTY                      YEAR LEASED    SQUARE FEET    EXPIRATION DATE     RENT/MONTH
<S>                               <C>            <C>            <C>                 <C>
    Dana Point, California            2004            150        Month to month          $200

    Dana Point, California            2005            100        Month to month          $149
</TABLE>

We believe that our facilities are satisfactory for our purposes and are in good
condition.

As reported in our 10-K for the financial year ended June 30, 2000:

Our  executive  offices,  research  and  product  development,  warehousing  and
distribution  facilities  for  POS  Products  were  housed  in a  single  leased
industrial unit comprised of approximately 29,000 square feet located in Irvine,
California.  Under the terms of the lease, we paid rent of approximately $43,700
per month with  predetermined  monthly rent increases at annual  intervals.  All
rental  payments  in respect of this  lease  were made as  scheduled  during our
fiscal  years ended June 30, 2001 and 2002.  The lease  expired in 2003 at which
point we were arrears in the payment of certain rental  payments under the terms
of the  lease  and the  outstanding  liability  in  respect  of this  lease  was
recognized in our balance of accounts payable.


                                       13
<PAGE>

CCI leased an  industrial  unit that  comprised of 33,000 square feet located in
Earth City,  Missouri,  which served as a  warehousing,  staging and  deployment
facility for the Solutions  Services  business.  This unit also housed sales and
administrative  staff.  CCI paid rent of  approximately  $17,800  per month with
predetermined monthly rent increases at annual intervals. All rental payments in
respect of this lease were made as scheduled  during our fiscal years ended June
30, 2001 and 2002.  The lease  expired in 2003 at which point we were arrears in
the  payment of  certain  rental  payments  under the terms of the lease and the
outstanding  liability in respect of this lease was recognized in our balance of
accounts payable.

Aspeon  Solutions leased office space comprised of 21,350 square feet located in
King of Prussia,  Pennsylvania,  which  contained a data center and office space
for  employees   providing   ASP   Services.   This  space  also  housed  sales,
administrative  and  professional  services staff. We paid rent of approximately
$43,200 per month with predetermined monthly rent increases at annual intervals.
The lease was due to expire in 2007.  All  rental  payments  in  respect of this
lease were made as  scheduled  during our fiscal  years  ended June 30, 2001 and
2002.  Aspeon  Solutions ceased trading in June 2002 after which no further rent
payments were made in respect of this lease and the entire outstanding liability
in respect of this lease was recognized in our balance of accounts payable.

Aspeon Solutions leased office space comprising approximately 15,000 square feet
located in Beverly,  Massachusetts  that contained space for the build out of an
additional   data   center,   if  required.   This  space  also  housed   sales,
administrative and professional services staff for the ASP Services business. We
paid rent of  approximately  $20,300 per month with  predetermined  monthly rent
increases at annual  intervals.  The lease was due to expire in 2005. All rental
payments in respect of this lease were made as scheduled during our fiscal years
ended June 30, 2001 and 2002. Aspeon Solutions ceased trading in June 2002 after
which no further rent payments were made in respect of this lease and the entire
outstanding  liability in respect of this lease was recognized in our balance of
accounts payable

Aspeon  Solutions  Danvers,  Massachusetts  facility  housed a data  center  and
certain network technicians for the ASP Services business. The company paid rent
of  approximately  $5,200 per month for 2,500 square feet.  The lease expired in
2002. All rental payments in respect of this lease were made as scheduled during
our  fiscal  years  ended  June 30,  2001 and 2002 and  there is no  outstanding
liability in respect of this lease

We leased office space comprised of approximately 3,000 square feet in Padworth,
Reading,  UK for Solutions  Services which  contained a project and sales office
for Jade and a sales office for Teneo. We paid rent of approximately  $4,600 per
month.  The lease expired in 2004. All rental  payments in respect of this lease
were made as scheduled  during our fiscal years ended June 30, 2001 and 2002 and
we ceased to be responsible for this lease with the sale of RGB in March 2002.

We  leased  warehouse  space  comprising  approximately  10,000  square  feet in
Middleton, Manchester UK which contained a distribution and warehousing function
for the Solutions  Services business.  We paid rent of approximately  $4,900 per
month.  The lease expired in 2001 and was  subsequently  further  extended.  All
rental  payments  in respect of this  lease  were made as  scheduled  during our
fiscal  years ended June 30, 2001 and 2002 and we ceased to be  responsible  for
this lease with the sale of RGB in March 2002.


                                       14
<PAGE>

We leased  office and  warehouse  space in  Warrington,  Cheshire UK  comprising
approximately   7,200  square  feet  to  support  sales,   administration,   and
warehousing  activities  for the Solutions  Services  business.  We paid rent of
approximately  $4,500 per month.  The lease expired in 2001 and was subsequently
extended to September  2003.  All rental  payments in respect of this lease were
made as scheduled during our fiscal years ended June 30, 2001 and 2002.  Aspeon,
Inc. provided a guaranty in respect of this lease that was to be released on its
sale of RGB in March  2002 and in  respect  of which it was  indemnified  by the
purchasers of RGB. Aspeon,  Inc.'s potential  contingent liability in respect of
this lease ended in September 2003 with the expiration of the lease.

In December  2001, we leased 12,920 square feet of warehouse and office space in
Irvine,  California.  We paid rent of approximately $11,000 per month. The lease
was scheduled to expire in December 2004. In July 2003 we assigned this lease to
an  unconnected  third  party and  since  December  2004 have had no  liability,
contingent or otherwise in respect of this lease.
In  February  2004 we entered  into a month to month lease for a 150 square foot
storage unit in Dana Point, California at $ 200 per month to maintain certain of
our corporate records.

In  March  2005 we  entered  into a three  month  lease  for a 300  square  foot
executive  office  suite in Laguna  Hills,  California  at  $1,150  per month to
facilitate  bringing our financial  statements and SEC filings up to date.  This
lease was terminated in September 2005.

In June 2005 we  entered  into a month to month  lease for a further  100 square
foot  storage  unit in Dana  Point,  California  at $150 per  month to  maintain
certain of our corporate records returned to us by our attorneys.

ITEM 3. 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 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


                                       15
<PAGE>

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

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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

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


                                       16
<PAGE>

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

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

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

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

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

In July  2006,  on the basis of further  audit  work and a review of  subsequent
events performed by O'Donnell,  O'Donnell has been able to complete the audit of
our June 30, 2001 financial  statements as set out on pages 57 through 97 below.
We are currently  establishing  the likely costs and  practicality of completing
the SEC  filings and related  financial  statements  for the period July 1, 2001
through June 30, 2003.

                                       17

<PAGE>

Last  Reported  Price.  On August 25, 2006,  the last  reported bid price of our
shares of common stock reported on the Grey Sheets was $0.0001 per share.

Holders.  There were 92 holders of record as of November 27, 2000;  however,  we
believed the number of beneficial holders of our shares of common stock to be in
excess of 600.

As of June 30,  2006  there  were 347  holders of record of shares of our common
stock. We believe that we have  approximately  2,000 beneficial owners of shares
of our common stock. In many instances,  a registered stockholder is a broker or
other  entity  holding  shares  in  street  name for one or more  customers  who
beneficially  own the shares.  Our transfer  agent is Mountain  Share  Transfer,
Inc., 1625 Abilene Drive, Broomfield, Colorado, 80020. Mountain Share Transfer's
telephone number is 303-460-1149.

Dividends.  We have not paid or declared cash  distributions or dividends on our
shares  of  common  stock  and  do  not  intend  to pay  cash  dividends  in the
foreseeable  future.  Future cash  dividends  will be determined by our board of
directors based upon our earnings, financial condition, capital requirements and
other relevant factors.

Penny Stock Regulation  Broker-dealer  practices in connection with transactions
in "penny  stocks" are  regulated  by certain  penny stock rules  adopted by the
Securities and Exchange Commission. Penny stocks generally are equity securities
with a price of less than $5.00.  Excluded from the penny stock  designation are
securities  registered  on certain  national  securities  exchanges or quoted on
NASDAQ,  provided  that  current  price and volume  information  with respect to
transactions  in such securities is provided by the  exchange/system  or sold to
established customers or accredited investors.

The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not  otherwise  exempt  from the  rules,  to deliver a  standardized  risk
disclosure  document that provides  information about penny stocks and the risks
in the penny stock market. The broker-dealer also must provide the customer with
current bid and offer  quotations for the penny stock,  the  compensation of the
broker-dealer  and its salesperson in connection with the  transaction,  and the
monthly account  statements showing the market value of each penny stock held in
the customer's  account.  In addition,  the penny stock rules generally  require
that prior to a  transaction  in a penny stock,  the  broker-dealer  must make a
special written  determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.

These  disclosure  requirements  may have the  effect of  reducing  the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock  rules.  As our  securities  have become  subject to the penny stock
rules, investors may find it more difficult to sell their securities.

Sale  of  Unregistered   Securities  --  details  concerning  the  sale  of  any
unregistered  securities during the period are set out in Note 15. Stockholders'
Deficit of our Financial Statements on page 89 below.

Stock  Incentive  Plans -- details  concerning  the activities and status of our
stock  incentive  plans during the period are set out in Note 15.  Stockholders'
Deficit of our Financial Statements on page 89 below.


                                       18
<PAGE>

ITEM 6. 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  and notes  thereto  and the other  financial  information
included  elsewhere 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 those set forth under "Risk Factors"
and elsewhere in this report.


OVERVIEW

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

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

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

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

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

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

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.


                                       19
<PAGE>

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

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

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

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

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

In August 1999, we acquired all of the  outstanding  capital stock of Restaurant
Consulting  Services,  Inc.  ("RCS").  RCS  implemented,  operated and supported
packaged software  applications for the restaurant industry. In January 2000, we
created Aspeon Solutions, Inc. ("Aspeon Solutions") as a wholly owned subsidiary
to centralize and continue the rapid development of our ASP service business.

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

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


                                       20
<PAGE>

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 as Aspeon  Systems (Asia Pacific) Pty Ltd and we merged the operations
of Monument into those of RCS.

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

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

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

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


                                       21
<PAGE>

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

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

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

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

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

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

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

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


                                       22
<PAGE>

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

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

In June 2002 we terminated the activities of RCS.

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

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

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

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

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

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.


                                       23
<PAGE>

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

On April 22, 2005, our sole  director,  David J Cutler entered into an agreement
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI creditors, subject to due diligence, to invest up to $50,000 cash
in us for the benefit of our  creditors  in return for a number of shares of our
common stock to be  determined.  Following  the  completion of the due diligence
process  during the three  months ended  December  31, 2005,  it was agreed with
Frank G Blundo,  Jr. P.C.,  trustee of the  assignment for the benefit of Aspeon
and CCI creditors, that Mr. Cutler would invest $20,000 in us for the benefit of
Aspeon and CCI creditors in return for a number of shares of our common stock to
be  determined.  Accordingly  during the three  months  ended  December 31, 2005
$20,000  which had been  placed in escrow  with Frank G Blundo,  Jr. P.C. by Mr.
Cutler was  released  for the  benefit of Aspeon and CCI  creditors.  On May 31,
2006,  based on an  independent  third  party  valuation,  the  majority  of our
independent  directors  approved  the issue of  10,536,775  shares of our common
stock to Mr.  Cutler for the  conversion  of  $14,243  of his debt into  equity.
Following  the issue of these shares of our common stock Mr.  Cutler owned 52.7%
of  our  total  authorized  and  issued  share  capital  and  still  had a  loan
outstanding to us of approximately $175,000.

During the fiscal  year ended June 30,  2005,  our then sole  director,  David J
Cutler,  advanced to us $88,000 by way of loan,  bearing interest at 8%, to meet
our ongoing  operating  expenses  and fund the costs of bringing  our  financial
statements and SEC reporting up to date. In the nine months ended March 31, 2006
Mr. Cutler has made further advances to us of $80,000 by way of loan to meet our
ongoing  operating  expenses  and  fund  the  costs of  bringing  our  financial
statements  and SEC  reporting up to date as required.  Effective  May 31, 2006,
$14,243 of this debt was converted into 10,536,775 shares of our common stock on
the basis of an  independent  third  party  valuation  and the  approval  of the
majority of our  independent  directors.  Following the issue of these shares of
our common stock Mr. Cutler owned 52.7% of our total authorized and issued share
capital and still had a loan outstanding to us of approximately $175,000.  There
is no guarantee that Mr. Cutler will continue to provide  further  funding to us
in the future.

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

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


                                       24
<PAGE>


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

In January 2006 we were contacted by the SEC's Office of Enforcement Liaison who
notified us that while they  recognized the progress we had made in bringing our
SEC filings up to date, they still considered us to be delinquent in our filings
because of our  failure to  complete  filings in respect of the period  April 1,
2001 through June 30, 2003. We are currently  establishing  the likely costs and
practicality  of completing the SEC filings for the period April 1, 2001 through
June 30, 2003. In the meantime  there  continues to be a risk that our shares of
common stock may be deregistered by the SEC's Office of Enforcement  Liaison due
the  continued  delinquency  of our SEC  filings  for the  period  April 1, 2001
through June 30, 2003.  In July 2006,  on the basis of further  audit work and a
review of subsequent  events performed by O'Donnell,  O'Donnell has been able to
complete the audit of our June 30, 2001 financial statements as set out on pages
57  through  97  below.  We are  currently  establishing  the  likely  costs and
practicality of completing the SEC filings and related financial  statements for
the period July 1, 2001 through June 30, 2003.

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

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

On May 31, 2006, based on an independent third party valuation,  the majority of
our independent  directors approved the issue of 10,536,775 shares of our common
stock to Mr.  Cutler for the  conversion  of  $14,243  of his debt into  equity.
Following  the issue of these shares of our common stock Mr.  Cutler owned 52.7%
of  our  total  authorized  and  issued  share  capital  and  still  had a  loan
outstanding to us of approximately $175,000.

In July  2006,  on the basis of further  audit  work and a review of  subsequent
events performed by O'Donnell,  O'Donnell has been able to complete the audit of
our June 30, 2001 financial  statements as set out on pages 57 through 97 below.
We are currently  establishing  the likely costs and  practicality of completing
the SEC  filings and related  financial  statements  for the period July 1, 2001
through June 30, 2003.

PLAN OF OPERATION

Our  plan of  operations  is to  negotiate  satisfactory  settlements  with  our
outstanding creditors,  vigorously defend against any further appeal that may be
made against our currently successful defense of the law suit brought against us
by certain of our  shareholders,  bring our financial records and SEC filings up
to date, seek 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  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 we will  successfully  complete this series of transactions.  In particular


                                       25
<PAGE>

there is no  assurance  that  any  such  business  will be  located  or that any
stockholder  will realize any return on their  shares after such a  transaction.
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. 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.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2001,  we had  $1,179,100  cash and cash  equivalents  on hand, a
working  capital   deficit  of  $15,675,800  and  a  shareholders'   deficit  of
$5,385,700.

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

We sustained  significant  losses  during the years ended June 30, 2001 and 2000
and had experienced negative cash flows from operations since our inception.

In  October   2000,   we  received  a  notice  of  default  from  our  Preferred
Stockholders,  which  triggered  certain  payment  requirements  as  well  as  a
Repricing and Redemption Event, as defined in the Preferred Stock Agreement (see
Note 12 - page 83 below).  We were also  delinquent  in the  payments of various
trade payables.  These matters, among others, raised substantial doubt as to our
ability to continue as a going  concern.  Our continued  existence was dependent
upon, among other factors, our ability to return to profitability, the continued
forbearance of the our lenders and creditors,  the successful  renegotiation  of
the terms of our Preferred  Stock,  the outcome of  litigation  filed against us
which  alleged  violations of the federal  securities  laws (Note 13 see page 85
below),  and our ability to raise funds from additional debt and, or, equity. We
had reduced our workforce and planed to further reduce expenditures. we believed
that such reductions,  the securing of a new working capital borrowing facility,
together  with  funds  expected  to  be  generated  from  operations,  would  be
sufficient to meet our expected short-term needs for working capital,  exclusive
of any  obligation to redeem our Preferred  Stock as discussed in Note 12 - page
83 below. However,  there could be no assurance that sufficient cash flows would
be generated by us to avoid the further  depletion of our working capital,  that
we would successfully  renegotiate the terms of our Preferred Stock, or that the
outcome  of the  litigation  would  not have a  material  adverse  impact on our
operations.  Accordingly,  management  intended  to  obtain  additional  debt or
private equity  financing.  There could be no assurance that  additional debt or
equity financing would be available,  if and when needed, or that, if available,
such financing could be completed on commercially favorable terms.

Subsequently we were unable to improve the  profitability  or cash generation of
our operations or to obtain  additional  debt or equity.  During the years ended
June  30,  2002  and 2003 we had no  alternative  but to sell or close  down our
remaining  operating   businesses  leaving  a  substantial  short  fall  to  our
creditors.

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

We believe that the proceeds from our Directors' and Officers'  insurance policy
would be  sufficient  to meet the legal cost  incurred in defending  any further
appeal against the Court's latest decision.  However, there is no assurance that


                                       26
<PAGE>

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

During the fiscal  year ended June 30,  2005,  our then sole  director,  David J
Cutler,  advanced to us $88,000 by way of loan,  bearing interest at 8%, to meet
our ongoing  operating  expenses  and fund the costs of bringing  our  financial
statements and SEC reporting up to date. In the nine months ended March 31, 2006
Mr.  Cutler  made  further  advances to us of $80,000 by way of loan to meet our
ongoing  operating  expenses  and  fund  the  costs of  bringing  our  financial
statements and SEC reporting up to date. Effective May 31, 2006, $14,243 of this
debt was converted into 10,536,775 shares of our common stock on the basis of an
independent  third  party  valuation  and the  approval  of the  majority of our
independent  directors.  Following the issue of these shares of our common stock
Mr.  Cutler owned 52.7% of our total  authorized  and issued  share  capital and
still  had a loan  outstanding  to us of  approximately  $175,000.  There  is no
guarantee that Mr. Cutler will continue to provide  further funding to us in the
future.

It is our current intention to seek to reach satisfactory negotiated settlements
with our  outstanding  creditors,  vigorously  defend against any further appeal
that  may be made  against  our  currently  successful  defense  of the law suit
brought against us by certain of our  shareholders,  bring our financial records
and SEC  filings  up to date,  seek a listing on the over the  counter  bulletin
board,  raise debt and, or, equity financing to fund the negotiated  settlements
with our creditors and to meet ongoing  operating  expanses 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  is no  assurance  that  this  series  of  events  will be  satisfactorily
completed.

CRITICAL ACCOUNTING POLICIES

Financial  Reporting  Release  No.  60  requires  all  companies  to  include  a
discussion of critical accounting policies and estimates used in the preparation
of their  financial  statements.  On an on-going basis, we evaluate our critical
accounting  policies  and  estimates.   We  base  our  estimates  on  historical
experience  and on various  other  assumptions  that we believe to be reasonable
under  the  circumstances,  the  results  of which  form our  basis  for  making
judgments  about the  carrying  values of assets  and  liabilities  that are not
readily  apparent  from other  sources.  Actual  results  may differ  from these
estimates under different assumptions or conditions.

Our  significant  accounting  policies are  described in Note 1 to our Financial
Statements on page 60 below. These policies were selected because they represent
the more significant accounting policies and methods that are broadly applied in
the preparation of our financial statements. However, it should be noted that we
intend to acquire a new operating business. The critical accounting policies and
estimates for such new  operations  will, in all  likelihood,  be  significantly
different from our current policies and estimates.

OFF  BALANCE  SHEET   ARRANGEMENTS,   CONTRACTUAL   OBLIGATIONS  AND  COMMERCIAL
COMMITMENTS

Financial  Reporting  Release  No.  61  requires  all  companies  to  include  a
discussion  to  address,  among  other  things,  liquidity,   off-balance  sheet
arrangements, contractual obligations and commercial commitments. Details of the
arrangements,  contractual  obligations and commercial commitments are described
in Note 13 of our Financial Statements on page 85 below.


                                       27
<PAGE>

FISCAL YEAR ENDED JUNE 30, 2001 COMPARED TO THE FISCAL YEAR ENDED JUNE 30, 2000

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

In December  2003, we appointed  attorney Frank G Blundo Jr. P.C. as trustee for
an  assignment  for the  benefit  of the  Aspeon  and CCI  creditors  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.

Consequently  from January 1, 2004 we had no assets,  no  operating  business or
other sources of income.

Revenue.

Revenue  for the fiscal  year ended June 30,  2001 was  $61,110,000  compared to
$81,045,000  for the fiscal year ended June 30, 2000, a decrease of  $19,935,000
or 24.6%.  Our mix of products and services sold was largely  unchanged  between
the fiscal years ended June 30, 2001 and 2000. The sale of products  represented
66.9% of our total  revenue in the fiscal year ended June 30,  2001  compared to
67.7% the fiscal year ended June 30,  2000, a decrease of 0.8%.  Conversely  the
sale of  services  represented  33.1% of our total  revenues  in the fiscal year
ended June 30, 2001  compared to 32.3% the fiscal year ended June 30,  2000,  an
increase of 0.8%.  The revenue for products  sold for the fiscal year ended June
30, 2001 was $40,884,000  compared to $54,902,000 for the fiscal year ended June
30, 2000, a decrease of $14,018,000 or 25.5%. The revenue for services  provided
for the fiscal year ended June 30, 2001 was $20,227,000  compared to $26,143,000
for the fiscal year ended June 30, 2000, a decrease of $5,916,000 or 22.6%

The decease in revenues  was due to the industry  wide  slowdown in POS hardware
sales and technology spending as a whole, together with the uncertainty and loss
of  confidence  in the  marketplace  in our  abilities  to support our  products
arising from the  restatement  of our  financial  results,  the law suit brought
against us by certain of our shareholders,  the resignation of our auditors, our
de-listing from Nasdaq and our weakened financial position.

Cost of Sales

Cost of sales for the fiscal year ended June 30, 2001 was  $55,362,000  compared
to $61,274,000 for the fiscal year ended June 30, 2000, a decrease of $5,912,000
or 9.7%.  The cost of sales for products sold for the fiscal year ended June 30,
2001 was $38,811,000  compared to $40,974,000 for the fiscal year ended June 30,
2000, a decrease of $2,163,000 or 5.3% compared to the 25.5% decrease in revenue
from the sale of products as set out above.  This increase of cost of sales as a
percentage of revenue for products sold was  attributable to the overall decease
in  the  number  of  POS  units  sold  through  the  Javelin  division,   higher
manufacturing  costs and an increase in inventory reserves of approximately $1.3
million due to change in the product  line we offered that  required  increasing
inventory  reserves  on our  inventory  of  parts  for the  product  lines to be
discontinued.  The cost of services  provided for the fiscal year ended June 30,
2001 was $16,551,000  compared to $20,300,000 for the fiscal year ended June 30,
2000,  a decrease  of  $3,749,000  or 18.5%  compared  to the 22.6%  decrease in
revenue  from the  provision  of services  as set out above.  Cost of sales as a
percentage of revenue from services provided  increased during fiscal 2001 as we
entered into a one significant contract with low margins in 2000 and had a major
impact  on  margins  in 2001 and our  revenue  fell by more than we were able to
reduce our fixed costs of sales for services.


                                       28
<PAGE>

Gross Profit

Gross profit for the fiscal year ended June 30, 2001 was $5,748,000,  or 9.4% of
revenue, compared to $19,771,000, or 24.4% of revenue, for the fiscal year ended
June 30, 2000. The gross profit on the sale of products was $2,072,200,  or 5.1%
of revenue, for the fiscal year ended June 30, 2001 compared to $13,929,000,  or
25.4% of revenue,  for the fiscal year ended June 30, 2000.  The gross profit on
the provision of services was  $3,676,000,  or 18.2% of revenue,  for the fiscal
year ended June 30, 2001 compared to  $5,843,000,  or 22.4% of revenue,  for the
fiscal year ended June 30, 2000. The reasons for these variances in gross profit
are set out above.

Research and Development Expenses

Research and  development  expenses for the fiscal year ended June 30, 2001 were
$1,285,000,  compared to  $1,968,000  for the fiscal year ended June 30, 2000, a
decrease of $683,000, or 34.7%. As a percentage of total revenues,  research and
development  expenses  amounted to 2.1% and 2.4% for the fiscal years ended June
30, 2001 and 2000  respectively.  The variance  relates  primarily to additional
development  costs and activities  relating to the design of new products in the
fiscal year ended June 30, 2000.

General and Administrative Expenses.

General and administrative expenses for the fiscal year ended June 30, 2001 were
$25,684,000  compared to $19,190,000 for the fiscal year ended June 30, 2000, an
increase of $6,494,000, or 33.8%. As a percentage of total revenues, general and
administrative  expenses  amounted  to 42% and 23.7% for the fiscal  years ended
June 30, 2001 and 2000  respectively.  This  increase  was  primarily  due to an
increase in overhead expenses associated with ASP services of $4.8 million,  the
full year impact of goodwill  amortization  associated with fiscal 1999 and 2000
acquisitions,  severance  costs  associated  with  the  termination  of  certain
management,  higher legal and  accounting  fees incurred in connection  with the
Company's fiscal 2000 audit and pending litigation (Note 13 - page 85 below), an
increase in  reserves  for  doubtful  accounts  of $1.0  million,  approximately
$750,000  of which  related  to the ASP  services  business  portion  which  was
disposed of in March 2001,  and the $229,000 loss incurred on the sale of Aspact
(Note 3 - page 77 below).

Selling and Marketing Expenses

Selling  and  marketing  expenses  for the fiscal  year ended June 30, 2001 were
$6,623,000,  compared to  $8,397,000  for the fiscal year ended June 30, 2000, a
decrease of $1,774,000, or 21.1%. As a percentage of total revenues, selling and
marketing  expenses  amounted to 10.8% and 10.4% for the fiscal years ended June
30, 2001 and 2000 respectively. The variance relates primarily to cost reduction
programs introduced by us during the fiscal year ended June 30, 2001 to conserve
cash and attempt to achieve profitability.

Impairment Charge

An impairment charge of $23,331,000 was recognized in the fiscal year ended June
30, 2001 in respect of the goodwill write off of RCS, DTI and Monument and other
intangible  assets. No impairment charge was recognized in the fiscal year ended
June 30, 2000.

Operating Loss.

An operating loss of $(51,175,000) was recognized in the fiscal year ending June
30, 2001 compared to an operating loss of $(9,783,000) for the fiscal year ended
June 30,  2000,  an  increase  of  $(41,392,000)  or more than 100%,  due to the
factors discussed above.


                                       29
<PAGE>

Interest Expense

Interest  expense  for the  fiscal  year ended  June 30,  2001 were  $2,298,000,
compared to $808,000  for the fiscal  year ended June 30,  2000,  an increase of
$1,490,000, or more than 100%. This decrease was primarily due to the accrual of
interest relating to our mandatory redeemable preferred stock.

Interest Income

Interest income for the fiscal year ended June 30, 2001 were $263,000,  compared
to $423,000 for the fiscal year ended June 30, 2000, a decrease of $160,000,  or
37.8%. The decrease was due to the fact that we had substantially lower balances
of cash,  cash  equivalents and investments in 2001 as compared to 2000 on which
to earn interest  income due to our  deteriorating  profitability  and cash flow
over the period.

Other Income

Other income for the fiscal year ended June 30, 2001 were $809,000,  compared to
other losses of $(82,000) for the fiscal year ended June 30, 2000, a variance of
$891,000,  or more than 100%. This variance was primarily due to the gain on the
sale of Teneo and certain assets of DTI.

Provision for Income Taxes.

The  provision  for income  taxes for the fiscal  year ended June 30,  2001 were
$(159,000),  compared to a credit of $950,000 for the fiscal year ended June 30,
2000, a variance of  $1,109,000,  or more than 100%. The liability in 2001 arose
from the profit on sale of certain of our businesses and assets that we were not
able to offset  against  our  brought  forward  tax  losses.  The credit in 2000
reflected the impact of tax losses generated in the year.

Net Loss Before Cumulative Effect of Accounting Change.

A net loss before the cumulative  effect of accounting  change of  $(52,561,000)
was  recognized  in the fiscal year ending June 30, 2001  compared to a net loss
before the cumulative effect of accounting change of $(9,301,000) for the fiscal
year ended June 30, 2000, an increase of  $(43,260,000) or more than 100% due to
the factors discussed above.

Cumulative Effect of Accounting Change

A  cumulative  effect of  accounting  change of $818,000 was  recognized  in the
fiscal year ended June 30, 2001 in respect of the  adoption of SFAS No. 133 (see
Note 1 -  page  63  below).  No  cumulative  effect  of  accounting  change  was
recognized in the fiscal year ended June 30, 2000.

Net Loss After Cumulative Effect of Accounting Change and Comprehensive Loss..

The  comprehensive  loss for the fiscal year ended June 30, 2001 was $52,378,000
compared to the net loss after the  cumulative  effect of  accounting  change of
$51,743,000,  a difference of $635,000 or 12.27%. The comprehensive loss for the
fiscal  year ended June 30,  2000 was  $10,197,000  compared  to the net loss of
$9,301,000 a difference of $896,000 or 9.6%. In both years the variance  related
primarily  to  the  change  in  the  cumulative  foreign  currency   translation
adjustment relating to our non-US  subsidiaries in Australia,  Singapore and the
United Kingdom and unrealized gains (losses) on available-for-sale securities.


                                       30
<PAGE>

Accretion of Manditorily Redeemable Preferred Stock Discount & Dividend

Accretion of manditorily  redeemable  preferred  stock discount and  manditorily
redeemable  preferred  stock dividend of $7,192,000 was recognized in the fiscal
year ending June 30, 2001 compared to $6,091,000  for the fiscal year ended June
30, 2000,  an increase of  $(1,101,000)  or 18.1%  reflecting  the fact that the
manditorily  redeemable  preferred  stock  was  issued  in  March  2000  and was
therefore only outstanding for part of the fiscal year ended June 30, 2000 while
it was outstanding for the whole of the year ended June 30 2001.

Net Loss Available to Common Stockholders.

A net loss available to common  stockholders of $(58,935,000)  was recognized in
the fiscal year ending June 30, 2001  compared to  $(15,392,000)  for the fiscal
year ended June 30, 2000, an increase of  $(43,543,000) or more than 100% due to
the factors discussed above.

CASH FLOW INFORMATION

As of June 30, 2001,  we had  $1,179,100  cash and cash  equivalents  on hand, a
working  capital   deficit  of  $15,676,000  and  a  shareholders'   deficit  of
$5,386,000.

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

We sustained  significant  losses  during the years ended June 30, 2001 and 2000
and had experienced negative cash flows from operations since our inception.

In  October   2000,   we  received  a  notice  of  default  from  our  Preferred
Stockholders,  which  triggered  certain  payment  requirements  as  well  as  a
Repricing and Redemption Event, as defined in the Preferred Stock Agreement (see
Note 12 - page 83 below).  We were also  delinquent  in the  payments of various
trade payables.  These matters, among others, raised substantial doubt as to our
ability to continue as a going  concern.  Our continued  existence was dependent
upon,  among  other  factors,  the our ability to return to  profitability,  the
continued  forbearance  of  the  our  lenders  and  creditors,   the  successful
renegotiation  of the terms of our  Preferred  Stock,  the outcome of litigation
filed against us, which alleged  violations of the federal securities laws (Note
13 see page 85 below),  and our  ability to raise  funds  from  additional  debt
and/or  capital.  We had  reduced  our  workforce  and planed to further  reduce
expenditures.  We believed that such  reductions,  the securing of a new working
capital borrowing facility,  and funds expected to be generated from operations,
would be sufficient to meet our expected  short-term  needs for working capital,
exclusive of any  obligation to redeem our Preferred  Stock as discussed in Note
12 - page 83 below.  However,  there could be no assurance that  sufficient cash
flows would be  generated  by us to avoid the further  depletion  of our working
capital,  that we would  successfully  renegotiate  the  terms of our  Preferred
Stock, or that the outcome of the litigation  would not have a material  adverse
impact on our operations.  Accordingly, we intended to obtain additional debt or
private equity  financing.  There could be no assurance that  additional debt or
equity financing would be available,  if and when needed, or that, if available,
such financing could be completed on commercially favorable terms.


                                       31
<PAGE>

Subsequently we were unable to improve the  profitability  or cash generation of
our operations or to obtain  additional  debt or equity.  During the years ended
June  30,  2002  and 2003 we had no  alternative  but to sell or close  down our
remaining  operating   businesses  leaving  a  substantial  short  fall  to  our
creditors.

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

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

During the fiscal  year ended June 30,  2005,  our then sole  director,  David J
Cutler,  advanced to us $88,000 by way of loan,  bearing interest at 8%, to meet
our ongoing  operating  expenses  and fund the costs of bringing  our  financial
statements and SEC reporting up to date. In the nine months ended March 31, 2006
Mr.  Cutler  made  further  advances to us of $80,000 by way of loan to meet our
ongoing  operating  expenses  and  fund  the  costs of  bringing  our  financial
statements and SEC reporting up to date.  Effective May 31, 2006,  $14,206.89 of
this debt was converted into 10,536,775  shares of our common stock on the basis
of an independent  third party valuation and the approval of the majority of our
independent  directors.  Following the issue of these shares of our common stock
Mr.  Cutler owned 52.7% of our total  authorized  and issued  share  capital and
still  had a loan  outstanding  to us of  approximately  $175,000.  There  is no
guarantee that Mr. Cutler will continue to provide  further funding to us in the
future.

It is our current intention to seek to reach satisfactory negotiated settlements
with our  outstanding  creditors,  vigorously  defend against any further appeal
that  may be made  against  our  currently  successful  defense  of the law suit
brought against us by certain of our  shareholders,  bring our financial records
and SEC  filings  up to date,  seek a listing on the over the  counter  bulletin
board,  raise debt and, or, equity financing to fund the negotiated  settlements
with our creditors and to meet ongoing  operating  expanses 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  is no  assurance  that  this  series  of  events  will be  satisfactorily
completed.

For the twelve  months  ended June 30,  2001,  net cash used in  operations  was
$(5,824,000)  compared to $(2,070,000) net cash used in operations in the twelve
months ended June 30, 2000, an increase of  $3,754,000,  or more than 100%.  For
the twelve  months  ended  June 30,  2001 the net loss,  adjusted  for non -cash
items,  was  $(17,329,000)  compared to a the net loss,  adjusted  for non -cash
items, of $(2,175,000)  for the twelve months ended June 30, 2001, a variance of
$15,154,000,  or more  than  100% due to the  increased  level of our  operating


                                       32
<PAGE>

losses for the reasons set out above.  In the twelve  months ended June 30, 2001
changes in operating assets and liabilities generated net cash of $11,506,000 as
compared to changes in operating  assets and  liabilities  for the twelve months
ended June 30, 2000 which only  generated  net cash of  $104,000,  a variance of
$11,402,000, or more than 100%. This variance in the changes in operating assets
and liabilities was largely due to a $10,392,000 reduction in inventories in the
fiscal year ended June 30, 2001.

Cash flow from  investing  activities  was $744,000 for the twelve  months ended
June 30, 2001  compared to  $(5,531,000)  used in investing  activities  for the
twelve  months ended June 30, 2000, a  difference  of  $6,275,000,  or more than
100%. In the twelve months ended June 30, 2001 we generated  $2,243,000 from the
sale of fixed assets,  the sale of investments and the net repayment on loans we
had made to  related  parties,  offset  by  expenditures  of  $1,500,000  on the
purchase of fixed assets and  payments for  businesses  we had  purchased.  This
compared to the twelve  months ended June 30, 2000 where we generated  $6447,000
from the sale of investments but spent  $7,954,000 on payments for businesses we
had  purchased,  $3,329,000  on the  purchase  of fixed  assets and  $496,000 on
advance under notes receivable to related parties.

Cash flow used in financing  activities was  $(2,569,000)  for the twelve months
ended June 30, 2001 compared to  $11,130,000  generated by financing  activities
for the twelve months ended June 30, 2000, a difference of $13,699,000,  or more
than 100%. In the twelve  months ended June 30, 2001 we used a net  $(2,105,000)
in  repayment  of our line of credit,  notes  payable and  capital  leases and a
further $553,000 in the payment of preferred stock  dividends.  This compared to
the twelve  months  ended June 30, 2000 where we  generated  $9,568,00  from the
issue of  preferred  stock,  $917,000  from the  exercise  of stock  options and
warrants and a net $645,000 under our line of credit,  notes payable and capital
leases.


ACCOUNTING PRONOUNCEMENTS

 In December  1999,  Staff  Accounting  Bulletin No. 101 ("SAB  101"),  "Revenue
Recognition in Financial  Statements"  was issued by the Securities and Exchange
Commission  staff (the "staff"),  which summarizes the staff's views on selected
revenue  recognition issues based upon existing  generally  accepted  accounting
principles.  The statements in the staff  accounting  bulletins are not rules or
interpretations  of the  Commission,  nor are  they  published  as  bearing  the
Commission's  official approval.  They represent  interpretations  and practices
followed  by the  Division  of  Corporation  Finance and the Office of the Chief
Accountant  in  administering   the  disclosure   requirements  of  the  Federal
securities laws. The staff has deferred the implementation date of SAB 101 until
no later than the fourth  quarter of fiscal years  beginning  after December 15,
1999. Our adoption of SAB 101 did not have a material impact on our consolidated
results of operations or financial position.

 In March  2000,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Interpretation No. 44 ("FIN 44"), "Accounting for Certain Transactions involving
Stock Compensation." The adoption of this Interpretation did not have a material
impact on our consolidated results of operations or financial position.

In  November  2000,  the  Emerging  Task  Force  ("EITF")   issued  EITF  00-27,
"Application of Issue No. 98-5,  "Accounting for Convertible Conversion Features
or   Contingently   Adjustable   Conversion   Ratios  to   Certain   Convertible
Instruments".  The  adoption of this EITF did not have a material  impact on our
consolidated results of operations or financial position.


                                       33
<PAGE>

On June 30,  2001,  the FASB  approved  the  issuance of SFAS No. 141,  Business
Combinations and SFAS No. 142,  Goodwill and Other Intangible  Assets.  SFAS No.
141 states that all  business  combinations  should be  accounted  for using the
purchase method of accounting;  use of pooling-of-interest method is prohibited.
Accounting  for the excess of the fair value of net assets  over cost  (negative
goodwill),  will be allocated to certain assets first with any remaining  excess
recognized  as an  extraordinary  gain.  SFAS No. 141 is effective  for business
combinations  completed  after  June  30,  2001.  SFAS  No.  142  addresses  the
accounting  for all  purchased  intangible  assets  but not the  accounting  for
internally developed intangible assets. Goodwill will no longer be amortized and
will be reviewed for impairment in accordance  with SFAS No. 142.  Goodwill will
be tested  annually and on an interim basis if an event or  circumstance  occurs
between the annual tests that might reduce the fair value of the reporting  unit
below its carrying  value.  SFAS No 142 is effective for fiscal years  beginning
after  December  31,  2001,   with  early  adoption   permitted   under  certain
circumstances.   Goodwill  and  intangible  assets  acquired  in  a  transaction
completed after June 30, 2001 but before SFAS No. 142 is initially  applied will
be accounted  for in  accordance  with SFAS No. 142. ". The adoption of SFAS No.
141 and SFAS No. 142 did not have a material impact on our consolidated  results
of operations or financial position.

In June  2001,  the  FASB  approved  for  issuance  SFAS  143  Asset  Retirement
Obligations.   SFAS  143  establishes  accounting  requirements  for  retirement
obligations associated with tangible long-lived assets, including (1) the timing
of the liability  recognition,  (2) initial  measurement of the  liability,  (3)
allocation of asset  retirement cost to expense,  (4) subsequent  measurement of
the liability and (5) financial statement disclosures. SFAS 143 requires that an
asset  retirement  cost should be capitalized as part of the cost of the related
long-lived  asset and  subsequently  allocated to expense using a systematic and
rational method. The statement is effective for financial  statements issued for
fiscal years beginning after June 15, 2002. The adoption of SFAS No. 143 did not
have a material  impact on our  consolidated  results of operations or financial
position.

In October 2001, the FASB also approved SFAS 144,  Accounting for the Impairment
or Disposal of Long-Lived Assets. SFAS 144 replaces SFAS 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The
new accounting model for long-lived  assets to be disposed of by sale applies to
all  long-lived  assets,  including  discontinued  operations,  and replaces the
provisions of APB Opinion No. 30, Reporting Results of Operations-Reporting  the
Effects of Disposal of a Segment of a Business,  for the disposal of segments of
a business.  Statement 144 requires that those long-lived  assets be measured at
the lower of carrying amount or fair value less cost to sell,  whether  reported
in continuing operations or in discontinued operations.  Therefore, discontinued
operations will no longer be measured at net realizable value or include amounts
for operating losses that have not yet occurred. Statement 144 also broadens the
reporting of discontinued operations to include all components of an entity with
operations that can be  distinguished  from the rest of the entity and that will
be  eliminated  from  the  ongoing  operations  of  the  entity  in  a  disposal
transaction.  The  provisions  of  Statement  144 are  effective  for  financial
statements  issued for fiscal  years  beginning  after  December  15,  2001 and,
generally, are to be applied prospectively. The adoption of SFAS No. 144 did not
have a material  impact on our  consolidated  results of operations or financial
position.


In April 2002, the FASB issued SFAS 145,  "Rescission of FASB  Statements No. 4,
44, and 64,  Amendment of FASB  Statement  No. 13, and  Technical  Corrections."
Among other things,  this statement  rescinds FASB  Statement No. 4,  "Reporting
Gains and Losses  from  Extinguishment  of Debt"  which  required  all gains and
losses from extinguishment of debt to be aggregated and, if material, classified
as an  extraordinary  item, net of related income tax effect.  As a result,  the
criteria  in APB  Opinion  No.  30,  "Reporting  the  Results of  Operations  --
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions," will now be used to
classify  those  gains and  losses.  The  provisions  of SFAS 145 related to the
classification  of debt  extinguishment  are effective for years beginning after
May 15, 2002. The adoption of SFAS No. 145 did not have a material impact on our
consolidated results of operations or financial position.


                                       34
<PAGE>

In July 2002, the FASB issued SFAS 146,  "Accounting  for Costs  Associated with
Exit or Disposal  Activities." SFAS 146 provides new guidance on the recognition
of costs  associated  with exit or disposal  activities.  The standard  requires
companies to recognize costs  associated  with exit or disposal  activities when
they are incurred  rather than at the date of  commitment to an exit or disposal
plan.  SFAS 146 supercedes  previous  accounting  guidance  provided by the EITF
Issue No. 94-3 "Liability  Recognition for Certain Employee Termination Benefits
and Other  Costs to Exit an  Activity  (including  Certain  Costs  Incurred in a
Restructuring)."  EITF Issue No. 94-3 required  recognition of costs at the date
of  commitment  to an  exit  or  disposal  plan.  SFAS  146  is  to  be  applied
prospectively to exit or disposal activities  initiated after December 31, 2002.
The adoption of SFAS No. 146 did not have a material impact on our  consolidated
results of operations or financial position.

In December 2002, the Financial  Accounting Standards Board ("FASB") issued SFAS
148  "Accounting  for Stock-Based  Compensation--Transition  and  Disclosure--an
amendment of SFAS 123." SFAS 148 provides  alternative methods of transition for
a voluntary  change to the fair value based method of accounting for stock-based
employee  compensation  from the  intrinsic  value-based  method  of  accounting
prescribed  by APB 25. As allowed by SFAS 123,  we elected to  continue to apply
the intrinsic value-based method of accounting,  and have adopted the disclosure
requirements of SFAS 123. We elected not to adopt the provisions of SFAS 148.

In  January  2003,  the  FASB  issued  FASB   Interpretation   ("FIN")  No.  46,
Consolidation of Variable  Interest  Entities,  which requires variable interest
entities  (commonly  referred  to as SPEs)  to be  consolidated  by the  primary
beneficiary  of the entity if certain  criteria are met. FIN No. 46 is effective
immediately  for all new variable  interest  entities  created or acquired after
January 31, 2003.  The adoption of this statement does not impact our historical
or present financial statements, as we have not created or acquired any variable
interest entities, nor do we expect to in the future.

In April 2003, the FASB issued  Statement of Financial  Accounting  Standard No.
149,  "Amendment  of  Statement  133  on  Derivative   Instruments  and  Hedging
Activities" (SFAS 149). SFAS 149 amends and clarifies  financial  accounting and
reporting for derivative  instruments,  including certain derivative instruments
embedded in other contracts  (collectively  referred to as derivatives)  and for
hedging  activities  under FASB  Statement No. 133,  "Accounting  for Derivative
Instruments  and  Hedging  Activities".  SFAS  149 is  generally  effective  for
contracts entered into or modified after June 30, 2003 or hedging  relationships
designated  after June 30,  2003.  The  adoption  of SFAS No. 149 did not have a
material impact on our consolidated results of operations or financial position.

In May 2003, the FASB issued Financial  Accounting Standard No. 150, "Accounting
for Certain Financial  Instruments with  Characteristics of Both Liabilities and
Equity" (SFAS 150). SFAS 150 establishes  standards for how a company classifies
and  measures  certain  financial   instruments  with  characteristics  of  both
liabilities  and  equity.  It  requires  that a  company  classify  a  financial
instrument  that is  within  the  scope  as a  liability  (or an  asset  in some
circumstances).  SFAS 150 is effective for financial instruments entered into or
modified  after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. The adoption of SFAS No. 150
did not have a material  impact on our  consolidated  results of  operations  or
financial position.

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


                                       35
<PAGE>


In November 2004, the FASB issued  Statement of Financial  Accounting  Standards
No. 151,  "Inventory Costs-- an amendment of ARB No. 43, Chapter 4" (hereinafter
"SFAS No. 151").  This  statement  amends the guidance in ARB No. 43, Chapter 4,
"Inventory  Pricing," to clarify the  accounting  for  abnormal  amounts of idle
facility expense, freight, handling costs, and wasted material (spoilage). Under
some  circumstances,  SFAS No. 151  mandates  that  items such as idle  facility
expense, excessive spoilage, double freight, and re-handling costs be recognized
as current-period  charges. In addition, this statement requires that allocation
of fixed production  overheads to the costs of conversion be based on the normal
capacity of the production facilities. This statement is effective for inventory
costs  incurred  during  fiscal years  beginning  after June 15, 2005. We do not
believe  that the  adoption  of SFAS No. 151 will have a material  impact on our
financial conditions or results of operation

In December 2004, the FASB issued  Statement of Financial  Accounting  Standards
No. 152,  which  amends SFAS  Statement  No. 66,  "Accounting  for Sales of Real
Estate," to reference the financial  accounting and reporting  guidance for real
estate time-sharing transactions that is provided in AICPA Statement of Position
(SOP)  04-2,  "Accounting  for  Real  Estate  Time-Sharing  Transactions."  This
statement  also amends  SFAS No. 67,  "Accounting  for Costs and Initial  Rental
Operations  of Real  Estate  Projects,"  to  state  that  the  guidance  for (a)
incidental operations and (b) costs incurred to sell real estate projects,  does
not apply to real estate  time-sharing  transactions.  The  accounting for those
operations  and costs is subject to the guidance in SOP 04-2.  This statement is
effective for financial  statements  for fiscal years  beginning  after June 15,
2005.  We do not believe  that the adoption of SFAS No. 152 will have a material
impact on our financial conditions or results of operation.

In December 2004, the FASB issued  Statement of Financial  Accounting  Standards
No. 153 (hereinafter  "SFAS No. 153"). This statement  addresses the measurement
of  exchanges  of  nonmonetary  assets.  The  guidance  in APB  Opinion  No. 29,
"Accounting  for  Nonmonetary  Transactions,"  is  based on the  principle  that
exchanges of  nonmonetary  assets should be measured  based on the fair value of
the assets exchanged.  The guidance in that opinion,  however,  included certain
exceptions  to that  principle.  SFAS No. 153 amends APB Opinion 29 to eliminate
the  exception  for  nonmonetary  exchanges  of  similar  productive  assets and
replaces it with a general exception for exchanges of nonmonetary assets that do
not have commercial  substance.  A nonmonetary exchange has commercial substance
if the future cash flows of the entity are expected to change significantly as a
result of the exchange. This statement is effective for financial statements for
fiscal years beginning after June 15, 2005. Earlier application is permitted for
nonmonetary  asset  exchanges  incurred  during fiscal years beginning after the
date of this  statement  is issued.  We do not believe that the adoption of SFAS
No. 153 will have a material  impact on our  financial  conditions or results of
operation

In  December  2004,  the FASB  issued a  revision  to FASB  Statement  No.  123,
Accounting for Stock Based Compensation.  This Statement  supersedes APB Opinion
No. 25, Accounting for Stock Issued to Employees, and its related implementation
guidance.   This  Statement   establishes   standards  for  the  accounting  for
transactions  in which an entity  exchanges its equity  instruments for goods or
services.  It also addresses  transactions in which an entity incurs liabilities
in  exchange  for  goods or  services  that are  based on the fair  value of the
entity's  equity  instruments  or that may be settled by the  issuance  of those
equity  instruments.  . We do not believe that the adoption of SFAS No. 123( R )
will have a material impact on our financial conditions or results of operation

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

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


                                       36
<PAGE>


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

In March 2006, the Financial  Accounting  Standards  Board (`FASB')  issued FASB
Statement  No.  156,  which  amends  FASB  Statement  No.  140.  This  Statement
establishes,  among other things, that accounting for all separately  recognized
servicing assets and servicing liabilities.  This Statement amends Statement 140
to  require  that all  separately  recognized  servicing  assets  and  servicing
liabilities be initially measured at fair value, if practicable.  This Statement
permits,  but  does  not  require,  the  subsequent  measurement  of  separately
recognized  servicing assets and servicing  liabilities at fair value. An entity
that uses  derivative  instruments  to mitigate the risks  inherent in servicing
assets and  servicing  liabilities  is required to account for those  derivative
instruments at fair value. Under this Statement,  an entity can elect subsequent
fair value measurement to account for its separately recognized servicing assets
and servicing  liabilities.  By electing that option, an entity may simplify its
accounting  because this Statement  permits income statement  recognition of the
potential  offsetting  changes  in fair  value of  those  servicing  assets  and
servicing liabilities and derivative  instruments Is the same accounting period.
This Statement is effective for financial  statements for fiscal years beginning
after September 15, 2006.  Earlier adoption of this Statement is permitted as of
the beginning of an entity's fiscal year, provided the entity has not yet issued
any  financial  statements  for that fiscal  year.  We do not  believe  that the
adoption of FASB Statement No. 156 will have a material  impact on our financial
conditions or results of operation.

EFFECTS OF INFLATION

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

SUBSEQUENT EVENTS

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.



                                       37
<PAGE>


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

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

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

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

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

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

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

On April 22, 2005, our sole  director,  David J Cutler entered into an agreement
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI creditors, subject to due diligence, to invest up to $50,000 cash
in us for the benefit of our  creditors  in return for a number of shares of our
common stock to be  determined.  Following  the  completion of the due diligence
process  during the three  months ended  December  31, 2005,  it was agreed with
Frank G Blundo,  Jr. P.C.,  trustee of the  assignment for the benefit of Aspeon
and CCI creditors, that Mr. Cutler would invest $20,000 in us for the benefit of
Aspeon and CCI creditors in return for a number of shares of our common stock to
be  determined.  Accordingly  during the three  months  ended  December 31, 2005
$20,000  which had been  placed in escrow  with Frank G Blundo,  Jr. P.C. by Mr.
Cutler was  released  for the  benefit of Aspeon and CCI  creditors.  On May 31,
2006,  based on an  independent  third  party  valuation,  the  majority  of our
independent  directors  approved  the issue of  10,536,775  shares of our common
stock to Mr.  Cutler for the  conversion  of  $14,243  of his debt into  equity.


                                       38
<PAGE>

Following  the issue of these shares of our common stock Mr.  Cutler owned 52.7%
of  our  total  authorized  and  issued  share  capital  and  still  had a  loan
outstanding to us of approximately $175,000.

During the fiscal  year ended June 30,  2005,  our then sole  director,  David J
Cutler,  advanced to us $88,000 by way of loan,  bearing interest at 8%, to meet
our ongoing  operating  expenses  and fund the costs of bringing  our  financial
statements and SEC reporting up to date. In the nine months ended March 31, 2006
Mr. Cutler has made further advances to us of $80,000 by way of loan to meet our
ongoing  operating  expenses  and  fund  the  costs of  bringing  our  financial
statements  and SEC  reporting up to date as required.  Effective  May 31, 2006,
$14,243 of this debt was converted into 10,536,775 shares of our common stock on
the basis of an  independent  third  party  valuation  and the  approval  of the
majority of our  independent  directors.  Following the issue of these shares of
our common stock Mr. Cutler owned 52.7% of our total authorized and issued share
capital and still had a loan outstanding to us of approximately $175,000.  There
is no guarantee that Mr. Cutler will continue to provide  further  funding to us
in the future.

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

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

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

In January 2006 we were contacted by the SEC's Office of Enforcement Liaison who
notified us that while they  recognized the progress we had made in bringing our
SEC filings up to date, they still considered us to be delinquent in our filings
because of our  failure to  complete  filings in respect of the period  April 1,
2001 through June 30, 2003. We are currently  establishing  the likely costs and
practicality  of completing the SEC filings for the period April 1, 2001 through
June 30, 2003. In the meantime  there  continues to be a risk that our shares of
common stock may be deregistered by the SEC's Office of Enforcement  Liaison due
the  continued  delinquency  of our SEC  filings  for the  period  April 1, 2001
through June 30, 2003.  In July 2006,  on the basis of further  audit work and a
review of subsequent  events performed by O'Donnell,  O'Donnell has been able to
complete the audit of our June 30, 2001 financial statements as set out on pages
57  through  97  below.  We are  currently  establishing  the  likely  costs and
practicality of completing the SEC filings and related financial  statements for
the period July 1, 2001 through June 30, 2003.

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

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


                                       39
<PAGE>

On May 31, 2006, based on an independent third party valuation,  the majority of
our independent  directors approved the issue of 10,536,775 shares of our common
stock to Mr.  Cutler for the  conversion  of  $14,243  of his debt into  equity.
Following  the issue of these shares of our common stock Mr.  Cutler owned 52.7%
of  our  total  authorized  and  issued  share  capital  and  still  had a  loan
outstanding to us of approximately $175,000.

In July  2006,  on the basis of further  audit  work and a review of  subsequent
events performed by O'Donnell,  O'Donnell has been able to complete the audit of
our June 30, 2001 financial  statements as set out on pages 57 through 97 below.
We are currently  establishing  the likely costs and  practicality of completing
the SEC  filings and related  financial  statements  for the period July 1, 2001
through June 30, 2003.



                                  RISK FACTORS

You should be aware that there are various risks  associated  with our business,
and us, including the ones discussed below. You should carefully  consider these
risk factors, as well as the other information contained in this Form 10-KSB, in
evaluating our business and us.

The factors affecting our future performance changed dramatically as a result of
the  discontinuance of the last of our operating  businesses  effective June 30,
2003 and the  transfer of all of our assets to a trustee of the  assignment  for
the benefit of Aspeon and CCI creditors  effective  January 1, 2004. Rather than
an  operating  business,  our  business  is  to  reach  satisfactory  negotiated
settlements  with our  outstanding  creditors,  vigorously  defend  against  any
further appeal that may be made against our currently  successful defense of the
law suit brought against us by certain of our shareholders,  bring our financial
records  and SEC  filings  up to date,  seek a listing  on the over the  counter
bulletin  board,  raise  debt  and,  or,  equity  to fund the  settlements  with
creditors or meet our ongoing  operating costs 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 is can be
no assurance that this series of events can be successfully completed,  that any
such business will be identified or that any stockholder will realize any return
on their shares after such a transaction has been completed. In particular there
is no assurance  that any such business will be located or that any  stockholder
will realize any return on their shares after such a transaction.  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.  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.  Although
there is no assurance, we believe we can successfully complete an acquisition or
merger, which will enable us to continue as a going concern

WE HAVE A SUBSTANTIAL BALANCE OF OUTSTANDING LIABILITIES

As at March 31,  2006 we had  outstanding  liabilities  of  approximately  $ 8.1
million due to creditors who were not eligible to be part of the  assignment for
the benefit of Aspeon and CCI  creditors,  or who elected not to  participate in
our assignment  for the benefit of Aspeon and CCI creditors.  We have no assets,
no operating business or our source of income from which to pay these creditors.


                                       40
<PAGE>

Accordingly  we must  attempt to  negotiate  acceptable  settlements  with these
outstanding  creditors and then attempt to raise debt and, or, equity funding to
finance the payment of the agreed settlements. There can be no assurance that we
shall be able to negotiate acceptable settlements with our outstanding creditors
or that we shall be able to raise the necessary  debt and, or, equity finance to
fund any such agreed  settlements.  If we are unable to settle these liabilities
it is  unlikely  that  we  will  be  able to  merge  with  another  entity  with
experienced  management and opportunities for growth in return for shares of our
common stock to create value for our shareholders

WE HAVE BEEN SUBJECT TO A LAW SUIT BY CERTAIN OF OUR SHAREHOLDERS

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

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

WE HAVE  INCURRED SIGNIFICANT LOSSES AND ANTICIPATE FUTURE LOSSES

As at March 31,  2006 we had  retained  deficit  in  excess  $90  million  and a
stockholders'  deficit of approximately $ 8.1 million.  Future losses are likely
to occur as we have no sources of income to meet our  operating  expenses.  As a
result of these,  among other factors,  we received a report on our consolidated
financial  statements  for the year  ended  June 30,  2005 from our  independent
accountants  that  include  an  explanatory  paragraph  stating  that  there  is
substantial  doubt about our ability to continue as a going concern.  Consistent
with our business plan, we plan on reaching satisfactory  negotiated settlements
with our outstanding creditors,  vigorously defending against any further appeal
that  may be made  against  our  currently  successful  defense  of the law suit
brought  against us by  certain  of our  shareholders,  bringing  our  financial
records  and SEC  filings up to date,  seeking a listing on the over the counter


                                       41
<PAGE>

bulletin board, raising additional debt and, or, equity to fund 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 is can be no  assurance  that this  series of events  can be  successfully
completed,  that any such business  will be  identified or that any  stockholder
will  realize  any  return on their  shares  after such a  transaction  has been
completed.  In particular  there is no assurance  that any such business will be
located or that any  stockholder  will  realize any return on their shares after
such a transaction. 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.  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.  Although  there is no  assurance,  we believe we can  successfully
complete an acquisition  or merger,  which will enable us to continue as a going
concern.

OUR EXISTING FINANCIAL  RESOURCES ARE INSUFFICIENT TO MEET OUR ONGOING OPERATING
EXPENSES

We have no sources of income at this time and no existing  cash balances to meet
our ongoing operating  expenses.  In the short term, unless we are able to raise
additional debt and, or, equity we shall be unable to meet our ongoing operating
expenses.  On a longer term basis, we plan to acquire an entity with experienced
management and the opportunities for growth in exchange for shares of our common
stock and are  dependent  on  achieving a  successful  merger with a  profitable
company.  No  assurances  can be given that we will be  successful  in acquiring
operations,   generating   revenues  or  reaching  or   maintaining   profitable
operations.

WE INTEND TO PURSUE THE ACQUISITION OF AN OPERATING BUSINESS

Our sole strategy is to acquire an operating business. Successful implementation
of this  strategy  depends  on our  ability to  identify a suitable  acquisition
candidate,   acquire  such  company  on  acceptable   terms  and  integrate  its
operations.  In  pursuing  acquisition  opportunities,  we  compete  with  other
companies  with similar  strategies.  Competition  for  acquisition  targets may
result in  increased  prices of  acquisition  targets and a  diminished  pool of
companies  available  for  acquisition.  Acquisitions  involve a number of other
risks,  including  risks of  acquiring  undisclosed  or  undesired  liabilities,
acquired  in-process  technology,   stock  compensation  expense,  diversion  of
management attention, potential disputes with the seller of one or more acquired
entities and possible  failure to retain key  acquired  personnel.  Any acquired
entity or assets may not perform  relative to our  expectations.  Our ability to
meet these challenges has not been established.


SCARCITY OF, AND COMPEETITION FOR, BUSINESS OPPORTUNITIES AND COMBINATIONS

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.  Nearly  all such
entities have significantly greater financial resources, technical expertise and
managerial  capabilities than us and, consequently,  we will be at a competitive
disadvantage in identifying  possible  business  opportunities  and successfully
completing  a business  combination.  Moreover,  we will also compete in seeking
merger or acquisition candidates with numerous other small public companies.  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.


                                       42
<PAGE>

WE HAVE NOT EXECUTED ANY FORMAL  AGREEMENT FOR A BUSINESS  COMBINATION  OR OTHER
TRANSACTION AND HAVE ESTABLISHED NO STANDARDS FOR BUSINESS COMBINATIONS

We have not executed any formal  arrangement,  agreement or  understanding  with
respect to engaging in a merger with,  joint  venture with or  acquisition  of a
private or public  entity.  There can be no assurance that we will be successful
in identifying and evaluating suitable business opportunities or in concluding a
business combination. We have not identified any particular industry or specific
business  within an industry  for  evaluation.  There is no assurance we will be
able to negotiate a business combination on terms favorable,  if at all. We have
not  established a specific  length of operating  history or specified  level of
earnings,  assets,  net worth or other  criteria  which we will require a target
business opportunity to have achieved, and without which we would not consider a
business combination. Accordingly, we may enter into a business combination with
a business opportunity having no significant operating history,  losses, limited
or no  potential  for  earnings,  limited  assets,  negative  net worth or other
negative characteristics.

REDUCTION OF PERCENTAGE  SHARE  OWNERSHIP  FOLLOWING  BUSINESS  COMBINATION  AND
DILUTION TO STOCKHOLDERS

Our  primary  plan of  operation  is based  upon a business  combination  with a
private concern which, in all likelihood,  would result in us issuing securities
to stockholders of such private company.  The issuance of previously  authorized
and unissued  shares of our common stock would result in reduction in percentage
of shares  owned by present  and  prospective  stockholders  and may result in a
change in control or management.  In addition,  any merger or acquisition can be
expected to have a significant  dilutive  effect on the percentage of the shares
held our stockholders.

WE ARE OUT OF COMPLIANCE WITH THE LISTING  REQUIREMENTS OF THE NASDAQ MARKET AND
HAVE NOT BEEN LISTED ON THE OVER THE COUNTER BULLETIN BOARD

 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.  Effective  as of January 4, 2001,  the shares of our common
stock was  delisted  from the Nasdaq.  As we were in arrears in our filings with
the SEC the shares of our common stock was 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.  Failure
obtain a listing on the over the counter bulletin board may adversely  effective
our  ability  to  acquire  another  entity  with   experienced   management  and
opportunities  for growth in return for shares of our common stock in an attempt
to create value for our shareholders.


                                       43
<PAGE>

THE SEC HAS INDICATED THAT IT MAY DEREGISTER SHARES OF OUR COMMON STOCK

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

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

In January 2006 we were contacted by the SEC's Office of Enforcement Liaison who
notified us that while they  recognized the progress we had made in bringing our
SEC filings up to date, they still considered us to be delinquent in our filings
because of our  failure to  complete  filings in respect of the period  April 1,
2001 through June 30, 2003. We are currently  establishing  the likely costs and
practicality  of completing the SEC filings for the period April 1, 2001 through
June 30, 2003. In the meantime  there  continues to be a risk that our shares of
common stock may be deregistered by the SEC's Office of Enforcement  Liaison due
the  continued  delinquency  of our SEC  filings  for the  period  April 1, 2001
through June 30, 2003.  In July 2006,  on the basis of further  audit work and a
review of subsequent  events performed by O'Donnell,  O'Donnell has been able to
complete the audit of our June 30, 2001 financial statements as set out on pages
57  through  97  below.  We are  currently  establishing  the  likely  costs and
practicality of completing the SEC filings and related financial  statements for
the period July 1, 2001 through June 30, 2003.

WE HAVE A  MAJORITY  STOCKHOLDER  WHO HAS THE  ABILITY  TO  EFFECTIVELY  CONTROL
SUBSTANTIALLY ALL ACTIONS TAKEN BY STOCKHOLDERS

On April 22, 2005, our sole  director,  David J Cutler entered into an agreement
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI creditors, subject to due diligence, to invest up to $50,000 cash
in us for the benefit of our  creditors  in return for a number of shares of our
common stock to be  determined.  Following  the  completion of the due diligence
process  during the three  months ended  December  31, 2005,  it was agreed with
Frank G Blundo,  Jr. P.C.,  trustee of the  assignment for the benefit of Aspeon
and CCI creditors, that Mr. Cutler would invest $20,000 in us for the benefit of
Aspeon and CCI creditors in return for a number of shares of our common stock to
be  determined.  Accordingly  during the three  months  ended  December 31, 2005
$20,000  which had been  placed in escrow  with Frank G Blundo,  Jr. P.C. by Mr.
Cutler was  released  for the  benefit of Aspeon and CCI  creditors.  On May 31,
2006,  based on an  independent  third  party  valuation,  the  majority  of our
independent  directors  approved  the issue of  10,536,775  shares of our common
stock to Mr.  Cutler for the  conversion  of  $14,243  of his debt into  equity.
Following  the issue of these shares of our common stock Mr.  Cutler owned 52.7%
of  our  total  authorized  and  issued  share  capital  and  still  had a  loan
outstanding to us of approximately $175,000.


                                       44
<PAGE>

Also in April  2005 Mr.  Cutler  entered  into an  agreement  with Mr.  Stack to
purchase all of Mr. Stack's shares of our common stock. However, it has not been
possible to complete this  transaction  as Mr. Stack has not been able to locate
the share certificates for the majority of the shares in question.

Mr.  Cutler  now owns more  than 50% of our  issued  shares of common  stock and
consequently is able to effectively  control  substantially all actions taken by
our  stockholders,  including the election of directors.  Such  concentration of
ownership  could also have the effect of  delaying,  deterring  or  preventing a
change in control that might  otherwise be  beneficial to  stockholders  and may
also discourage  acquisition bids for us and limit the amount certain  investors
may be willing to pay for shares of common stock.

THE PRICE OF OUR COMMON STOCK COULD BE HIGHLY VOLATILE

Our common  shares is currently  traded on the Gray Sheets.  Our common stock is
subject to price volatility,  low volumes of trades and large spreads in bid and
ask prices  quoted by market  makers.  Due to the low volume of shares traded on
any trading day,  persons buying or selling in relatively  small  quantities may
easily  influence  prices of our common  stock.  This low volume of trades could
also cause the price of our stock to fluctuate  greatly,  with large  percentage
changes in price  occurring  in any trading day  session.  Holders of our common
stock  may also not be able to  readily  liquidate  their  investment  or may be
forced to sell at depressed  prices due to low volume  trading.  If high spreads
between  the bid and ask  prices  of our  common  stock  exist  at the time of a
purchase,  the  stock  would  have to  appreciate  substantially  on a  relative
percentage  basis for an  investor  to recoup  their  investment.  Broad  market
fluctuations  and general  economic and political  conditions may also adversely
affect the market price of our common  stock.  No assurance can be given that an
active  market in our common  stock will develop or be  sustained.  If an active
market does not  develop,  holders of our common  stock may be unable to readily
sell the shares they hold or may not be able to sell their shares at all.


WE DO NOT ANTICIPATE PAYING CASH DIVIDENDS ON OUR COMMON STOCK

We do not  anticipate  paying  any cash  dividends  on our  common  stock in the
foreseeable future.

ITEM 7. FINANCIAL STATEMENTS

Due to the dispute with our previous  auditors,  PWC, and our lack of funds, the
last Form 10-K we filed on a current basis was filed in respect of our financial
year ended June 30, 2000 and the last Form 10-Q we filed on a current  basis was
in respect of the three and nine month period  ended March 31, 2001.  No further
filings were completed until October 28, 2005 when, between October 28, 2005 and
November  15,  2005,  we filed all  required  SEC filings and related  financial
statements for the period July 1, 2003 through September 30, 2005.  However,  we
had not completed all required SEC filings and related  financial  statements in
respect  of the period  April 1, 2001  through  June 30,  2003  although  we had
included substantial  financial extracts and all material disclosures in respect
of these  periods in the  filings  we had  completed  in  respect of  subsequent
periods.  We believed the cost to  shareholders  in completing  these filings in
respect  of these  earlier  periods  exceeded  any  benefit to  shareholders  in
completing these filings as the information in these filings was at least two to
four years old, no longer  relevant to our  shareholders  given our  decision to
cease  all  trading  operations  made on June 30,  2003  and  that all  material
information  in respect of these earlier  periods has been made available to our
shareholders in our SEC filings for later periods all filings were completed

In January 2006 we were contacted by the SEC's Office of Enforcement Liaison who
notified us that while they  recognized the progress we had made in bringing our
SEC filings up to date, they still considered us to be delinquent in our filings
because of our  failure to  complete  filings in respect of the period  April 1,
2001 through June 30, 2003.


                                       45
<PAGE>

In July  2006,  on the basis of further  audit  work and a review of  subsequent
events performed by O'Donnell,  O'Donnell has been able to complete the audit of
our June 30, 2001 financial  statements as set out on pages 57 through 97 below.
We have  also  included  unaudited  and  audited  extracts  from  our  financial
statements  for the period July 1, 2001 through June 30, 2005 on pages 54 though
56 below.

We are currently  establishing  the likely costs and  practicality of completing
the SEC  filings and related  financial  statements  for the period July 1, 2001
through June 30, 2003.

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

In September 2000, at the insistence of our auditors,  PWC, we announced that we
would  restate  our  first  quarter  2000  financial  statements  as a result of
accounting misstatements.

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

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

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 at that time.

In August 2001, we, together with our Chief Executive Officer, filed a six count
complaint  against our former  auditors,  PricewaterhouseCoopers  LLP,  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 $2.3 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.

As reported in the Form 8-K filed on September 15, 2005, effective September 12,
2005 we appointed O'Donnell as auditors in succession to BDO.

We had no disagreements with BDO or O'Donnell.

ITEM 8A    CONTROLS and PROCEDURES

We conducted an evaluation of the  effectiveness  of the design and operation of
our   disclosure   controls  (as  defined  in  Exchange  Act  Rules   13a-14(c))
("Controls")  as of June 30, 2001 (the  "Evaluation  Date").  The evaluation was
supervised  by David J.  Cutler,  our  Chief  Executive  Officer  and  Principal
Accounting Officer, to test the effectiveness of Controls. Controls are designed
to reasonably  assure that  information  required to be disclosed in our reports
filed  under  the  Exchange  Act,  such  as this  Annual  Report,  is  recorded,
processed, summarized and reported within the time periods as required. Controls
are also designed to reasonably  assure that such information is accumulated and
communicated to our management.

Management does not expect that the Controls will prevent all errors.  No matter
how well designed,  Controls cannot provide absolute assurance that the system's
objectives will be met. Due to resource constraints, the design of Controls must
be  considered  relative to their  costs.  No  evaluation  can provide  absolute
assurance  that  all of the  Company's  control  issues  will  be  detected  and
corrected.  Controls can be circumvented by individual acts, by collusion of two
or more  people  or by  override  of the  controls.  We have  had  only  limited
operations as of the Evaluation  Date and the Controls in place at that time may
be inadequate for future operations.


                                       46
<PAGE>

After evaluating the effectiveness of our Controls, Mr. Cutler concluded that as
of the Evaluation  Date, our Controls were adequate and effective to ensure that
material  information  relating  to the  Company  would be made known to them by
individuals within those entities,  particularly during the period in which this
Form  10-KSB  was being  prepared.  There  were no  significant  changes  in our
internal  controls  or in other  factors  that  could  significantly  affect our
disclosure  controls and procedures  subsequent to the Evaluation  Date, nor any
significant  deficiencies or material weaknesses in such disclosure controls and
procedures requiring corrective actions. As a result, no corrective actions were
taken.  However,  it should be noted that we intend to acquire another operating
business.   The  Controls  necessary  for  such  new  operations  will,  in  all
likelihood, be significantly different from the current Controls.


                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT

DIRECTORS AND EXECUTIVE OFFICERS

During the fiscal year ended June 30, 2001 our  executive officers and directors
of the Company and were as follows:

<TABLE>
<CAPTION>

 NAME                             AGE                     POSITION
-------                         -------                   --------------
<S>                               <C>      <C>
Richard P. Stack................  36       President, Chief Executive Officer and Director

Edmund Brooks...................  56       Chief Executive Officer of Javelin Systems and Director

Timothy M. Feeney...............  36       Chief Financial Officer and Chief Administrative Officer

Peter G. Spitzer................  45       Chief Technology Officer

Andrew F. Puzder (1)(2).........  52       Director

Jay L. Kear (1)(2)..............  64       Director

Thomas Nolan (2)................  59       Director
</TABLE>

(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.

RICHARD P. STACK,  age 36, had been our President,  Chief Executive  Officer and
director since our inception in September  1995.  Prior to that time,  from 1991
through September 1995, Mr. Stack was Managing Director of Hi-Technology Supply,
a manufacturer and distributor of personal  computers and components  located in
South Africa,  which he founded and grew to  approximately  $6 million in annual
sales  and 15  employees  prior  to its  sale to a South  Africa-based  personal
computer and component  manufacturing company. From 1988 through 1991, Mr. Stack
was employed by Pan American  Airlines in technical  management  positions.  Mr.
Stack holds a B.A. degree from the University of California at Berkeley.

EDMUND BROOKS,  age 56, was elected one of our directors in May 2000. Mr. Brooks
was Chief Executive Officer of Javelin Systems, a division of the Company, after
having served as Executive  Vice President of Sales for Aspeon  Solutions,  Inc.
("Aspeon Solutions") a wholly-owned subsidiary of ours. Mr. Brooks joined Aspeon
Solutions in July 1999,  prior to that time Mr.  Brooks served from 1994 through
1999 as the Corporate Chief  Information  Officer and as Chief Operating Officer
of the AFC Management Services Corp, a shared services  organization  supporting
the AFC Brands  (Popeyes  Fried  Chicken,  Churchs Fried  Chicken,  Cinnabon and
Seattle's Best Coffee).  Prior to joining AFC, Mr. Brooks was with IBM from 1969
through 1994 as Managing Principal in IBM's Consulting Group, a group conducting
engagements  with numerous large retail food service chains in the United States
and  abroad.  Mr.  Brooks  received  his  undergraduate   degree  in  Electrical
Engineering  from  Penn  State  and  his  MBA in  International  Marketing  from
Pepperdine University.


                                       47
<PAGE>

TIMOTHY  M.  FEENEY,  age 36,  had been our Chief  Financial  Officer  and Chief
Administrative  Officer  since June 2000,  and had served as Vice  President  of
Finance and Administration for our ASP Services business since March 2000. Prior
to joining  us,  Mr.  Feeney  was  President  of The  Platinum  Group  providing
strategic  planning  services  for  growth-oriented,   fast-paced   foodservice,
technology  and  consulting  organizations.  Mr. Feeney  served in  senior-level
financial  management  positions  from January 1996 through  December  1998 with
several  foodservice  and  restaurant  companies  including  Jeepers!  and  DAKA
International, Inc. Prior to January 1996, Mr. Feeney served as an audit manager
in the  Boston  office  of  Deloitte  &  Touche  LLP  where  he  specialized  in
manufacturing,  high-technology and  telecommunications  industries.  Mr. Feeney
held a B.A. in Accountancy  from the Bentley  College and is a Certified  Public
Accountant in the Commonwealth of Massachusetts.

PETER G.  SPITZER,  age 45,  joined  us in March  2000 as our  Chief  Technology
Officer.  He has 26 years of experience in information  technology having served
in the vendor,  service provider,  consulting and user environments in a variety
of leadership roles. Most recently, from 1999 through 2000, Dr. Spitzer was Vice
President  of  Strategic  Systems  for  Dendrite  International,  where he built
Dendrite's analytics and data management  division.  From 1990 through 1999, Dr.
Spitzer was a consultant in advanced  technology  and business  practices.  From
1988 through 1990,  Dr. Spitzer  served as Chief  Information  Officer for Texas
Children's  Hospital.  Dr.  Spitzer  held an MBA  from the  UCLA  Executive  MBA
Program,  MD with honors from Harvard  Medical  School,  a Masters of Science in
Electrical  Engineering and Computer Science from MIT, and a BS in Bioelectrical
Engineering (with a minor in Economics) from MIT.

ANDREW F. PUZDER,  age 52, was elected as one of our directors in November 1996.
Mr.  Puzder was President  and Chief  Executive  Officer of CKE Inc., a New York
Stock Exchange  listed  company,  President and Chief  Executive  Officer of CKE
Hardee's  Food  Systems,  Inc.,  and a director of Pierre  Foods Inc.  and Santa
Barbara  Restaurants  Group.  Mr.  Puzder was also a partner on leave at the law
firm of Stradling,  Yocca,  Carlson & Rauth.  Mr. Puzder received his J. D. from
the Washington University School of Law.

JAY L. KEAR,  age 64, was elected as one of our directors in August 1996.  Since
1988, Mr. Kear had represented  Stack  Enterprises in working with and investing
in high technology companies.  From 1988 through 1993, Mr. Kear was also engaged
in similar  work for the  Noorda  Family  Trust.  Prior to 1988,  Mr.  Kear held
various sales,  marketing,  engineering,  and general management  positions with
private and public companies in the high technology  sector. Mr. Kear received a
B.S. degree from the University of Southern California.

THOMAS NOLAN, age 59, was elected as one of our directors in September 2000. Mr.
Nolan was  President  and Chief  Executive  Officer  and  member of the board of
directors of Xcert Inc.  Since 1985,  Mr. Nolan served as a business  consultant
for  numerous  Silicon  Valley  high-technology  companies,   including  Visible
Interactive, DB Star, InterLinear Technology,  Beckman Display,  Pixelcraft, The
Windward  Group,  Seismic  Entertainment,  Phaser  Systems and Xerox  Technology
Ventures.  From 1974 to 1984 Mr. Nolan was Chief  Financial  Officer of Randtron
Systems. Prior to 1974, Mr. Nolan was with Arthur Young & Company, a predecessor
to  Ernst & Young.  Mr.  Nolan  served  as an  officer  in the US Navy and was a
graduate  of  Texas  Christian  University  with a  B.B.A.  degree  in  business
administration. He was a certified public accountant.

Timothy  M.  Feeney   resigned  as  our  Chief   Financial   Officer  and  Chief
Administrative Officer in December 2000.

On  November  13,  2001  Richard  P Stack  resigned  as our  Chairman  and Chief
Executive Officer but remained as a director.  Jay L Kear was appointed Chairman
and Robert Nichol was appointed as a director and Chief Executive Officer.

Andrew F Puzder resigned as a director on March 25, 2002.

Thomas Nolan resigned as a director in July 2002.

Horace Hertz was appointed as a director on September 5, 2002.

Edmund Brooks resigned as a director during September, 2002.

Robert  Nichols  resigned  as a director  of the  Company,  President  and Chief
Executive Officer effective  September 18, 2002 and Richard P Stack, an existing
director was appointed as President and Chief Executive Officer.


                                       48
<PAGE>

Jay L Kear and Horace Hertz resigned as directors on June 30, 2003.

David Cutler was appointed as a director in April 2005.

Richard P Stack resigned as a director in April 2005.

Wesley F Whiting and Redgie Green were appointed as directors in March 2006.


Effective March 31, 2006, our directors and officers were:


             NAME                AGE             POSITION

      David J. Cutler            49      President, Chief Executive Officer,

      Wesley F Whiting           73      Secretary and Director

      Redgie Green               51      Director

David J. Cutler - President, Chief Executive Officer, Chief Financial Office and
Director.  Mr. Cutler became our sole director and officer on April 22, 2005.Mr.
Cutler has more than 20 years of experience in international finance, accounting
and  business  administration.  He held  senior  positions  with  multi-national
companies such as Reuters Group Plc and the Schlumberger  Ltd. and has served as
a director for two British  previously  publicly quoted companies -- Charterhall
Plc and  Reliant  Group  Plc.  From  March 1993  until  1999,  Mr.  Cutler was a
self-employed  consultant providing accounting and financial advice to small and
medium-sized  companies in the United Kingdom and the United States.  Mr. Cutler
was  Chief  Financial  Officer  and  subsequently  Chief  Executive  Officer  of
Multi-Link Telecommunications, Inc., a publicly quoted voice messaging business,
from 1999 to 2005. Mr. Cutler has a masters degree from St. Catherine College in
Cambridge,  England  and  qualified  as a British  Chartered  Accountant  and as
Chartered Tax Advisor with Arthur Andersen & Co. in London.  He was subsequently
admitted  as a  Fellow  of the UK  Institute  of  Chartered  Accountants.  Since
arriving in the United  States Mr.  Cutler has  qualified as a Certified  Public
Accountant,  a Fellow of the AICPA  Institute of  Corporate  Tax  Management,  a
Certified  Valuation Analyst of the National  Association of Certified Valuation
Analysts and obtained an executive MBA from Colorado State University.

Wesley F. Whiting - Secretary and Director.  Mr Whiting became our secretary and
director on March 13, 2006. Mr. Whiting was President,  director,  and Secretary
of Berge Exploration, Inc. (1978-88) and President, Vice President, and director
of NELX, Inc. (1994-1998),  and was Vice President and director of Intermountain
Methane  Corporation  (1988-91),  and  President  of Westwind  Production,  Inc.
(1997-1998).  He was a director of Kimbell deCar  Corporation  from 1998,  until
2000 and he has been  President and a director of Dynadapt  System,  Inc.  since
1998.  He was a Director of Colorado  Gold & Silver,  Inc. from 1999 to 2000. He
was President and director of Business  Exchange Holding Corp. from 2000 to 2002
and Acquisition Lending, Inc. (2000 to 2002). He was director and Vice President
of Utilitec, Inc. from 1999 to 2002, and has been Vice President and director of
Agro  Science,  Inc.  since  2001.  He was  President  and  director  of Premium
Enterprises,  Inc. From October 2002 to December 31, 2002. He is Vice  President
and director of Evergreen  Associates,  Inc. and Resource  Science,  Inc. He was
appointed  Director  and  Secretary  of BSA  SatelLINK,  Inc.  in  2002.  He was
President and Director of Fayber Group, Inc. from 2003 to 2005 when he resigned.
He has also been  Director of Life USA,  Inc.  since 2003.  He was a Director of
Baymark   Technologies,   Inc.  and  was  appointed  as  a  Director  of  Cavion
Technolgies, Inc. in March 2006.

Redgie  Green -  Director.  Mr Green  became our  director on March 13, 2006 Mr.
Green has been Secretary and Director of Dynadapt  System,  Inc. since 1998. Mr.
Green has been  co-owner  and operator of Green's B&R  Enterprises,  a wholesale
donut  baker  since 1983.  He has been an active  investor in small  capital and
high-tech  ventures  since 1987.  Mr.  Green was a director  of Colorado  Gold &
Silver,  Inc. in 2000. He was a director for Houston  Operating  Company in late
2004 until  December  2004. He was recently  elected as a director for Mountains
West  Exploration,  Inc. He was  Secretary,  Treasurer  and  Director of Baymark
Technologies,  Inc and apppointed as a Director of Cavion  Technolgies,  Inc. in
March 2006.


                                       49
<PAGE>

COMMITTEES OF THE BOARD OF DIRECTORS

In the  ordinary  course  of  business,  the  board  of  directors  maintains  a
compensation committee and an audit committee

The  primary  function  of the  compensation  committee  is to  review  and make
recommendations  to the board of  directors  with  respect to the  compensation,
including bonuses,  of our officers and to administer the grants under our stock
option plan.

The  functions  of the  audit  committee  are to  review  the scope of the audit
procedures employed by our independent  auditors, to review with the independent
auditors our  accounting  practices  and policies and  recommend to whom reports
should be submitted,  to review with the independent  auditors their final audit
reports,  to review  with our  internal  and  independent  auditors  our overall
accounting and financial controls,  to be available to the independent  auditors
during  the year for  consultation,  to  approve  the audit fee  charged  by the
independent  auditors,  to report to the board of directors with respect to such
matters and to recommend the selection of the independent auditors.

During the fiscal year ended June 30, 2001, Messrs Pudzer, Kear and Nolan served
on the  audit  committee  and  Messrs.  Pudzer  and  Kear  on  the  compensation
committee.  However, following the resignation of Messrs. Kear and Hertz on June
30,  2003,  we have had no  directors  as members of the  compensation  or audit
committee.

In the absence of a separate audit committee our board of directors functions as
audit  committee and performs some of the same functions of an audit  committee,
such as recommending a firm of independent certified public accountants to audit
the  annual   financial   statements;   reviewing   the   independent   auditors
independence,  the financial  statements  and their audit report;  and reviewing
management's administration of the system of internal accounting controls.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section  16(a)  of  the  Securities  Exchange  Act  requires  our  Officers  and
Directors, and persons who own more than 10% of a registered class of our equity
securities,  to file reports of ownership and changes in ownership with the SEC.
Officers,  directors  and  greater  than 10%  shareholders  are  required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file. Based
solely on our review of copies of such  reports  received,  and  representations
from certain  reporting  persons,  we believe that, during the fiscal year ended
June 30, 2001, all Section 16(a) filing requirements applicable to our officers,
directors and greater than 10% beneficial  owners were filed in compliance  with
all  applicable  requirements  with the  exception  of  Richard P Stack,  Edmund
Brooks, Andrew F Puzder, Jay Kear and Thomas Nolan who had not filed.

CODE OF ETHICS

A code of ethics relates to written  standards  that are reasonably  designed to
deter wrongdoing and to promote;

-    Honest and ethical  conduct,  including  the ethical  handling of actual or
     apparent   conflicts  of  interest   between   personal  and   professional
     relationships;

-    Full, fair, accurate,  timely and understandable  disclosure in reports and
     documents that are filed with, or submitted to, the SEC and in other public
     communications made by an issuer;


                                       50
<PAGE>

-     Compliance with applicable governmental laws, rules and regulations;

-     The prompt internal reporting  of violations of the code to an appropriate
person or persons identified in the code; and

-     Accountability for adherence to the code.

Due to the  limited  scope of our  current  operations,  we have not  adopted  a
corporate  code of ethics  that  applies  to our  principal  executive  officer,
principal accounting officer, or persons performing similar functions.


ITEM 10. EXECUTIVE COMPENSATION

The  following  table  shows for the three  fiscal  year  ended  June 30,  2001,
compensation  awarded or paid to, or earned by, the  Company's  Chief  Executive
Officer and the two other most highly compensated executive officers that earned
more than $100,000 in the three fiscal years ended June 30, 2001  (collectively,
the "Named Executive Officers"):

<TABLE>
<CAPTION>

                                            ANNUAL COMPENSATION                         LONG-TERM
                                            -------------------                        COMPENSATION
                                           SALARY            BONUS                   AWARDS SECURITIES
                                                                                                  ALL OTHER
NAME AND PRINCIPAL POSITION          YEAR       ($)           ($)       UNDERLYING OPTIONS(2)   COMPENSATION(3)
---------------------------        --------   --------      --------    ---------------------   ---------------
<S>                                <C>        <C>           <C>         <C>                     <C>
 Richard P. Stack ................   2001     $250,000            --                       --                --
President, Chief Executive           2000     $222,987      $ 25,000                   25,000                --
  Officer and Director               1999     $187,887            --                   75,000                --

Horace M. Hertz(1) ..............    2001           --            --                       --                --
  Chief Financial Officer            2000     $170,833      $ 12,500                  125,000           $15,385
                                     1999     $143,333      $ 20,000                  110,000                --

Robert D. Nichols(1) ............    2001           --            --                       --                --
Chief Operating Officer              2000     $169,231            --                   75,000                --
                                     1999     $ 37,500      $152,909                   75,000                --
</TABLE>


                                       51
<PAGE>

(1) Messrs.  Hertz and Nichols  employment as Chief Financial  Officer and Chief
Operating Officer, respectively, were terminated in June 2000.

(2) Messrs.  Stack,  Hertz and Nichols  were also granted  800,000,  500,000 and
500,000  options,  respectively,  to  acquire  shares of common  stock of Aspeon
Solutions,  Inc. at a strike price of $1.50 per share. The options vest in equal
monthly installments over thirty-six months.

(3) Represents severance payments made to Mr. Hertz in June 2000.

In July 2002  Richard P Stack  agreed to the  cancellation  of all his  existing
stock  options and was issued with  250,000 new stock  options  with an exercise
price of $0.07. The options had a five year term and vested immediately.

In September  2002 Richard P Stack was issued with 600,000 stock options with an
exercise  price of  $0.06.  The  options  had a ten year  term and  vested  on a
straight line basis over 36 months.

All Mr.  Stack's stock options were  cancelled,  unexercised,  subsequent to his
resignation as our sole director and officer on April 22, 2005.

EMPLOYMENT AND CONSULTING AGREEMENTS

CCI and Robert  Nichols  entered into an Employment  Agreement  dated January 1,
1998 (the "Nichols  Employment  Agreement").  The Nichols  Employment  Agreement
expired on December  31,  2002 and  provided  for  payment to Mr.  Nichols of an
annual base salary of  $100,000.  Mr.  Nichols was also  entitled to a quarterly
bonus of $6,250  and a  year-end  bonus of  approximately  $31,750,  subject  to
adjustment  based on CCI's  profitability  for the  applicable  fiscal year.  In
addition to his base salary and bonuses, Mr. Nichols was also reimbursed for all
reasonable  and  necessary  travel  and  other  business  expenses  incurred  in
connection  with the  performance of his duties.  In the event that Mr. Nichols'
employment  with  CCI was  terminated  for  cause  (as  defined  in the  Nichols
Employment  Agreement) or in the event of a voluntary  termination of employment
by Mr.  Nichols  following  a change  in  control  (as  defined  in the  Nichols
Employment  Agreement),  Mr. Nichols was entitled to his base salary through the
date of termination.  If Mr. Nichols was terminated without cause (as defined in
the Nichols Employment Agreement),  then Mr. Nichols would have been entitled to
a lump sum  equal to Mr.  Nichol's  annual  base  salary.  On June 30,  2000 Mr.
Nichols' employment with the Company was terminated.

DIRECTOR COMPENSATION

The members of the Board received cash compensation of $2,500 plus reimbursement
of their expenses  incurred in connection  with  attendance at Board meetings in
accordance with Company policy.

STOCK OPTION PLAN

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


                                       52
<PAGE>

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 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 June 30, 2004:
                                                                     WEIGHTED
                                                                     AVERAGE
                                                   OPTIONS        EXERCISE PRICE

FOR OPTIONS GRANTED AT FAIR MARKET
VALUE ON THE DATE OF GRANT:
Options outstanding beginning of period......      850,000               $0.063
  Granted..........................                     --                  --
  Exercised........................                     --                  --
  Canceled.........................                     --                  --
                                                 -----------             -------
Options outstanding................                850,000               $0.063
                                                 ===========             =======
Options exercisable................                616,667               $0.063
                                                 ===========             =======

The range of exercise prices for options  outstanding and options exercisable at
June 30, 2004 were as follows:



                                       53
<PAGE>

<TABLE>
<CAPTION>

                          OPTIONS OUTSTANDING                             OPTIONS EXERCISABLE
                       ---------------------------                      -----------------------
RANGE OF                                     WEIGHTED AVERAGE                                      WEIGHTED
 EXERCISE PRICE        OUTSTANDING           REMAINING LIFE        EXERCISABLE               EXERCISE PRICE
---------------        -----------           ----------------      -----------               --------------
<S>                    <C>                   <C>                   <C>                       <C>
$0.07..........          250,000                  3.0                250,000                      $ 0.07
$0.06..........          600,000                  8.8                366,667                        0.06
                       -----------                ---              ----------                     -------
                         850,000                  7.0                616,667                     $ 0.063
                       ===========                ===              ==========                     =======
</TABLE>

All the above options were cancelled  during the fiscal year ended June 30, 2005
following the resignation of Richard P Stack as our director and Chief Executive
Officer in April 2005.

Pro Forma  Stock-Based  Compensation  Disclosures -- We apply APB Opinion 25 and
related  interpretations in accounting for our stock options that are granted to
employees.  Accordingly,  no compensation cost has been recognized for grants of
options to  employees  since the  exercise  prices were not less than the quoted
value of our  common  stock on the  grant  dates.  Had  compensation  cost  been
determined  based on the fair value at the grant dates for awards under the Plan
consistent  with the method of SFAS No. 123, our net income  (loss) and earnings
(loss) per share would have been  unchanged as all expenses in respect of issued
stock options were immaterial.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  tables  set  forth  certain  information   regarding  beneficial
ownership of our common stock, as of November 27, 2000 and March 31, 2006, by:

   o      each person who is known by us to own beneficially more than 5% of our
          outstanding common stock,

   o      each of our named executive officers and directors, and

   o      all executive officers and directors as a group.

Shares of common stock not outstanding but deemed  beneficially  owned by virtue
of the right of an  individual  to acquire the shares of common  stock within 60
days are treated as outstanding  only when determining the amount and percentage
of common stock owned by such individual.  Except as noted below the table, each
person has sole voting and investment power with respect to the shares of common
stock shown.

As at November 27, 2000:

                                                     NUMBER OF      PERCENT OF
                                                      SHARES        OUTSTANDING

    Richard P. Stack(3)                               798,041              8.3%
    Robert D. Nichols(4)                              325,249              3.4%
    Horace Hertz(5)                                   116,666              1.2%
    Jay L Kear(6)                                      70,054               *
    Andrew F. Puzder(7)                                59,054               *
    Edmund Brooks(8)                                   53,844               *
    Thomas Nolan(9)                                     5,555               *

*  Less than one percent

(1) Mr. Stack has an address c/o the Company's  principal  executive  offices at
2460 West 26th Avenue, Suite 380-C, Denver, Colorado, 80211.

2)  Beneficial  ownership  is  determined  in  accordance  with the rules of the
Securities and Exchange  Commission (the "SEC") and generally includes voting or
investment  power with respect to  securities.  Except as indicated by footnote,
and subject to community  property laws where  applicable,  the persons named in
the table above have sole voting and investment power with respect to all shares
of Common Stock shown as  beneficially  owned by them.  Percentage of beneficial
ownership  is based on  9,436,225  shares  of  Common  Stock  outstanding  as of
November 27, 2000.

3) Includes 9,700 shares owned by Mr. Stack's  children,  22,200 shares owned by
Mr. Stack's father and 5,500 shares owned by Mr. Stack's  mother.  Also includes
150,000  shares  subject to options  exercisable  within 60 days of November 27,
2000.

4)  Includes  58,249  shares  subject to options  exercisable  within 60 days of
November 27, 2000.


                                       54
<PAGE>

(5) Includes 116,666 shares subjection to options  exercisable within 60 days of
November 27, 2000.

(6)  Includes  5,000 shares held by the Jay Louis Kear family Trust of which Mr.
Kear is the trustee and 7,000 shares owned by an individual  retirement  account
of which Mr. Kear is the trustee. Also includes 58,054 shares subject to options
exercisable within 60 days of November 27, 2000.

(7) Includes  58,054  shares  subject to options  exercisable  within 60 days of
November 27, 2000.

(8) Includes  53,333  shares  subject to options  exercisable  within 60 days of
November 27, 2000.

(9)  Includes  5,555  shares  subject to options  exercisable  within 60 days of
November 27, 2000.

10) Includes  468,245  shares subject to options  exercisable  within 60 days of
November 27, 2000.

As at June 30, 2006:

<TABLE>
<CAPTION>

                                                                 NUMBER OF      PERCENT OF
  NAME AND ADDRESS OF BENEFICIAL OWNER                             SHARES      OUTSTANDING
<S>                                                           <C>            <C>
    David J. Cutler (2)                                       10,536,775             52.7%

    Wesley F Whiting (2)                                              --               --%

    Redgie Green (2)                                                  --               --%

                                                              ------------   ------------
    All executive officers and directors as a group.          10,536,775             52.7%

    Richard P Stack (1) (3)                                      679,700              3.4%
</TABLE>

(1) Mr. Stack's address is c/o Aspeon, Inc. 2460 West 26th Avenue,  Suite 380-C,
Denver, Colorado, 80211.

(2) Messrs  Cutler,  Whiting and Green's  address is c/o Aspeon,  Inc. 2460 West
26th Avenue, Suite 380-C, Denver, Colorado, 80211.

In April 2005 Mr.  Cutler  entered into an agreement  with Mr. Stack to purchase
all of Mr. Stack's shares of our common stock. However, it has not been possible
to complete this  transaction as Mr. Stack has not been able to locate the share
certificates for the majority of the shares in question.

As reported above, on April 22, 2005, our sole director,  David J Cutler entered
into an agreement with Frank G Blundo,  Jr. P.C.,  trustee of the assignment for
the benefit of Aspeon and CCI creditors,  subject to due diligence, to invest up
to $50,000 cash in us for the benefit of our creditors in return for a number of
shares of our common stock to be determined. Following the completion of the due
diligence process during the three months ended December 31, 2005, it was agreed
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI  creditors,  that Mr.  Cutler would invest  $20,000 in us for the
benefit  of Aspeon  and CCI  creditors  in return  for a number of shares of our
common  stock to be  determined.  Accordingly  during  the  three  months  ended
December 31, 2005  $20,000  which had been placed in escrow with Frank G Blundo,
Jr. P.C. by Mr. Cutler was released for the benefit of Aspeon and CCI creditors.
On May 31, 2006, based on an independent third party valuation,  the majority of
our independent  directors approved the issue of 10,536,775 shares of our common
stock to Mr.  Cutler for the  conversion  of  $14,243  of his debt into  equity.
Following  the issue of these shares of our common stock Mr.  Cutler owned 52.7%
of  our  total  authorized  and  issued  share  capital  and  still  had a  loan
outstanding to us of approximately $175,000.

(3) Mr Stack's ownership includes 9,700 shares owned by Mr. Stack's children but
no longer  includes  shares issuable upon exercise of options to purchase common
stock as Mr.  Stack's  options were cancelled  subsequent to his  resignation in
April 2005.


                                       55
<PAGE>

As reported  above,  in April 2005 Mr. Cutler entered into an agreement with Mr.
Stack to purchase all of Mr. Stack's shares of our common stock. However, it has
not been possible to complete this transaction as Mr. Stack has not been able to
locate the share certificates for the majority of the shares in question.

Information  concerning  stock  options and warrants  issued by us is set out in
Note 15 Stockholders Deficit of our Financial Statements on page 89 below.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED 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 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 largest
amount outstanding under this loan was approximately $85,300. 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.

In August 2000, we executed a sale agreement  with the then current  director of
Aspact (the  "Purchaser").  The initial  purchase  price of  $350,000,  which is
reflected in other assets in the consolidated  balance sheet, 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 for the fiscal year ended
June 30, 2001. In the event the Purchaser consummated an initial public offering
or disposed of all or substantially  all of Aspact's common stock, the Purchaser
would be 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 February 2001, the our  subsidiary,  RGB, sold its interest in Teneo Limited
to  employees  of  Teneo  for the  consideration  of a  $350,000  note  which is
reflected in other assets in the consolidated balance sheet. Consequently a gain
on sale of $432,000 was recognized during the fiscal year ended June 30, 2001.

On March 1, 2001,  the we completed  the sale of the  consulting  contracts  and
certain of the fixed assets of our Dynamic  Technologies,  Inc. (DTI) subsidiary
to a company controlled by DTI's former owners and certain shareholders of ours,
for a purchase  price of  $900,000  and the return for  cancellation  of 200,000
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 fiscal year ended March 31, 2001.

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.  Following  the  completion of the due diligence


                                       56
<PAGE>

process  during the three  months ended  December  31, 2005,  it was agreed with
Frank G Blundo,  Jr. P.C.,  trustee of the  assignment for the benefit of Aspeon
and CCI creditors, that Mr. Cutler would invest $20,000 in us for the benefit of
Aspeon and CCI creditors in return for a number of shares of our common stock to
be  determined.  Accordingly  during the three  months  ended  December 31, 2005
$20,000  which had been  placed in escrow  with Frank G Blundo,  Jr. P.C. by Mr.
Cutler was  released  for the  benefit of Aspeon and CCI  creditors.  On May 31,
2006,  based on an  independent  third  party  valuation,  the  majority  of our
independent  directors  approved  the issue of  10,536,775  shares of our common
stock to Mr.  Cutler for the  conversion  of  $14,243  of his debt into  equity.
Following  the issue of these shares of our common stock Mr.  Cutler owned 52.7%
of  our  total  authorized  and  issued  share  capital  and  still  had a  loan
outstanding to us of approximately $175,000.

During the fiscal  year ended June 30,  2005,  our then sole  director,  David J
Cutler,  advanced to us $88,000 by way of loan,  bearing interest at 8%, to meet
our ongoing  operating  expenses  and fund the costs of bringing  our  financial
statements and SEC reporting up to date. In the nine months ended March 31, 2006
Mr.  Cutler  made  further  advances to us of $80,000 by way of loan to meet our
ongoing  operating  expenses  and  fund  the  costs of  bringing  our  financial
statements and SEC reporting up to date. Effective May 31, 2006, $14,243 of this
debt was converted into 10,536,775 shares of our common stock on the basis of an
independent  third  party  valuation  and the  approval  of the  majority of our
independent  directors.  Following the issue of these shares of our common stock
Mr.  Cutler owned 52.7% of our total  authorized  and issued  share  capital and
still  had a loan  outstanding  to us of  approximately  $175,000.  There  is no
guarantee that Mr. Cutler will continue to provide  further funding to us in the
future.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

   EXHIBIT
   NUMBER                          DESCRIPTION AND METHOD OF FILING


   2.0(15)     Share Sale  Agreement  dated  January  17, 2003  entered  into by
               Aspeon, Inc. and Matthew James Maley.
   3.1(8)      Registrant's Amended and Restated Certificate of Incorporation.

   3.2         Registrant's  Certificate  of  Amendment  to Amended and Restated
               Certificate of Incorporation.

   3.3(10)     Registrant's Certificate of Designations,  Preferences and Rights
               of the Series A Convertible Exchangeable Preferred Stock.

   3.4(1)      Registrant's Amended and Restated Bylaws.

   4.1(1)      Form of Common Stock Certificate of Registrant.

  10.1(1)      Form of Indemnity  Agreement entered into between the Company and
               its directors and executive officers.*

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

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

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

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

  10.2(1)      1996 Stock Incentive Award Plan (the "1996 Plan").*

  10.3 (14)    Form of Secured  Convertible  Promissory  Note payable by Aspeon,
               Inc., to each of Richard Stack, Kenneth Kadlec and Horace Hertz.


                                       57
<PAGE>

  10.3(1)      Form of Director  Non-Qualified  Stock Option Agreement under the
               1996 Plan.*

  10.4(1)      Form of Employee  Non-Qualified  Stock Option Agreement under the
               1996 Plan.*

  10.5(6)      1997 Equity Incentive Plan, as amended.*

  10.6(6)      Form of Incentive Stock Option Agreement under the 1997 Plan.*

  10.7(6)      Form of Nonstatutory Stock Option Agreement under the 1997 Plan.*

  10.8(1)      Employment  Agreement  dated  August 19,  1996 by and between the
               Company and Richard P. Stack.*

  10.9(6)      Employment  Agreement  dated  January 1, 1998 by and  between CCI
               Group, Inc. and Robert Nichols.*

  10.10(6)     Standard  Industrial/Commercial  Multi-Tenant  Lease-Modified Net
               dated  January 27, 1998 by and between the Company and  BRS-Campo
               Investment Company LP.

  10.11(1)     Standard  Industrial/Commercial  Single-Tenant  Lease-Gross dated
               October 19, 1995 by and between the Company and Robert P. Peebles
               Trust, dated April 11, 1979.

  10.12(2)     Standard  Sublease  dated  September  9, 1997 by and  between the
               Company, D. Howard Lewis and William R. Miller.

  10.13(6)     The Business Center Office/Warehouse Lease dated April 4, 1997 by
               and between CCI Group, Inc and Nooney Krombech Company.

  10.14(2)     Distributor  Agreement  dated  March 14,  1997 by and between the
               Company and ScanSource, Inc.

  10.15(6)     Loan and Security  Agreement  dated June 8, 1998 by and among the
               Company,  CCI Group,  Inc.,  Posnet  Computers,  Inc.  and Finova
               Capital  Corporation and related Secured  Promissory Note, Pledge
               Agreement and Secured Continuing Corporate Guarranty.

  10.16(6)     Form of Warrant  issued by the Company in favor of Finova Capital
               Corporation.

  10.17(8)     Second and Third Amendments to Loan and Security  Agreement dated
               December 15, 1998 and January 10, 1999, respectively by and among
               the Company,  CCI Group, Inc., Posnet Computers,  Inc. and FINOVA
               Capital  Corporation and related Security Promissory Note, Pledge
               Agreement and Secured Continuing Corporate Guaranty.

  10.18(7)     Stock  Purchase  Agreement,  dated  April  23,  1999 by and among
               Javelin Systems,  Inc., Dynamic Technologies,  Inc., SB Holdings,
               Inc., John Biglin, Denise Biglin and John Seitz.

  10.19(9)     1999 Non-Officer Stock Option Plan.*

  10.20(9)     Form of  non-qualified  stock  option  agreement  under  the 1999
               Non-Officer Stock Option Plan.*

  10.21(9)     Form of 1999 Plan Stock Option Grant Notice.*

  10.22(10)    Securities Purchase Agreement,  dated as of March 7, 2000, by and
               among the Company,  Aspeon  Solutions,  Inc. and Marshall Capital
               Management, Inc.


                                       58
<PAGE>

  10.23(10)    Warrant to  Purchase  Common  Stock of the  Company,  dated as of
               March 8, 2000 issued by the  Company in favor of Marshal  Capital
               Management, Inc.

  10.24(10)    Warrant to Purchase Common Stock of Aspeon Solutions,  Inc. dated
               as of March 8, 2000, issued by Aspeon Solutions, Inc. in favor of
               Marshall Capital Management, Inc.

  10.25(10)    Registration  Rights Agreement,  dated as of March 7, 2000 by and
               among the Company,  Aspeon  Solutions,  Inc. and Marshal  Capital
               Management, Inc.

  10.26        Sixth Amendment and Waiver to Loan and Security Agreement Between
               Aspeon, Inc., CCI Group, Inc. and Finova Capital Corporation.

  16.1 (11)    Letter  from   PricewaterhouseCoopers,   LLP   addressed  to  the
               Securities and Exchange Commission.

  16.1 (16)    Letter from BDO  Seidman,  LLP  addressed to the  Securities  and
               Exchange Commission.

  21.1         Subsidiaries

  24.1         Power of Attorney

  27.1         Financial Data Schedule.


(1)  Filed as an exhibit to the Company's  Registration  Statement on Form SB-2,
     as amended (No. 333-11217), and incorporated herein by reference.

(2)  Filed as an exhibit to the  Company's  Annual Report on Form 10-KSB for the
     fiscal year ended June 30, 1997 and incorporated herein by reference.

(3)  Filed as an  exhibit  to the  Company's  Current  Report  on Form 8-K dated
     December 30, 1997 and incorporated herein by reference.

(4)  Filed as an exhibit to the  Company's  Current  Report on Form 8-K/A  dated
     March 4, 1998 and incorporated herein by reference.

(5)  Filed as an  exhibit  to the  Company's  Current  Report  on Form 8-K dated
     January 5, 1998 and incorporated herein by reference.

(6)  Filed as an exhibit to the  Company's  Annual Report on Form 10-KSB for the
     fiscal year ended June 30, 1998 and incorporated herein by reference.

(7)  Filed as an exhibit to the Company's  Current  Report on Form 8-K filed May
     3, 1999, and incorporated herein by reference.

(8)  Filed as an exhibit to the  Company's  Quarterly  report on Form 10-QSB for
     the quarter ended December 31, 1998 and incorporated herein by reference.

(9)  Filed as an exhibit to the  Company's  Annual Report on Form 10-KSB for the
     fiscal year ended June 30, 1999 and incorporated herein by reference.

(10) Filed as an exhibit to the Company's Current Report on Form 8-K dated March
     9, 2000 and incorporated herein by reference.

(11) Filed as an  exhibit  to the  Company's  Current  Report  on Form 8-K dated
     January 21, 2001 and incorporated herein by reference


                                       59
<PAGE>

(12) Filed as an exhibit to the Company's Current Report on Form 8-K dated April
     8, 2002 and incorporated herein by reference

(13) Filed as an exhibit to the Company's  Current  Report on Form 8-K dated May
     14, 2002 and incorporated herein by reference

(14) Filed as an  exhibit  to the  Company's  Current  Report  on Form 8-K dated
     September 27, 2002 and incorporated herein by reference

(15) Filed as an  exhibit  to the  Company's  Current  Report  on Form 8-K dated
     February 3, 2003 and incorporated herein by reference.

(16) Filed as an  exhibit  to the  Company's  Current  Report  on Form 8-K dated
     September 15, 2005 and incorporated herein by reference.

(17) Filed as an exhibit to the  Company's  Current  Report on Form 8-K/A  dated
     December 9, 2005 and incorporated herein by reference.

(18) Filed as an exhibit to the Company's Current Report on Form 8-K dated March
     16, 2006 and incorporated herein by reference.

(19) Filed as an exhibit to the Company's Current Report on Form 8-K dated March
     28, 2006 and incorporated herein by reference

(20) Filed as an exhibit to the Company's  Current  Report on Form 8-K dated May
     31, 2006 and incorporated herein by reference.

       * Management contract or compensatory plan or arrangement of the Company.

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees.

We incurred $1,182,000 aggregate fees and expenses to our former auditors,  PWC,
and $292,000 to our former auditors, BDO, in the fiscal year ended June 30, 2001

We incurred no aggregate fees and expenses to our former  auditors,  BDO, or our
current auditors,  O'Donnell,  in the fiscal years ended June 30, 2005 and 2004.
No audit or review fees were  incurred  in fiscal 2005 or 2004 to conserve  cash
resources.

In the 9 months  ended March 31, 2006 we incurred  $5,120  audit and review fees
with our current auditors O'Donnell.

Tax Fees.

We incurred $0  aggregate  tax fees to our former  auditors,  PWC, and $0 to our
former auditors, BDO, in the fiscal year ended June 30, 2001

We did not  incur  any tax  fees to our  former  auditor,  BDO,  or our  current
auditors,  O'Donnell,  in the  fiscal  years  ended  June 30,  2005 and 2004 for
professional  services  rendered  for  tax  compliance,   tax  advice,  and  tax
planning..  No tax fees were  incurred in fiscal  2005 or 2004 to conserve  cash
resources.

In the 9 months ended March 31, 2006 did not incur any tax fees with our current
auditors, O'Donnell.


                                       60
<PAGE>

All Other Fees.

We incurred $0 other fees and  expenses to our former  auditors,  PWC, and $0 to
our former auditors, BDO, in the fiscal year ended June 30, 2001

We did not incur any other professional fees to our former auditor,  BDO, or our
current auditors, O'Donnell, in the fiscal years ended June 30, 2005 and 2004 to
conserve cash resources.

In the 9 months  ended  March 31,  2006 did not  incur  any other  fees with our
current auditors, O'Donnell.

It is the role of the Audit Committee,  or in the absence of an audit committee,
the Board of Directors,  to consider whether,  and determine that, the auditor's
provision  of  non-audit  services  would be  compatible  with  maintaining  the
auditor's independence.  Any services described above for fiscal year ended June
30, 2006,  2005 or 2004 would have had to be approved by the Audit  Committee or
the Board of Directors pursuant to its policies and procedures.

As reported in the Form 8-K filed on September 15, 2005, effective September 12,
2004 we appointed O'Donnell as auditors in succession to BDO.


                                       61
<PAGE>

                          INDEX TO FINANCIAL STATEMENTS

                                                                            PAGE

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM...............       58

CONSOLIDATED BALANCE SHEET - As at June 30, 2001 and 2000.............       59

CONSOLIDATED STATEMENTS OF OPERATIONS.................................

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT...........

CONSOLIDATED STATEMENTS OF CASH FLOWS.................................

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS............................       63




                                       62

<PAGE>


<TABLE>
<CAPTION>

                                  ASPEON, INC.
                                  CONSOLIDATED

                                                                        JUNE 30,
                                                                       2001         2000
                                                                  --------------------------
                       ASSETS
<S>                                                               <C>          <C>
Current Assets

     Cash & Cash Equivalents                                      $  1,179,100 $  8,853,200
     Investments                                                             0    1,025,200
     Accounts Receivable - Net of Allowance for
       Doubtful Accounts of                                          6,502,900   12,856,000
     $2,736,400 and $454,400 Respectively
     Inventory                                                       7,184,600   20,666,300
     Income Tax Receivable                                                   0    2,713,700
     Prepaid Expenses and Other Current Assets                       1,073,500    1,955,600

                                                                  --------------------------
              Total Current Assets                                  15,940,100   48,070,000

Property and Equipment, Net                                          3,136,600    5,525,900
Goodwill                                                            11,224,900   36,627,700
Other Assets, Net                                                      330,900    1,559,900
                                                                  --------------------------
     TOTAL ASSETS                                                 $ 30,632,500 $ 91,783,500
                                                                  ==========================

                       LIABILITIES & STOCKHOLDERS' (DEFICIT) / EQUITY

Current Liabilities

     Line of Credit                                               $    967,700 $  3,189,000
     Manditorily Redeemable Preferred Stock (In Default)            13,969,200            0
     Accounts Payable                                                8,824,200   10,598,600
     Accrued Expenses                                                2,959,500    7,249,200
     Current Maturities of Long-Term Debt                              507,000    1,037,600
     Purchase Price Payable for Acquisitions                         2,126,400            0
     Customer Deposits                                                 943,500    1,226,900
     Deferred Revenues                                               1,119,200    1,545,900
     Income Taxes Payable                                              199,200            0
                                                                  --------------------------
              Total Current Liabilities                             31,615,900   24,847,200

Long-Term Debt, Net of Current Portion                                 940,400      305,200
Purchase Price Payable for Acquisitions                                      0    1,868,200
Other                                                                   35,300      277,400
                                                                  --------------------------
              Total Liabilities                                     32,591,600   27,298,000

Manditorily  Redeeemable  Series A Preferred
  Stock, $0.01 par value, 9,850 and                                          0    6,042,100
  10,000 issued and outstanding
  (liquidation value of $ 13,969,200 and
  $10,150,000) respectively, in Default and
  Classified as a Current Liability
Manditorily Redeeemable Warrants                                     3,426,600    3,426,600
Manditorily Redeeemable Minority Interest Warrants                           0      867,300

COMMITMENTS AND CONTINGENCIES (Note. 9)

STOCKHOLDERS' (DEFICIT) / EQUITY

     Preferred Stock, $0.01 par value: 990,000
     shares authorized (1,000,000                                            0            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, and 9,383,161 shares                       9,43694,400       93,800
     issued and outstanding  respectively.
     Additional Paid In Capital                                     65,143,600   65,049,500
     Treasury Stock                                                    (60,000)           0
     Accumulated Deficit                                           (68,961,300) (10,025,900)
     Accumulated Other Comprehensive Loss                           (1,602,400)    (967,900)
                                                                  --------------------------
              Total Stockholders' (Deficit) / Equity                (5,385,700)  54,149,500

                                                                  --------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) / EQUITY            $ 30,632,500 $ 91,783,500
                                                                  ==========================
</TABLE>

         See accompanying Notes to Consolidated Financial Statements.

                                       63

<PAGE>

<TABLE>
<CAPTION>

                                  ASPEON, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                      FOR THE YEARS ENDED
                                                                           JUNE 30,
                                                                       2001         2000
<S>                                                               <C>          <C>
REVENUE

     Products                                                     $ 40,883,600 $  54,902,300
     Services                                                       20,226,900    26,142,900
                                                                  ---------------------------
     Total Revenue                                                  61,110,500    81,045,200

COST OF SALES

     Products                                                       38,811,400    40,973,800
     Services                                                       16,550,900    20,300,100
                                                                  ---------------------------
     Total Cost of Sales                                            55,362,300    61,273,900
                                                                  ---------------------------
GROSS PROFIT                                                         5,748,200    19,771,300

OPERATING EXPENSES

     Research and Development                                        1,285,200     1,968,000
     General and Administrative                                     25,684,300    19,189,800
     Selling and Marketing                                           6,622,700     8,396,900
     Impairment Charge                                              23,331,400             0
                                                                  ---------------------------
     Total Operating Expenses                                       56,923,600    29,554,700

OPERATING (LOSS)                                                   (51,175,400)   (9,783,400)

Interest Expense                                                    (2,297,900)     (807,800)
Interest Income                                                        262,600       422,800
Other Income / (Expense), Net                                          809,100       (82,300)

                                                                  ---------------------------
(Loss) before Income Taxes and
   Cumulative Effect of Accounting Change                          (52,401,600)  (10,250,700)

Income Taxes (Expense) / Benefit                                      (159,300)      949,500

                                                                  ---------------------------
NET (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE           (52,560,900)   (9,301,200)

Cumulative Effect of Accounting Change                                 817,600             0
                                                                  ---------------------------
NET (LOSS) AFTER CUMULATIVE EFFECT OF ACCOUNTING CHANGE            (51,743,300)   (9,301,200)

Accretion of Manditorily Redeemable Preferred Stock
  Discount & Dividend                                               (7,192,100)   (6,090,500)
                                                                  ---------------------------
NET (LOSS) AVAILABLE TO COMMON STOCKHOLDERS                       $(58,935,400 $ (15,391,700)
                                                                  ===========================

NET (LOSS) PER COMMON SHARE

     Basic & Diluted
              Before cumulative effect of accounting change              (6.34)        (1.67)
              Cumulative effect of accounting change                      0.09          0.00

                                                                    -----------  ------------
              Net Loss                                                  ($6.25)       ($1.67)
                                                                    ===========  ============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

     Basic & Diluted                                                 9,424,304     9,243,079
                                                                  ===========================
</TABLE>

         See accompanying Notes to Consolidated Financial Statements.

                                       64

<PAGE>

<TABLE>
<CAPTION>

                                                  ASPEON, INC.
                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                                   FOR THE YEARS ENDED JUNE 30, 2005 and 2004

                               Common Stock         Treasury Stock      Additional    Deferred
                                                                        Paid - in     Stock-based
                            Shares       Amount    Shares      Amount    Capital     Compensation

                               #          $          #          $           $            $

<S>                      <C>           <C>         <C>      <C>        <C>           <C>
Balance, June 30 1999      8,887,203     88,900          0          0   55,800,700        (6,700)

Shares issued in
  connection with            104,802      1,000          0          0    2,059,700             0
  the acquisition
  of Monument

Shares issued in
  connection with            271,256      2,700          0          0    2,565,300             0
  the earnout
  provisions of the
  RGB and Jade
  acquisitions

Accretion of
  mandatorily redeem
  -able preferred                  0          0          0          0    3,708,400             0
  stock beneficial
  conversion feature

Accretion of
  mandatorily redeemable           0          0          0          0            0             0
  preferred stock
  discount and dividends

Amortization of deferred
  stock-based                      0          0          0          0            0         6,700
compensation

Exercise of stock options    119,900      1,200          0          0      915,400             0

Net & Comprehensive Profit

                           ----------  ---------  ---------  ---------  ----------- -------------
Balance, June 30 2000      9,383,161     93,800          0          0   65,049,500             0

Conversion of manditorily     53,064        600          0          0       94,100             0
redeemable preferred stock

Accretion of manditory
  redeemable stock                 0          0          0          0            0             0
  discount and dividends

Purchase of Treasury Stock         0          0    (60,000)         0            0             0

Net & Comprehensive (Loss)

                           ----------  ---------  ---------  ---------  ----------- -------------
Balance, June 30 2001      9,436,225 $   94,400    (60,000)$        0 $ 65,143,600 $           0 $
                           ==========  =========  =========  =========  =========== =============
</TABLE>

        See accompanying Notes to Consolidated Financial Statements.

                                       65

<PAGE>

<TABLE>
<CAPTION>

                                  ASPEON, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                   FOR THE YEARS ENDED JUNE 30, 2005 and 2004

                            Retained       Earnings        Accumulated
                          / (Accumulated  Comprehensive    Comprehensive
                            Deficit)       Profit / (Loss) Profit / (Loss)      Total

                                        $              $                           $
<S>                            <C>               <C>          <C>          <C>
Balance, June 30 1999            3,799,700        (72,200)                 59,610,400

Shares issued in
  connection with                        0              0                   2,060,700
  the acquisition
  of Monument

Shares issued in
  connection with                        0              0                   2,568,000
  the earnout
  provisions of the
  RGB and Jade
  acquisitions

Accretion of
  mandatorily redeem
  -able preferred               (3,708,400)             0                           0
  stock beneficial
  conversion feature

Accretion of
  mandatorily redeemable          (816,000)             0                    (816,000)
  preferred stock
  discount and dividends

Amortization of deferred
  stock-based                            0              0                       6,700
compensation

Exercise of stock options                0              0                     916,600

Net & Comprehensive Profit      (9,301,200)      (895,700)    (10,196,900) (10,196,900)
                                                              ===========
                               ------------    -----------                 -----------
Balance, June 30 2000          (10,025,900)      (967,900)                 54,149,500

Conversion of manditorily                0              0                      94,700
redeemable preferred stock

Accretion of manditory
  redeemable stock              (7,192,100)             0                  (7,192,100)
  discount and dividends

Purchase of Treasury Stock                                                    (60,000)

Net & Comprehensive (Loss)     (51,743,300)      (634,500)    (52,377,800) (52,377,800)
                                                               ===========
                               ------------    -----------                 -----------
Balance, June 30 2001          (68,961,300)$   (1,602,400)               $ (5,385,700)
                               ============    ===========                 ===========
</TABLE>



        See accompanying Notes to Consolidated Financial Statements.

                                       66

<PAGE>

<TABLE>
<CAPTION>

                                  ASPEON, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS

                                                              FOR THE YEAR ENDED
                                                                     JUNE 30
                                                                 2001       2000
                                                           -----------------------
<S>                                                        <C>           <C>
CASH FLOW PROVIDED BY / (USED IN) OPERATING ACTIVITIES

NET (LOSS)                                                 $ (51,743,300)$(9,301,200)

ADJUSTMENTS TO RECONCILE NET (LOSS) TO NET CASH
PROVIDED BY / (USED IN) OPERATING ACTIVITIES
     Cumulative Effect of Accounting Change                   (817,600)            0
     Depreciation and Amortization                           4,566,100     4,962,800
     Warrant Valuation Adjustment                             (137,800)            0
     Write-off of Purchased Software                                 0       136,400
     Amortization of Deferred Financing Costs                        0       304,700
     Amortization of Deferred / Stock-Based Compensation        83,200       121,100
     Gain on Sale of Fixed Assets                           (1,252,900)            0
     Impairment Charge                                      23,331,400             0
     Write-Off of Assets                                     1,652,500             0
     Deferred Income Taxes                                           0       530,900
     Deferred Rent Expense                                                    67,900
     Penalty Interest on Manditorily Redeeemable Series
        A Preferred  Stock                                   1,467,200
     Provision for Inventories                               2,156,799       629,400
     Provision for Accounts Receivable                       2,194,659       355,200
     Provision for Warranty and Other                        1,170,542        18,300

CHANGES IN OPERATING ASSETS & LIABILITIES
     (Increase)/Decrease in Accounts Receivable              3,515,300     3,298,100
     (Increase)/Decrease in Inventories                     10,392,200    (6,755,900)
     (Increase)/Decrease in Income Taxes Receivable          2,713,700    (2,713,700)
     (Increase)/Decrease in Prepaid Expenses and Other
          Current Assets                                       400,900      (100,000)
     (Increase)/Decrease in Other Assets                       524,900        (6,400)
     Increase/(Decrease) in Accounts Payable                (1,546,800)    2,705,900
     Increase/(Decrease) in Accrued Expenses                (3,892,500     3,997,000
     Increase/(Decrease) in Customer Deposits                 (283,400)      948,900
     Increase/(Decrease) in Deferred Revenues                 (318,600)      247,600
     Increase/(Decrease) in Income Taxes Payable                     0    (1,517,400)
                                                              -----------------------
     Total Cash Flow provided by / (used in) Operating
          Activities                                        (5,823,500)   (2,070,400)

CASH FLOW FROM INVESTING ACTIVITIES
     Purchase of Fixed Assets                               (1,072,600)   (3,528,500)
     Cash Paid for Purchased Businesses                       (427,000)   (7,953,600)
     Investment in Securities                                        0     6,446,800
     Proceeds from Sale of Fixed Assets                        900,000             0
     Proceeds from Sale of Investments                       1,037,300             0
     Advances Under Notes Receivable due from Related
         Parties                                              (400,000)     (496,000)
     Repayments of Notes Receivable due from Related Parties   706,000             0
                                                              -----------------------

  Total Cash Flow provided by / (used in) Investing
         Activities                                            743,700    (5,531,300)

CASH FLOW FROM FINANCING ACTIVITIES

     Net borrowings / (repayments) under line of credit     (1,691,200)    1,137,400
     Payments of Notes Payable to Third Parties                      0       (33,900)
     Payment of Notes Payable                                 (574,100)     (309,500)
     Advances / (Repayments) on Capital Leases                 249,900      (108,900)
     Net Proceeds from Issuance of Preferred Stock                   0     9,568,400
     Exercise of Stock Options and Warrants                          0       916,600
     Preferred Stock Dividend Paid                            (553,300)      (40,000)
                                                              -----------------------
     Total Cash Flow provided by / (used in)
          Financing Activities                              (2,568,700)   11,130,100

     Effects of Exchange Rate Changes on Cash                  (25,600)     (316,700)
                                                              -----------------------

INCREASE / (DECREASE) IN CASH & CASH EQUIVALENTS           $(7,674,100)  $ 3,211,700
                                                              =======================

Cash and Cash Equivalents at the beginning of the period   $ 8,853,200   $ 5,641,500
                                                              =======================
Cash and Cash Equivalents at the end of the period         $ 1,179,100   $ 8,853,200
                                                             =======================

SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid for interest                                     $   418,595   $   436,000
                                                             -----------------------
Cash paid for income tax                                   $   194,525   $ 1,425,900
                                                             -----------------------
</TABLE>

          See accompanying Notes to Consolidated Financial Statements.

                                       67
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Aspeon, Inc.
Denver, Colorado

I have audited the  accompanying  balance  sheet of Aspeon,  Inc. as of June 30,
2001, and the related statements of operations,  stockholders' deficit, and cash
flows for the year ended  June 30,  2001.  These  financial  statements  are the
responsibility of the Company's  management.  My responsibility is to express an
opinion on these financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects,  the financial position of Aspeon,  Inc. as of June 30, 2001,
and the  results  of its  operations  and cash flows for the year ended June 30,
2001 in conformity with accounting  principles  generally accepted in the United
States.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As  discussed  in Note 2 to the  financial
statements,  the Company had suffered  significant losses, had a working capital
deficit  as of June 30,  2001 and has  subsequently  ceased  to trade and has no
ongoing source of income.  Management's  plans to address these matters are also
included  in  Note  2  to  the  financial  statements.  These  conditions  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
The financial  statements do not include any adjustments  that might result from
the outcome of this uncertainty




/s/ Larry O'Donnell
Larry O'Donnell CPA, P.C.
Aurora, Colorado
July 15, 2006

                                       68

<PAGE>


                       MULTI-LINK TELECOMMUNICATIONS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:

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

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

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

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

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

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

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

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

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.

                                       69

<PAGE>

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

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

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

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

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

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

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

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

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

                                       70

<PAGE>

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

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

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

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

                                       71

<PAGE>

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

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

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

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

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

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

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

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

                                       72

<PAGE>

purchase  583,334  shares of our common stock was  cancelled;  and (d) a warrant
previously  issued by our  subsidiary,  Aspeon  Solutions,  entitling the holder
thereof to purchase 1,250,000 shares of the common stock of Aspeon Solutions was
cancelled.  We believed  that the  settlement  had a net positive  effect on our
balance sheet of approximately $19 million.

In June 2002 we terminated the activities of RCS.

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

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

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

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

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

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.

                                       73

<PAGE>

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

On April 22, 2005, our sole  director,  David J Cutler entered into an agreement
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI creditors, subject to due diligence, to invest up to $50,000 cash
in us for the benefit of our  creditors  in return for a number of shares of our
common stock to be  determined.  Following  the  completion of the due diligence
process  during the three  months ended  December  31, 2005,  it was agreed with
Frank G Blundo,  Jr. P.C.,  trustee of the  assignment for the benefit of Aspeon
and CCI creditors, that Mr. Cutler would invest $20,000 in us for the benefit of
Aspeon and CCI creditors in return for a number of shares of our common stock to
be  determined.  Accordingly  during the three  months  ended  December 31, 2005
$20,000  which had been  placed in escrow  with Frank G Blundo,  Jr. P.C. by Mr.
Cutler was  released  for the  benefit of Aspeon and CCI  creditors.  On May 31,
2006,  based on an  independent  third  party  valuation,  the  majority  of our
independent  directors  approved  the issue of  10,536,775  shares of our common
stock to Mr.  Cutler for the  conversion  of  $14,243  of his debt into  equity.
Following  the issue of these shares of our common stock Mr.  Cutler owned 52.7%
of  our  total  authorized  and  issued  share  capital  and  still  had a  loan
outstanding to us of approximately $175,000.

During the fiscal  year ended June 30,  2005,  our then sole  director,  David J
Cutler,  advanced to us $88,000 by way of loan,  bearing interest at 8%, to meet
our ongoing  operating  expenses  and fund the costs of bringing  our  financial
statements and SEC reporting up to date. In the nine months ended March 31, 2006
Mr. Cutler has made further advances to us of $80,000 by way of loan to meet our
ongoing  operating  expenses  and  fund  the  costs of  bringing  our  financial
statements  and SEC  reporting up to date as required.  Effective  May 31, 2006,
$14,243 of this debt was converted into 10,536,775 shares of our common stock on
the basis of an  independent  third  party  valuation  and the  approval  of the
majority of our  independent  directors.  Following the issue of these shares of
our common stock Mr. Cutler owned 52.7% of our total authorized and issued share
capital and still had a loan outstanding to us of approximately $175,000.  There
is no guarantee that Mr. Cutler will continue to provide  further  funding to us
in the future.

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

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

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

In January 2006 we were contacted by the SEC's Office of Enforcement Liaison who
notified us that while they  recognized the progress we had made in bringing our
SEC filings up to date, they still considered us to be delinquent in our filings

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because of our  failure to  complete  filings in respect of the period  April 1,
2001 through June 30, 2003. We are currently  establishing  the likely costs and
practicality  of completing the SEC filings for the period April 1, 2001 through
June 30, 2003. In the meantime  there  continues to be a risk that our shares of
common stock may be deregistered by the SEC's Office of Enforcement  Liaison due
the  continued  delinquency  of our SEC  filings  for the  period  April 1, 2001
through June 30, 2003.  In July 2006,  on the basis of further  audit work and a
review of subsequent  events performed by O'Donnell,  O'Donnell has been able to
complete the audit of our June 30, 2001 financial statements as set out on pages
57 through 97. We are currently  establishing  the likely costs and practicality
of completing  the SEC filings and related  financial  statements for the period
July 1, 2001 through June 30, 2003.

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

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

On May 31, 2006, based on an independent third party valuation,  the majority of
our independent  directors approved the issue of 10,536,775 shares of our common
stock to Mr.  Cutler for the  conversion  of  $14,243  of his debt into  equity.
Following  the issue of these shares of our common stock Mr.  Cutler owned 52.7%
of  our  total  authorized  and  issued  share  capital  and  still  had a  loan
outstanding to us of approximately $175,000.

In July  2006,  on the basis of further  audit  work and a review of  subsequent
events performed by O'Donnell,  O'Donnell has been able to complete the audit of
our June 30, 2001 financial statements as set out on pages 57 through 97. We are
currently  establishing  the likely costs and practicality of completing the SEC
filings and related  financial  statements  for the period July 1, 2001  through
June 30, 2003.

Principles  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.

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

Investments - We determined the appropriate classification of our investments at
the time of purchase and reevaluated  such  determination  at each balance sheet
date. We classified our investments as available-for-sale in accordance with the
provisions  of  Statement of Financial  Accounting  Standards  ("SFAS") No. 115,
"Accounting  for  Certain  Investments  in Debt and  Equity  Securities".  These
securities were carried at fair market value,  with unrealized  gains and losses
reported in stockholders'  deficit as a component of other comprehensive  income
(loss).  Cost was determined  using the specific  identification  method for the
purpose of computing gains and losses

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 Inventories  -  Inventories  at June 30, 2001 and 2000  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.

Depreciation  expense was approximately  $1,577,700 and $1,964,700 for the years
ended June 30, 2001 and 2000 respectively.

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
were  compared to the asset's  carrying  amount to determine if a write-down  to
market value or discounted cash flow value was required.

An impairment charge of $23,331,000 was recognized in the fiscal year ended June
30, 2001 in respect of the goodwill write off of RCS, DTI and Monument and other
intangible  assets. No impairment charge was recognized in the fiscal year ended
June 30, 2000.

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.

Foreign  Currency  Translation -- The consolidated  financial  statements of our
non-U.S.  operations were translated into U.S.  dollars for financial  reporting
purposes.  The assets and liabilities of non-U.S.  operations  whose  functional
currencies are other than the U.S. dollar are translated at rates of exchange at
fiscal  year-end,  and revenues and expenses are translated at average  exchange
rates for the fiscal year. The cumulative  translation  effects are reflected in
accumulated other comprehensive  income (loss). Gains and losses on transactions
denominated in other than the functional currency of an operation were reflected
in other income (expense).

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.

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 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.

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

Advertising  cost --  Advertising  costs were expensed as incurred.  Advertising
expense was $508,200 and $1,288,000 for the years ended 2001 and 2000

Research  and  development  - Research  and  development  costs are  expensed as
incurred.  Research and development expenses  principally  comprised payroll and
related costs, and the cost of prototypes.

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. The net loss for the year ended
June  30,  2001  was   $(51,743,300)   compared  to  a  comprehensive   loss  of
$(52,377,800)  a variance of $634,500.  The net loss for the year ended June 30,
2000 was  $(9,301,200)  compared  to a  comprehensive  loss of  $(10,196,900)  a
variance of $895,700. In both years the variance related primarily to the change
in the cumulative foreign currency translation adjustment relating to our non-US
subsidiaries in Australia, Singapore and the United Kingdom and unrealized gains
(losses) on available-for-sale securities.

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
for the years ended June 30, 2001 and 2000 as we had losses from operations and,
therefore, the effect of all additional potential common stock was antidilutive.
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.

Cumulative  Effect of  Accounting  Change -- Effective  July 1, 2000, we adopted
SFAS No. 133,  which  established  new  accounting  and reporting  standards for
derivative  instruments,  including certain derivative  instruments  embedded in
other contracts and for hedging activities. All derivatives,  whether designated
in  hedging   relationships  or  not,  were  required  to  be  recorded  on  the
consolidated  balance sheet at fair value. If the derivative was designated as a

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fair value  hedge,  the changes in the fair value of the  derivative  and of the
hedged item  attributable  to the hedged risk were to be recognized in earnings.
If the derivative was designated as a cash flow hedge, the effective portions of
changes  in the  fair  value  of the  derivative  were to be  recorded  in other
comprehensive  income (OCI) and were recognized in the income statement when the
hedged item affects earnings.  Ineffective portions of changes in the fair value
of cash flow hedges were to be recognized in earnings.

At July 1, 2000 and June 30, 2001, we had derivative  instruments  consisting of
mandatorily  redeemable  minority interest  warrants and an embedded  "mandatory
redemption" option associated with its mandatorily redeemable Series A preferred
stock. We issued these derivatives as an incentive to the preferred  stockholder
to execute the  transaction on March 8, 2000 discussed in Note 12 - page 83. The
mandatorily  redeemable  minority  interest  warrants  were valued at  $867,300,
$50,600 and $0 at March 8, 2000, June 30, 2000 and June 30, 2001,  respectively.
The mandatory  redemption option was valued at $93,000,  $43,000 and $0 at March
8, 2000,  June 30, 2000 and  September  30, 2000,  respectively.  We did not use
derivative  instruments  to manage  exposures  to foreign  currency,  securities
price, and interest rate risks. Accordingly, we had no derivatives designated as
hedging instruments.

We  recorded  a pre-  and  after-tax  reduction  to  loss  of  $817,600  for the
cumulative effect at July 1, 2000 for the adoption of SFAS No. 133. For the nine
months ended March 31, 2001,  derivative gains of $133,000 are included in other
income

Recently Issued Accounting  Pronouncements -- In December 1999, Staff Accounting
Bulletin No. 101 ("SAB 101"),  "Revenue Recognition in Financial Statements" was
issued by the Securities  and Exchange  Commission  staff (the  "staff"),  which
summarizes the staff's views on selected revenue  recognition  issues based upon
existing generally accepted accounting  principles.  The statements in the staff
accounting bulletins are not rules or interpretations of the Commission, nor are
they published as bearing the  Commission's  official  approval.  They represent
interpretations  and practices  followed by the Division of Corporation  Finance
and  the  Office  of  the  Chief  Accountant  in  administering  the  disclosure
requirements  of the  Federal  securities  laws.  The  staff  has  deferred  the
implementation  date of SAB 101 until no later than the fourth quarter of fiscal
years  beginning after December 15, 1999. Our adoption of SAB 101 did not have a
material impact on our consolidated results of operations or financial position.

 In March  2000,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Interpretation No. 44 ("FIN 44"), "Accounting for Certain Transactions involving
Stock Compensation." The adoption of this Interpretation did not have a material
impact on our consolidated results of operations or financial position.

In  November  2000,  the  Emerging  Task  Force  ("EITF")   issued  EITF  00-27,
"Application of Issue No. 98-5,  "Accounting for Convertible Conversion Features
or   Contingently   Adjustable   Conversion   Ratios  to   Certain   Convertible
Instruments".  The  adoption of this EITF did not have a material  impact on our
consolidated results of operations or financial position.

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On June 30,  2001,  the FASB  approved  the  issuance of SFAS No. 141,  Business
Combinations and SFAS No. 142,  Goodwill and Other Intangible  Assets.  SFAS No.
141 states that all  business  combinations  should be  accounted  for using the
purchase method of accounting;  use of pooling-of-interest method is prohibited.
Accounting  for the excess of the fair value of net assets  over cost  (negative
goodwill),  will be allocated to certain assets first with any remaining  excess
recognized  as an  extraordinary  gain.  SFAS No. 141 is effective  for business
combinations  completed  after  June  30,  2001.  SFAS  No.  142  addresses  the
accounting  for all  purchased  intangible  assets  but not the  accounting  for
internally developed intangible assets. Goodwill will no longer be amortized and
will be reviewed for impairment in accordance  with SFAS No. 142.  Goodwill will
be tested  annually and on an interim basis if an event or  circumstance  occurs
between the annual tests that might reduce the fair value of the reporting  unit
below its carrying  value.  SFAS No 142 is effective for fiscal years  beginning
after  December  31,  2001,   with  early  adoption   permitted   under  certain
circumstances.   Goodwill  and  intangible  assets  acquired  in  a  transaction
completed after June 30, 2001 but before SFAS No. 142 is initially  applied will
be accounted  for in  accordance  with SFAS No. 142. ". The adoption of SFAS No.
141 and SFAS No. 142 did not have a material impact on our consolidated  results
of operations or financial position.

In June  2001,  the  FASB  approved  for  issuance  SFAS  143  Asset  Retirement
Obligations.   SFAS  143  establishes  accounting  requirements  for  retirement
obligations associated with tangible long-lived assets, including (1) the timing
of the liability  recognition,  (2) initial  measurement of the  liability,  (3)
allocation of asset  retirement cost to expense,  (4) subsequent  measurement of
the liability and (5) financial statement disclosures. SFAS 143 requires that an
asset  retirement  cost should be capitalized as part of the cost of the related
long-lived  asset and  subsequently  allocated to expense using a systematic and
rational method. The statement is effective for financial  statements issued for
fiscal years beginning after June 15, 2002. The adoption of SFAS No. 143 did not
have a material  impact on our  consolidated  results of operations or financial
position.

In October 2001, the FASB also approved SFAS 144,  Accounting for the Impairment
or Disposal of Long-Lived Assets. SFAS 144 replaces SFAS 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The
new accounting model for long-lived  assets to be disposed of by sale applies to
all  long-lived  assets,  including  discontinued  operations,  and replaces the
provisions of APB Opinion No. 30, Reporting Results of Operations-Reporting  the
Effects of Disposal of a Segment of a Business,  for the disposal of segments of
a business.  Statement 144 requires that those long-lived  assets be measured at
the lower of carrying amount or fair value less cost to sell,  whether  reported
in continuing operations or in discontinued operations.  Therefore, discontinued
operations will no longer be measured at net realizable value or include amounts
for operating losses that have not yet occurred. Statement 144 also broadens the
reporting of discontinued operations to include all components of an entity with
operations that can be  distinguished  from the rest of the entity and that will
be  eliminated  from  the  ongoing  operations  of  the  entity  in  a  disposal
transaction.  The  provisions  of  Statement  144 are  effective  for  financial
statements  issued for fiscal  years  beginning  after  December  15,  2001 and,
generally, are to be applied prospectively. The adoption of SFAS No. 144 did not
have a material  impact on our  consolidated  results of operations or financial
position.

In April 2002, the FASB issued SFAS 145,  "Rescission of FASB  Statements No. 4,
44, and 64,  Amendment of FASB  Statement  No. 13, and  Technical  Corrections."
Among other things,  this statement  rescinds FASB  Statement No. 4,  "Reporting
Gains and Losses  from  Extinguishment  of Debt"  which  required  all gains and
losses from extinguishment of debt to be aggregated and, if material, classified
as an  extraordinary  item,net of related  income tax effect.  As a result,  the
criteria  in APB  Opinion  No.  30,  "Reporting  the  Results of  Operations  --
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions," will now be used to
classify  those  gains and  losses.  The  provisions  of SFAS 145 related to the
classification  of debt  extinguishment  are effective for years beginning after
May 15, 2002. The adoption of SFAS No. 145 did not have a material impact on our
consolidated results of operations or financial position.

In July 2002, the FASB issued SFAS 146,  "Accounting  for Costs  Associated with
Exit or Disposal  Activities." SFAS 146 provides new guidance on the recognition
of costs  associated  with exit or disposal  activities.  The standard  requires
companies to recognize costs  associated  with exit or disposal  activities when
they are incurred  rather than at the date of  commitment to an exit or disposal
plan.  SFAS 146 supercedes  previous  accounting  guidance  provided by the EITF

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Issue No. 94-3 "Liability  Recognition for Certain Employee Termination Benefits
and Other  Costs to Exit an  Activity  (including  Certain  Costs  Incurred in a
Restructuring)."  EITF Issue No. 94-3 required  recognition of costs at the date
of  commitment  to an  exit  or  disposal  plan.  SFAS  146  is  to  be  applied
prospectively to exit or disposal activities  initiated after December 31, 2002.
The adoption of SFAS No. 146 did not have a material impact on our  consolidated
results of operations or financial  position.  In December  2002,  the Financial
Accounting  Standards Board ("FASB") issued SFAS 148 "Accounting for Stock-Based
Compensation--Transition  and  Disclosure--an  amendment  of SFAS 123." SFAS 148
provides  alternative  methods of transition for a voluntary  change to the fair
value based method of accounting for stock-based employee  compensation from the
intrinsic  value-based method of accounting  prescribed by APB 25. As allowed by
SFAS 123, we elected to continue to apply the  intrinsic  value-based  method of
accounting, and have adopted the disclosure requirements of SFAS 123. We elected
not to adopt the provisions of SFAS 148.

In  January  2003,  the  FASB  issued  FASB   Interpretation   ("FIN")  No.  46,
Consolidation of Variable  Interest  Entities,  which requires variable interest
entities  (commonly  referred  to as SPEs)  to be  consolidated  by the  primary
beneficiary  of the entity if certain  criteria are met. FIN No. 46 is effective
immediately  for all new variable  interest  entities  created or acquired after
January 31, 2003.  The adoption of this statement does not impact our historical
or present financial statements, as we have not created or acquired any variable
interest entities, nor do we expect to in the future.

In April 2003, the FASB issued  Statement of Financial  Accounting  Standard No.
149,  "Amendment  of  Statement  133  on  Derivative   Instruments  and  Hedging
Activities" (SFAS 149). SFAS 149 amends and clarifies  financial  accounting and
reporting for derivative  instruments,  including certain derivative instruments
embedded in other contracts  (collectively  referred to as derivatives)  and for
hedging  activities  under FASB  Statement No. 133,  "Accounting  for Derivative
Instruments  and  Hedging  Activities".  SFAS  149 is  generally  effective  for
contracts entered into or modified after June 30, 2003 or hedging  relationships
designated  after June 30,  2003.  The  adoption  of SFAS No. 149 did not have a
material impact on our consolidated results of operations or financial position.

In May 2003, the FASB issued Financial  Accounting Standard No. 150, "Accounting
for Certain Financial  Instruments with  Characteristics of Both Liabilities and
Equity" (SFAS 150). SFAS 150 establishes  standards for how a company classifies
and  measures  certain  financial   instruments  with  characteristics  of  both
liabilities  and  equity.  It  requires  that a  company  classify  a  financial
instrument  that is  within  the  scope  as a  liability  (or an  asset  in some
circumstances).  SFAS 150 is effective for financial instruments entered into or
modified  after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. The adoption of SFAS No. 150
did not have a material  impact on our  consolidated  results of  operations  or
financial position.

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  Statement of Financial  Accounting  Standards
No. 151,  "Inventory Costs-- an amendment of ARB No. 43, Chapter 4" (hereinafter
"SFAS No. 151").  This  statement  amends the guidance in ARB No. 43, Chapter 4,
"Inventory  Pricing," to clarify the  accounting  for  abnormal  amounts of idle
facility expense, freight, handling costs, and wasted material (spoilage). Under
some  circumstances,  SFAS No. 151  mandates  that  items such as idle  facility
expense, excessive spoilage, double freight, and re-handling costs be recognized
as current-period  charges. In addition, this statement requires that allocation
of fixed production  overheads to the costs of conversion be based on the normal
capacity of the production facilities. This statement is effective for inventory
costs  incurred  during  fiscal years  beginning  after June 15, 2005. We do not

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believe  that the  adoption  of SFAS No. 151 will have a material  impact on our
financial conditions or results of operation

In December 2004, the FASB issued  Statement of Financial  Accounting  Standards
No. 152,  which  amends SFAS  Statement  No. 66,  "Accounting  for Sales of Real
Estate," to reference the financial  accounting and reporting  guidance for real
estate time-sharing transactions that is provided in AICPA Statement of Position
(SOP)  04-2,  "Accounting  for  Real  Estate  Time-Sharing  Transactions."  This
statement  also amends  SFAS No. 67,  "Accounting  for Costs and Initial  Rental
Operations  of Real  Estate  Projects,"  to  state  that  the  guidance  for (a)
incidental operations and (b) costs incurred to sell real estate projects,  does
not apply to real estate  time-sharing  transactions.  The  accounting for those
operations  and costs is subject to the guidance in SOP 04-2.  This statement is
effective for financial  statements  for fiscal years  beginning  after June 15,
2005.  We do not believe  that the adoption of SFAS No. 152 will have a material
impact on our financial conditions or results of operation.

In December 2004, the FASB issued  Statement of Financial  Accounting  Standards
No. 153 (hereinafter  "SFAS No. 153"). This statement  addresses the measurement
of  exchanges  of  nonmonetary  assets.  The  guidance  in APB  Opinion  No. 29,
"Accounting  for  Nonmonetary  Transactions,"  is  based on the  principle  that
exchanges of  nonmonetary  assets should be measured  based on the fair value of
the assets exchanged.  The guidance in that opinion,  however,  included certain
exceptions  to that  principle.  SFAS No. 153 amends APB Opinion 29 to eliminate
the  exception  for  nonmonetary  exchanges  of  similar  productive  assets and
replaces it with a general exception for exchanges of nonmonetary assets that do
not have commercial  substance.  A nonmonetary exchange has commercial substance
if the future cash flows of the entity are expected to change significantly as a
result of the exchange. This statement is effective for financial statements for
fiscal years beginning after June 15, 2005. Earlier application is permitted for
nonmonetary  asset  exchanges  incurred  during fiscal years beginning after the
date of this  statement  is issued.  We do not believe that the adoption of SFAS
No. 153 will have a material  impact on our  financial  conditions or results of
operation

In  December  2004,  the FASB  issued a  revision  to FASB  Statement  No.  123,
Accounting for Stock Based Compensation.  This Statement  supersedes APB Opinion
No. 25, Accounting for Stock Issued to Employees, and its related implementation
guidance.   This  Statement   establishes   standards  for  the  accounting  for
transactions  in which an entity  exchanges its equity  instruments for goods or
services.  It also addresses  transactions in which an entity incurs liabilities
in  exchange  for  goods or  services  that are  based on the fair  value of the
entity's  equity  instruments  or that may be settled by the  issuance  of those
equity  instruments.  . We do not believe that the adoption of SFAS No. 123( R )
will have a material impact on our financial conditions or results of operation

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

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

                                       81

<PAGE>

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

In March 2006, the Financial  Accounting  Standards  Board (`FASB')  issued FASB
Statement  No.  156,  which  amends  FASB  Statement  No.  140.  This  Statement
establishes,  among other things, that accounting for all separately  recognized
servicing assets and servicing liabilities.  This Statement amends Statement 140
to  require  that all  separately  recognized  servicing  assets  and  servicing
liabilities be initially measured at fair value, if practicable.  This Statement
permits,  but  does  not  require,  the  subsequent  measurement  of  separately
recognized  servicing assets and servicing  liabilities at fair value. An entity
that uses  derivative  instruments  to mitigate the risks  inherent in servicing
assets and  servicing  liabilities  is required to account for those  derivative
instruments at fair value. Under this Statement,  an entity can elect subsequent
fair value measurement to account for its separately recognized servicing assets
and servicing  liabilities.  By electing that option, an entity may simplify its
accounting  because this Statement  permits income statement  recognition of the
potential  offsetting  changes  in fair  value of  those  servicing  assets  and
servicing liabilities and derivative  instruments Is the same accounting period.
This Statement is effective for financial  statements for fiscal years beginning
after September 15, 2006.  Earlier adoption of this Statement is permitted as of
the beginning of an entity's fiscal year, provided the entity has not yet issued
any  financial  statements  for that fiscal  year.  We do not  believe  that the
adoption of FASB Statement No. 156 will have a material  impact on our financial
conditions or results of operation.

Business  Segments -- In June 1997,  the Financial  Accounting  Standards  Board
issued SFAS No. 131,  Disclosures  About  Segments of an Enterprise  and Related
Information  ("SFAS No.  131").  SFAS No. 131 changes  the way public  companies
report  segment  information  in annual  financial  statements and also requires
those  companies to report  selected  segment  information in interim  financial
reports to stockholders.  It also establishes  standards for related disclosures
about products and services,  geographic areas, and major customers. We used the
management  approach  for segment  disclosure,  which  designates  the  internal
organization  that is used by  management  for making  operating  decisions  and
assessing  performance as the source of our reportable  segments.  Following the
cessation  of our  trading  operations  effective  June 30,  2003 we believe our
operations  during fiscal 2005 and 2004  comprised only one segment and as such,
adoption of SFAS No. 131 does not impact the  disclosures  made in our financial
statements.

2.       GOING CONCERN AND LIQUIDITY:

As of June 30, 2001,  we had  $1,179,100  cash and cash  equivalents  on hand, a
working  capital   deficit  of  $15,675,800  and  a  shareholders'   deficit  of
$5,385,700.

                                       82

<PAGE>

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

We sustained  significant  losses  during the years ended June 30, 2001 and 2000
and had experienced negative cash flows from operations since our inception.

In  October   2000,   we  received  a  notice  of  default  from  our  Preferred
Stockholders,  which  triggered  certain  payment  requirements  as  well  as  a
Repricing and Redemption Event, as defined in the Preferred Stock Agreement (see
Note 12 - page 83 below).  We were also  delinquent  in the  payments of various
trade payables.  These matters, among others, raised substantial doubt as to our
ability to continue as a going  concern.  Our continued  existence was dependent
upon,  among  other  factors,  the our ability to return to  profitability,  the
continued  forbearance  of  the  our  lenders  and  creditors,   the  successful
renegotiation  of the terms of our  Preferred  Stock,  the outcome of litigation
filed against us, which alleged  violations of the federal securities laws (Note
13 see page 85 below),  and our  ability to raise  funds  from  additional  debt
and/or  capital.  We had  reduced  our  workforce  and planed to further  reduce
expenditures.  We believed that such  reductions,  the securing of a new working
capital borrowing facility,  and funds expected to be generated from operations,
would be sufficient to meet our expected  short-term  needs for working capital,
exclusive of any  obligation to redeem our Preferred  Stock as discussed in Note
12 - page 83 below.  However,  there could be no assurance that  sufficient cash
flows would be  generated  by us to avoid the further  depletion  of our working
capital,  that we would  successfully  renegotiate  the  terms of our  Preferred
Stock, or that the outcome of the litigation  would not have a material  adverse
impact on our operations.  Accordingly, we intended to obtain additional debt or
private equity  financing.  There could be no assurance that  additional debt or
equity financing would be available,  if and when needed, or that, if available,
such financing could be completed on commercially favorable terms.

Subsequently we were unable to improve the  profitability  or cash generation of
our operations or to obtain  additional  debt or equity.  During the years ended
June  30,  2002  and 2003 we had no  alternative  but to sell or close  down our
remaining  operating   businesses  leaving  a  substantial  short  fall  to  our
creditors.

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

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

During the fiscal  year ended June 30,  2005,  our then sole  director,  David J
Cutler,  advanced to us $88,000 by way of loan,  bearing interest at 8%, to meet
our ongoing  operating  expenses  and fund the costs of bringing  our  financial
statements and SEC reporting up to date. In the nine months ended March 31, 2006
Mr. Cutler has made further advances to us of $80,000 by way of loan to meet our
ongoing  operating  expenses  and  fund  the  costs of  bringing  our  financial
statements  and SEC  reporting up to date as required.  Effective  May 31, 2006,
$14,243 of this debt was converted into 10,536,775 shares of our common stock on
the basis of an  independent  third  party  valuation  and the  approval  of the
majority of our  independent  directors.  Following the issue of these shares of
our common stock Mr. Cutler owned 52.7% of our total authorized and issued share
capital and still had a loan outstanding to us of approximately $175,000.  There
is no guarantee that Mr. Cutler will continue to provide  further  funding to us
in the future.

It is our current intention to seek to reach satisfactory negotiated settlements
with our  outstanding  creditors,  vigorously  defend against any further appeal
that  may be made  against  our  currently  successful  defense  of the law suit
brought against us by certain of our  shareholders,  bring our financial records
and SEC  filings  up to date,  seek a listing on the over the  counter  bulletin
board,  raise debt and, or, equity financing to fund the negotiated  settlements
with our creditors and to meet ongoing  operating  expanses 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  is no  assurance  that  this  series  of  events  will be  satisfactorily
completed.

                                       83

<PAGE>

3.       ACQUISITIONS AND DISPOSITIONS:

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

<TABLE>
<CAPTION>

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


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


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

                                                                                ceased providing services December
                                                                                2003.


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

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

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

Javelin Systems International Pte 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                                   established March 2000.             sold March 2001.

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

In August 1999 we acquired  all of the  outstanding  capital  stock of RCS.  The
aggregate  purchase  price for RCS consisted of  $3,054,400  in cash  (including
acquisition  costs of $21,300).  The  acquisition  has been accounted for by the
purchase  method,  and  accordingly,  the results of operations of RCS have been
included with ours  commencing on the date of  acquisition.  The purchase  price
resulted in excess of purchase price over the fair value of net assets  acquired
of approximately $2,706,200.  Such excess was being amortized on a straight-line
basis over 10 years.  In June 2000, we agreed to pay to the former owner of RCS,
and then current  employee of ours,  $2,500,000 to settle all future  contingent
payments.  This settlement was recorded as compensation  expense and was paid in
July 2000.  The results of  operations  of RCS prior to the date of  acquisition
were not material.

                                       84

<PAGE>

In March 2000, we acquired all of the outstanding capital stock of Monument. The
aggregate purchase price for Monument consisted of $1,579,000 in cash (including
acquisition costs of $79,000) and 104,802 shares of common stock with a value of
$2,060,700.  The acquisition has been accounted for by the purchase method,  and
accordingly,  the results of operations of Monument have been included with ours
commencing on the date of acquisition.  The purchase price resulted in excess of
purchase  price  over the fair  value of net assets  acquired  of  approximately
$3,639,700.  Such excess was being amortized on a straight-line basis over three
years.  The results of operations of Monument  prior to the date of  acquisition
were not material.

In August 2000, we executed a sale agreement  with the then current  director of
Aspact (the  "Purchaser").  The initial  purchase  price of  $350,000,  which is
reflected in other assets in the  consolidated  balance sheet, was payable to us
in monthly installments of $14,600 commencing in July 2001. Consequently, a loss
on sale of approximately  $229,000 was recognized for the fiscal year ended June
30, 2001. In the event the Purchaser  consummated an initial public  offering or
disposed of all or  substantially  all of Aspact's  common stock,  the Purchaser
would be 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 February 2001, the our  subsidiary,  RGB, sold its interest in Teneo Limited
to  employees  of  Teneo  for the  consideration  of a  $350,000  note  which is
reflected in other assets in the consolidated balance sheet. Consequently a gain
on sale of $432,000 was recognized during the fiscal year ended June 30, 2001.

On March 1, 2001,  the we completed  the sale of the  consulting  contracts  and
certain of the fixed assets of our Dynamic  Technologies,  Inc. (DTI) subsidiary
to a company controlled by DTI's former owners and certain shareholders of ours,
for a purchase  price of  $900,000  and the return for  cancellation  of 200,000
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 fiscal year ended March 31, 2001.

4. ASSETS

Effective  January 1, 2004,  all our  remaining  assets,  with the  exception of
certain other receivables, were transferred to the trustee of the assignment for
benefit of the Aspeon and CCI creditors at a fair market value of $496,000.  Our
only remaining  asset - other  receivables - related to Directors' and Officers'
insurance due from our insurance  company to be paid to our attorneys in respect
of legal fees incurred in respect of the law suit brought  against us by certain
of our shareholders.

5. INVESTMENTS

During the years  ended June 30, 2001 and 2000,  we invested in debt  securities
with original maturities ranging from three to nine months.

                                       85

<PAGE>

Investments consisted of the following as of June 30, 2001 and 2000:

                                               2001                 2000

Obligations of U.S. government agencies     $     ---             $   519,500
Corporate debt securities                         ---                 505,700
                                            ----------            -------------
                                             $    ---             $ 1,025,200
                                            ==========            =============

6. INVENTORIES

Inventories  at June  30,  2001 and 2000  consisted  primarily  of point of sale
computer  hardware and components and were stated at the lower of cost (first-in
first-out) or market.

                                           2001                       2000

Raw materials                          $4,008,100                $ 7,506,400
Work-in-progress                          194,900                    110,400
Finished goods                                                     2,981,600
13,049,500
                                       ------------               ------------
                                       $7,184,600                $20,666,300
                                       ============               ============

Effective January 1, 2004 all inventories were transferred to the trustee of the
assignment for the benefit of the Aspeon and CCI creditors.

7. FIXED ASSETS

As at June 30, 2001 and 2000 our fixed assets comprised:


                                             2001                     2000

Computer equipment and software         $  5,155,300           $    6,597,400
Furniture and fixtures                     1,453,500                  835,300
Vehicles                                      58,500                  222,800
Leasehold improvements                       509,700                1,238,800
                                     ------------------        -----------------
                                           7,177,000                8,894,300
Accumulated depreciation                  (4,040,400)              (3,368,400)
                                     ------------------        -----------------
                                        $  3,136,600             $  5,525,900
                                     ==================        =================

Effective  January 1, 2004 all fixed assets were  transferred  to the trustee of
the assignment for the benefit of the Aspeon and CCI creditors.

Depreciation  expense was approximately  $1,577,700 and $1,964,700 for the years
ended June 30, 2001 and 2000 respectively.

8. INTANGIBLE ASSETS

GOODWILL

 Excess of cost over net assets of purchased  businesses  (goodwill)  represents
the excess of  purchase  price over the fair value of the net assets of acquired
businesses.  For the  acquisitions of Posnet,  CCI,  Aspact,  RGB, Jade, RCS and
Monument,  the excess was allocated entirely to goodwill. We determined that for
these acquired  companies,  there were no other  identifiable  intangible assets
that would require an allocation of the purchase  price.  Goodwill was stated at
cost and was amortized on a straight-line  basis over periods ranging from three
to 25 years.

                                       86

<PAGE>

OTHER INTANGIBLE ASSETS

Other   intangible   assets  include  the  estimated  value  associated  with  a
non-compete agreement, workforce and software acquired in the acquisition of DTI
(Note 3). These items are being amortized on a straight-line  basis over periods
ranging from two to ten years.

Amortization of goodwill and other  intangible  assets amounted to approximately
$2,988,400  and  $2,998,100  for  the  years  ended  June  30,  2001  and  2000,
respectively.

At September  30, 2000,  we recorded an impairment  charge of  $17,366,000.  The
provision  includes  charges  for  the  write-off  of  $16,624,600  of  goodwill
associated  with DTI and Monument and the  write-off of the  remaining  $741,400
balance of other intangible assets. At March 31, 2001, we recorded an impairment
charge of  $2,664,900.  The  provision  includes  charges for the  write-off  of
goodwill  associated with RCS and the remaining goodwill of Monument.  A further
write off of $3,300,500  was recorded as at June 30, 2001in  respect of goodwill
and other intangible assets.

9. LIABILITIES

In December  2003, we appointed  attorney Frank Blundo Jr. P.C. as trustee of an
assignment for the benefit of the Aspeon and CCI creditors  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 be 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.  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.

As at June 30,  2004  and  2003 our  total  liabilities  also  included  certain
liabilities  in  respect  of  Javelin  Asia  and RCS that  remained  outstanding
following the termination of their operations.

10. ACCRUED SEVERANCE COSTS

Included in accrued  expenses as of June 30, 2000 was  $3,900,000  of  severance
costs for nine senior management  personnel  terminated in June 2000. Such costs
include payroll and related expenses,  health benefits and $2,500,000 associated
with the settlement of future contingent  payments with the selling  shareholder
of RCS (Note 3). The  termination  agreements  provided for the extension of the
exercise period to twenty-four months for previously granted stock options.  The
fair market value of the  underlying  common stock on the date the stock options
were modified was less than the exercise price; accordingly, there was no impact
to the  consolidated  statements  of  operations.  In addition,  we entered into
consulting agreements with five of the terminated employees, in which a total of
200,000 of our stock  options were granted with vesting  periods of  twenty-four
months.  The  impact  of  these  stock  options  to the  consolidated  financial
statements was not material. As of June 30, 2001, there are no remaining accrued
costs associated with these termination agreements.

                                       87

<PAGE>

As of March 31, 2001, the remaining  balance of accrued severance costs included
in the accrued expenses is $354,000 which represents the remaining accrued costs
incurred during the quarter ended December 31, 2000. Such costs include payroll,
related  expenses  and  health  benefits  for  five  terminations.  Four  of the
termination  agreements  provided for the  extension  of the exercise  period to
ninety  days  for  previously  granted  stock  options.  The  fifth  termination
agreement  provided  for the  extension of the  exercise  period to  twenty-four
months for  previously  granted  stock  options.  The fair  market  value of the
underlying  common  stock on the date the stock  options  were  modified for all
agreements was less than the exercise price; accordingly, there was no impact to
the consolidated statements of operations.

11. 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

         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

                                       88

<PAGE>

         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.  Aspeon did not  guarantee  this line of
credit  which  ceased to be a liability of the group 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 2001at 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.  Aspeon did not guarantee this line
of  credit  which  ceased to be a  liability  of the group 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. Aspeon provided a guarantee for this facility that
was to be  released  on its sale of Javelin  Australia  in  January  2003 and in
respect of which it was 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, 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.

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

The remainder of the balance of notes payable as at March 31, 2006  represents a
loan to us of $169,000 by David J Cutler, our Chief Executive Officer and one of
our directors.  The loan,  bearing  interest at 8%, was made to meet our ongoing
operating  expenses and fund the costs of bringing our financial  statements and
SEC  reporting  up to date.  Effective  May 31,  2006,  $14,243 of this debt was
converted  into  10,536,775  shares  of our  common  stock  on the  basis  of an
independent  third  party  valuation  and the  approval  of the  majority of our
independent  directors.  Following the issue of these shares of our common stock
Mr.  Cutler owned 52.7% of our total  authorized  and issued  share  capital and
still  had a loan  outstanding  to us of  approximately  $175,000.  There  is no
guarantee  that Mr.  Cutler will  continue.  There can be no assurance  that Mr.
Cutler will provide us with further funding in the future.

                                       89

<PAGE>

12. 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.

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

                                       90

<PAGE>

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 53,064 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:

<TABLE>
<CAPTION>

                                                      Three months       Nine months
                                                         Ended              Ended
                                                   ------------------ ------------------
<S>                                                <C>                <C>
                                                              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
                                                   ================== ==================
</TABLE>

 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.

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

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<PAGE>

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.

13.COMMITMENTS:

Leases

As reported in our Form 10K for the fiscal year ended June 30, 2000:

We leased our facilities and certain  equipment under  non-cancelable  operating
leases subject to scheduled rent increases.

We leased certain  computer and office equipment under capital leases with three
to  five-year  terms and  interest  rates  ranging from 9.5% to 15%. The cost of
assets  acquired  under  capital  leases during the year ended June 30, 2000 was
$551,800 with accumulated amortization of $75,700 as of June 30, 2000.

Minimum lease commitments at June 30, 2001 are as follows:

<TABLE>
<CAPTION>

YEAR ENDING JUNE 30                                          CAPITAL            OPERATING
-------------------                                          ---------          ----------
<S>                                                         <C>                 <C>
2002..................................................      $   111,800          $ 1,734,300
2003..................................................          105,500            1,519,300
2004..................................................           71,900              929,100
2005..................................................           53,900              769,500
2006.....................................                            --              769,500
Thereafter............................................               --              691,600
                                                                ---------         ----------
Total minimum lease payments..........................          343,100           $6,413,300
                                                                =========         ==========
Less amount representing interest.....................          (64,600)
                                                                ---------
Present value of minimum obligations..................          278,500
Current portion.......................................         (101,600)
                                                               ----------
Long-term portion.....................................        $ 176,900
                                                               ==========
</TABLE>

                                       92

<PAGE>

As at June  30,  2003  and  2004 we were in  default  on all of our  outstanding
capital and operating  leases and the full amount of our liability  under theses
lease is  recorded  as current  liabilities  included in our balance of accounts
payable.

Rent  expense  under  operating  lease  agreements  aggregated  approximately  $
1,929,600 and $1,373,100 for the years ended June 30, 2001 and 200o respectively
and was  included in general  and  administrative  expenses in our  consolidated
statements of operations.

Employment Agreements

We had employment  agreements  with our key employees,  which expired at various
dates through June 2003. Certain agreements provided for incentive bonuses which
are payable if specified management goals are attained.

Future annual minimum  payments  under the employment  agreements as of June 30,
2001 were as follows:

                                                              EMPLOYMENT
YEAR ENDING JUNE 30                                           AGREEMENT
-------------------                                           ----------

2002........................................................   1,830,000
2003........................................................   1,491,000
                                                              ----------
Total.......................................................  $3,321,000
                                                              ==========

Effective  June  30,  2003  the  11  individuals  covered  by  these  employment
agreements  had  resigned  of  their  own  volition  or left us on the  basis of
negotiated settlements that had been paid in full.

Litigation

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 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

                                       93

<PAGE>

States District Court dismissed the suit with prejudice and entered  judgment in
favor of the us and our officers.  On September  20, 2001 the lead  plaintiff in
the class action suit appealed against the dismissal of the case. On January 21,
2003 the  decision  to dismiss  the case was upheld but the lead  plaintiff  was
given the opportunity to remedy the  deficiencies in the complaint that had been
filed.  Accordingly  on May 30, 2003 the  plaintiff  filed its  "Second  Amended
Consolidated  Complaint" which again was subsequently  dismissed by the District
Court.  On  November  26,  2003 the lead  plaintiff  filed  its  "Third  Amended
Consolidated  Complaint" which was again dismissed with prejudice in March 2004.
The lead  plaintiff  once again  appealed  against the  dismissal and the United
States  Court of Appeals  for the Ninth  Circuit  affirmed  the  dismissal  with
prejudice  on  February  23,  2006.  This is the fifth time that the Courts have
ruled in favor of us and against the  shareholders  who have  brought  this suit
against us. On each of the previous  occasions the shareholders who have brought
this suit  against us have filed an appeal  against the  decision of the Courts.
There can be no  assurance  that the  shareholders  who have  brought  this suit
against us will not file a further  appeal  against the Courts' latest ruling in
which case we will continue to vigorously defend against the claims.

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.

Guarantees
 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. Aspeon provided a guarantee for this facility that
was to be  released  on its sale of Javelin  Australia  in  January  2003 and in
respect of which it was indemnified by the purchaser of Javelin Australia.

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<PAGE>

We leased  office and  warehouse  space in  Warrington,  Cheshire UK  comprising
approximately   7,200  square  feet  to  support  sales,   administration,   and
warehousing  activities  for the Solutions  Services  business.  We paid rent of
approximately  $4,500 per month.  The lease expired in 2001 and was subsequently
extended to September 2003. Aspeon,  Inc. provided a guaranty in respect of this
lease that was to be released on its sale of RGB in March 2002 and in respect of
which it was  indemnified by the  purchasers of RGB.  Aspeon,  Inc.'s  potential
contingent  liability in respect of this lease ended in September  2003 with the
expiration of the lease.


14. 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 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 largest
amount outstanding under this loan was approximately $85,300. 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.

In August 2000, we executed a sale agreement  with the then current  director of
Aspact (the  "Purchaser").  The initial  purchase  price of  $350,000,  which is
reflected in other assets in the consolidated  balance sheet, 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 for the fiscal year ended
June 30, 2001. In the event the Purchaser consummated an initial public offering
or disposed of all or substantially  all of Aspact's common stock, the Purchaser
would be 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 February 2001, the our  subsidiary,  RGB, sold its interest in Teneo Limited
to  employees  of  Teneo  for the  consideration  of a  $350,000  note  which is
reflected in other assets in the consolidated balance sheet. Consequently a gain
on sale of $432,000 was recognized during the fiscal year ended June 30, 2001.

On March 1, 2001,  the we completed  the sale of the  consulting  contracts  and
certain of the fixed assets of our Dynamic  Technologies,  Inc. (DTI) subsidiary
to a company controlled by DTI's former owners and certain shareholders of ours,
for a purchase  price of  $900,000  and the return for  cancellation  of 200,000
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 fiscal year ended March 31, 2001.

                                       95

<PAGE>

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.  Following  the  completion of the due diligence
process  during the three  months ended  December  31, 2005,  it was agreed with
Frank G Blundo,  Jr. P.C.,  trustee of the  assignment for the benefit of Aspeon
and CCI creditors, that Mr. Cutler would invest $20,000 in us for the benefit of
Aspeon and CCI creditors in return for a number of shares of our common stock to
be  determined.  Accordingly  during the three  months  ended  December 31, 2005
$20,000  which had been  placed in escrow  with Frank G Blundo,  Jr. P.C. by Mr.
Cutler was  released  for the  benefit of Aspeon and CCI  creditors.  On May 31,
2006,  based on an  independent  third  party  valuation,  the  majority  of our
independent  directors  approved  the issue of  10,536,775  shares of our common
stock to Mr.  Cutler for the  conversion  of  $14,243  of his debt into  equity.
Following  the issue of these shares of our common stock Mr.  Cutler owned 52.7%
of  our  total  authorized  and  issued  share  capital  and  still  had a  loan
outstanding to us of approximately $175,000.

During the fiscal  year ended June 30,  2005,  our then sole  director,  David J
Cutler,  advanced to us $88,000 by way of loan,  bearing interest at 8%, to meet
our ongoing  operating  expenses  and fund the costs of bringing  our  financial
statements and SEC reporting up to date. In the nine months ended March 31, 2006
Mr. Cutler has made further advances to us of $80,000 by way of loan to meet our
ongoing  operating  expenses  and  fund  the  costs of  bringing  our  financial
statements  and SEC  reporting up to date as required.  Effective  May 31, 2006,
$14,243 of this debt was converted into 10,536,775 shares of our common stock on
the basis of an  independent  third  party  valuation  and the  approval  of the
majority of our  independent  directors.  Following the issue of these shares of
our common stock Mr. Cutler owned 52.7% of our total authorized and issued share
capital and still had a loan outstanding to us of approximately $175,000.  There
is no guarantee that Mr. Cutler will continue to provide  further  funding to us
in the future.

15.  STOCKHOLDERS' DEFICIT:

Preferred Stock -- We have the authority to issue 1,000,000  shares of preferred
stock of which 10,000 was  subsequently  designated  as  mandatorily  redeemable
stock. The Board of Directors has the authority to issue such preferred stock in
series and determine the rights and preferences of the shares.

                                       96

<PAGE>

Common Stock - We have sold and issued the following securities,  which were not
registered  under the  Securities Act of 1933, as amended (the "Act") since June
30, 1999.

In September 1999 and December 1999, respectively,  we issued 79,270 and 104,698
shares of our Common Stock to Gary Green,  Roger  Scarlett,  Anthony Sampson and
Contech  Consultants,  Ltd. as further  consideration for our acquisition of all
the outstanding capital stock of RGB/Trinet Limited and of Jade  Communications,
Ltd.,  corporations  organized  under the laws of England.  The  issuance of the
Common Stock was deemed to be exempt from registration  under the Securities Act
of 1933, as amended ("the Act") by virtue of Section 4(2) of the Act because the
issuance did not involve a public offering.

In March 2000, we issued  104,802  shares of the our Common Stock to Mr. Chester
Pazdziorny and Mr. Carl Rubin as consideration for our acquisition of all of the
outstanding capital stock of Monument Software Corporation,  organized under the
laws of Massachusetts.  The issuance of the Common Stock was deemed to be exempt
from registration under the Act by virtue of Section 4(2) of the Act because the
issuance did not involve a public offering.

In March 2000,  we issued  87,288  shares of the our Common Stock to Gary Green,
Roger  Scarlett,  Anthony  Sampson  and  Contech  Consultants,  Ltd.  as further
consideration  for our  acquisition  of all the  outstanding  capital  stock  of
RGB/Trinet  Limited and of Jade  Communications,  Ltd.,  corporations  organized
under the laws of England.  The  issuance  of the Common  Stock was deemed to be
exempt  from  registration  under the Act by virtue of  Section  4(2) of the Act
because the issuance did not involve a public offering.

The recipients of the above-described  securities represented their intention to
acquire the securities for investment  only and not with a view to  distribution
thereof.  Appropriate  legends were affixed to the stock certificates  issued in
such transactions.

 In August 2000, 150 shares of Preferred Stock plus accrued and unpaid dividends
were converted into 53,064 shares of our common stock valued at $94,700.

On April 22, 2005, our sole  director,  David J Cutler entered into an agreement
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI creditors, subject to due diligence, to invest up to $50,000 cash
in us for the benefit of our  creditors  in return for a number of shares of our
common stock to be  determined.  Following  the  completion of the due diligence
process  during the three  months ended  December  31, 2005,  it was agreed with
Frank G Blundo,  Jr. P.C.,  trustee of the  assignment for the benefit of Aspeon
and CCI creditors, that Mr. Cutler would invest $20,000 in us for the benefit of
Aspeon and CCI creditors in return for a number of shares of our common stock to
be  determined.  Accordingly  during the three  months  ended  December 31, 2005
$20,000  which had been  placed in escrow  with Frank G Blundo,  Jr. P.C. by Mr.
Cutler was  released  for the  benefit of Aspeon and CCI  creditors.  On May 31,
2006,  based on an  independent  third  party  valuation,  the  majority  of our
independent  directors  approved  the issue of  10,536,775  shares of our common
stock to Mr.  Cutler for the  conversion  of  $14,243  of his debt into  equity.
Following  the issue of these shares of our common stock Mr.  Cutler owned 52.7%
of  our  total  authorized  and  issued  share  capital  and  still  had a  loan
outstanding to us of approximately $175,000.

                                       97

<PAGE>

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.

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 11 - page 81 above, 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 12 page 83). 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 June 30, 2003, 2004 and 2005, no warrants were outstanding.

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

                                       98

<PAGE>

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 year ended June 30, 2004, 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
during the year ended June 30 2004:

                                                     YEAR ENDED
                                                     JUNE 30, 2004
                                         ---------------------------------------
                                                                WEIGHTED
                                                                AVERAGE

                                             OPTIONS         EXERCISE PRICE

FOR OPTIONS GRANTED AT FAIR MARKET
  VALUE ON THE DATE OF GRANT:
Options outstanding beginning of
period................                       850,000              $0.063
  Granted..........................               --                  --
  Exercised........................               --                  --
  Canceled.........................               --                  --
                                          -----------           ----------
Options outstanding................          850,000              $0.063
                                          ===========           ==========
Options exercisable................          616,667              $0.063
                                          ===========           ==========

                                       99

<PAGE>

The range of exercise prices for options  outstanding and options exercisable at
June 30, 2004 were as follows:

<TABLE>
<CAPTION>


                                      OPTIONS OUTSTANDING                           OPTIONS EXERCISABLE
                                  ------------------------------              ------------------------------
RANGE OF                                        WEIGHTED AVERAGE
 EXERCISE PRICE         OUTSTANDING             REMAINING LIFE                  EXERCISABLE         EXERCISE PRICE
---------------         -----------             ----------------                -----------         --------------
<S>                     <C>                     <C>                             <C>                 <C>
$0.07.............        250,000                      3.0                        250,000                 $0.07
$0.06.............        600,000                      8.8                        366,667                  0.06
                        -----------                    ---                      ----------                ------
                          850,000                      7.0                        616,667                $0.063
                        ===========                    ===                      ==========                ======
</TABLE>

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

Pro Forma  Stock-Based  Compensation  Disclosures -- We apply APB Opinion 25 and
related  interpretations in accounting for our stock options that are granted to
employees.  Accordingly,  no compensation cost has been recognized for grants of
options to  employees  since the  exercise  prices were not less than the quoted
value of our  common  stock on the  grant  dates.  Had  compensation  cost  been
determined  based on the fair value at the grant dates for awards under the Plan
consistent  with the method of SFAS No. 123, our net income  (loss) and earnings
(loss) per share would have been  unchanged as all expenses in respect of issued
stock options were immaterial .

16.  EMPLOYEE BENEFITS PLANS:

We sponsored  several 401(k) retirement plans (the "Plans") that were considered
defined contribution  discretionary plans under which eligible  participants may
contribute up to a maximum of 15% of their pre-tax  earnings  subject to certain
statutory  limitations.  We made no  discretionary  contributions  to the  Plans
during the years ended June 30 2001 and 2000 or subsequent to that date.

17. INCOME TAXES:

We had, and have,  very  substantial  net operating  losses carried  forward for
Federal and State tax purposes which, unless utilized,  expire from 2012 through
2024.  However,  following the issue of 52.7% of our total authorized and issued
share capital on May 31, 2006 to Mr. Cutler,  one of our directors,  our ability
to use these losses is substantially  restricted by the impact of section 382 of
the Internal Revenue Code following such a merger.

18. SEGMENT INFORMATION:

Our  reportable  segments  are  strategic  business  units that offer  different
products  and  services.  They are  managed  separately  because  each  business
requires  different  technology  and  marketing  strategies.  The segments and a
description of their businesses follows:

The  Research and  Development  segment  provides  all research and  development
activities for the other business segments

The  POS  Products  segment  designs,   manufactures  and  markets  open  system
touchscreen  point-of-sale (POS) network-ready  hardware systems.  These systems
are sold on a stand-alone basis or integrated as part of an end-to-end solution.

The Solutions Services segment provides retail foodservice  technology solutions
and  services  that  enable  restaurants  and  retailers  to  capture,  analyze,
disseminate   and  use   information   throughout  the   enterprise,   from  the
point-of-sale   (POS)  cash   register   terminal  to  the  back  office  to  an
organization's headquarters.

The ASP Services  segment  provides  pre-integrated,  mission-critical  business
application   services  customized  to  meet  industry  specific  needs  of  the
foodservice and retail industry.

                                      100

<PAGE>

The accounting  policies of the segments are the same as those  described in the
"Summary of Significant Accounting Policies." Segment data includes intersegment
revenues.  We do not  allocate  corporate-headquarters  costs  or  research  and
development  costs  to  the  operating  segments.  Resources  for  research  and
development are allocated  based on budgets.  We evaluate the performance of our
segments and allocate resources to them based on net income (loss).

Information  about  the our  reportable  segments  for the years  ended  June 30
follows:

<TABLE>
<CAPTION>
                                RESEARCH AND               POS             SOLUTION            ASP
                                DEVELOPMENT              PRODUCTS          SERVICES        SERVICES            TOTAL
                                ----------              -----------       ----------     -----------       -----------
<S>                             <C>                     <C>              <C>             <C>               <C>
2000
Revenues......................  $        --             $50,414,700      $33,091,000     $13,469,700       $96,975,400
Net income (loss).............   (1,298,900)               (681,500)        (406,500)     (5,713,000)       (8,099,900)
Total assets..................  $        --             $69,000,200      $16,122,000     $ 6,661,300       $91,783,500

2001
Revenues......................  $        --             $27,864,200      $31,301,800    $  7,470,900       $66,636,900
Net income (loss).............           --             (13,971,400)      (6,194,800)    (32,895,900)      (53,062,100)
Total assets..................  $        --             $ 8,990,400      $19,344,900    $  2,297,200       $30,632,500
</TABLE>

A reconciliation of total segment sales to total consolidated revenues and total
segment net income (loss) to total  consolidated net income (loss) for the years
ended June 30, 2001 and 2000 is as follows:

<TABLE>
<CAPTION>

                                                                2001              2000
                                                             -----------       ------------
<S>                                                         <C>                <C>
REVENUES:
  Total segment revenues..............................      $ 66,636,900         $ 96,975,400
  Elimination of inter-segment revenues...............        (5,526,400)         (15,930,200)
                                                            --------------      ---------------
  Consolidated revenues...............................      $ 61,110,500         $ 81,045,200
                                                            ==============      ===============
NET (LOSS):
  Total segment net (loss).....................             $(53,062,100)        $ (8,099,900)
  Elimination of inter-segment gross profit net of
    income taxes......................................           501,200             (323,900)
  Elimination of non-segment expenses, net of taxes...                --             (877,400)
                                                            --------------      ---------------
  Consolidated net (loss)......................             $(52,560,900)        $ (9,301,200)
                                                            ==============      ===============
</TABLE>

                                      101

<PAGE>

Specified items included in segment (loss) for the years ended June 30:

<TABLE>
<CAPTION>

                                        RESEARCH AND       POS        SOLUTION        ASP
                                        DEVELOPMENT     PRODUCTS      SERVICES      SERVICES        TOTAL
                                        ------------    --------      --------      --------        -----
<S>                                     <C>            <C>           <C>           <C>           <C>
2000
Interest expense..............          $       --     $  759,500    $  42,100     $    6,200    $  807,800
Interest income...............                  --       (389,800)     (33,000)            --      (422,800)
Depreciation and amortization
  expense.....................                  --        867,300    1,201,200      2,894,300     4,962,800
Income tax expense
  (benefit)...................            (669,100)    (2,598,800)     230,300      2,088,100      (949,500)
Expenditures for additions to
  long-lived assets...........           $      --    $ 1,199,600  $ 4,681,100    $14,170,900   $20,051,600

2001
Interest expense..............           $      --    $ 2,127,700  $   128,900     $   41,300    $2,297,900
Interest income...............                  --       (188,200)     (27,700)       (46,700)     (262,600)
Depreciation and amortization
  expense.....................                  --      1,187,700    1,077,600      2,300,800     4,566,100
Impairment Charge                               --             --    3,500,000     18,831,400    23,331,400
Income tax expense
  (benefit)...................                  --        (65,300)     224,600             --       159,300
Expenditures for additions to
  long-lived assets...........           $      --    $   106,200     $188,700     $  777,700    $1,072,600
</TABLE>

Revenues and long-lived  asset  information by geographic area as of and for the
years ended June 30:

<TABLE>
<CAPTION>
                                         UNITED
                                         STATES        EUROPE            ASIA           AUSTRALIA         TOTAL
                                       -----------   -----------      ----------      --------------    ---------
<S>                                   <C>             <C>                <C>             <C>            <C>
2000
Revenues........................      $52,924,800      $23,375,200        $2,116,000     $2,629,200     $81,045,200
Long-lived assets...............      $39,318,600      $ 2,377,800        $1,454,700     $   42,400     $43,193,500

2001
Revenues........................      $36,340,800      $21,888,800        $  235,400     $2,645,500     $61,110,500
Long-lived assets...............     $  2,734,600      $   158,400        $  518,300     $   56,300     $ 3,467,600
</TABLE>

19.  SUBSEQUENT EVENTS:

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

                                      102

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

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

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

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

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.

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<PAGE>

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

On April 22, 2005, our sole  director,  David J Cutler entered into an agreement
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI creditors, subject to due diligence, to invest up to $50,000 cash
in us for the benefit of our  creditors  in return for a number of shares of our
common stock to be  determined.  Following  the  completion of the due diligence
process  during the three  months ended  December  31, 2005,  it was agreed with
Frank G Blundo,  Jr. P.C.,  trustee of the  assignment for the benefit of Aspeon
and CCI creditors, that Mr. Cutler would invest $20,000 in us for the benefit of
Aspeon and CCI creditors in return for a number of shares of our common stock to
be  determined.  Accordingly  during the three  months  ended  December 31, 2005
$20,000  which had been  placed in escrow  with Frank G Blundo,  Jr. P.C. by Mr.
Cutler was  released  for the  benefit of Aspeon and CCI  creditors.  On May 31,
2006,  based on an  independent  third  party  valuation,  the  majority  of our
independent  directors  approved  the issue of  10,536,775  shares of our common
stock to Mr.  Cutler for the  conversion  of  $14,243  of his debt into  equity.
Following  the issue of these shares of our common stock Mr.  Cutler owned 52.7%
of  our  total  authorized  and  issued  share  capital  and  still  had a  loan
outstanding to us of approximately $175,000.

During the fiscal  year ended June 30,  2005,  our then sole  director,  David J
Cutler,  advanced to us $88,000 by way of loan,  bearing interest at 8%, to meet
our ongoing  operating  expenses  and fund the costs of bringing  our  financial
statements and SEC reporting up to date. In the nine months ended March 31, 2006
Mr. Cutler has made further advances to us of $80,000 by way of loan to meet our
ongoing  operating  expenses  and  fund  the  costs of  bringing  our  financial
statements  and SEC  reporting up to date as required.  Effective  May 31, 2006,
$14,243 of this debt was converted into 10,536,775 shares of our common stock on
the basis of an  independent  third  party  valuation  and the  approval  of the
majority of our  independent  directors.  Following the issue of these shares of
our common stock Mr. Cutler owned 52.7% of our total authorized and issued share
capital and still had a loan outstanding to us of approximately $175,000.  There
is no guarantee that Mr. Cutler will continue to provide  further  funding to us
in the future.

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

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

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

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<PAGE>

In January 2006 we were contacted by the SEC's Office of Enforcement Liaison who
notified us that while they  recognized the progress we had made in bringing our
SEC filings up to date, they still considered us to be delinquent in our filings
because of our  failure to  complete  filings in respect of the period  April 1,
2001 through June 30, 2003. We are currently  establishing  the likely costs and
practicality  of completing the SEC filings for the period April 1, 2001 through
June 30, 2003. In the meantime  there  continues to be a risk that our shares of
common stock may be deregistered by the SEC's Office of Enforcement  Liaison due
the  continued  delinquency  of our SEC  filings  for the  period  April 1, 2001
through June 30, 2003.  In July 2006,  on the basis of further  audit work and a
review of subsequent  events performed by O'Donnell,  O'Donnell has been able to
complete the audit of our June 30, 2001 financial statements as set out on pages
57 through 97. We are currently  establishing  the likely costs and practicality
of completing  the SEC filings and related  financial  statements for the period
July 1, 2001 through June 30, 2003.

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

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

On May 31, 2006, based on an independent third party valuation,  the majority of
our independent  directors approved the issue of 10,536,775 shares of our common
stock to Mr.  Cutler for the  conversion  of  $14,243  of his debt into  equity.
Following  the issue of these shares of our common stock Mr.  Cutler owned 52.7%
of  our  total  authorized  and  issued  share  capital  and  still  had a  loan
outstanding to us of approximately $175,000

In August 2006,  on the basis of further  audit work and a review of  subsequent
events performed by O'Donnell,  O'Donnell has been able to complete the audit of
our June 30, 2001 financial statements as set out on pages 57 through 97. We are
currently  establishing  the likely costs and practicality of completing the SEC
filings and related  financial  statements  for the period July 1, 2001  through
June 30, 2003.

                                      105

<PAGE>


                                   SIGNATURES

    In  accordance  with Section 13 or 15(d) of the  Securities  Exchange Act of
1934, the  Registrant  duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                                    ASPEON, INC.

Date: August 25, 2006                           By: /s/ DAVID  J. CUTLER
                                                    ----------------------------
                                                    David J Cutler
                                                    Chief Executive Officer, &
                                                    Chief Financial Officer

    In accordance with the Securities Exchange Act of 1924, this report has been
signed  by  the  following  persons  on  behalf  of  the  Registrant  and in the
capacities and on the dates indicated.

              SIGNATURE                      TITLE                   DATE


     /s/ DAVID J. CUTLER             Chief Executive Officer     August 25, 2006
     ------------------------
         David  J. Cutler                         &
                                     Chief Financial Officer
                                     (Principal Financial and
                                     Accounting Officer)







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