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, 2004.

[_]      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)

            4704 HARLAN STREET, SUITE 420
                  DENVER, COLORADO                                80212
      (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. []

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

    The  Registrant's  revenues  for its fiscal  year  ended June 30,  2004 were
$865,000.

    The   aggregate   market  value  of  the  voting   common   equity  held  by
non-affiliates  of the  Registrant  on October 20, 2005 was  approximately  $819
based upon the reported closing sale price of such shares on the Grey Sheets for
that date. As of October 20, 2005,  there were 9,436,225  shares  outstanding of
which 8,187,904 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]



                                       1
<PAGE>




                                  ASPEON, INC.

                        2004 ANNUAL REPORT ON FORM 10-KSB

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

   ITEM                                  DESCRIPTION                               PAGE
<S>           <C>                                                                  <C>
Item 1.       Description of Business..............................................      3

Item 2.       Description of Properties............................................     10

Item 3.       Legal Proceedings....................................................     11

Item 4.       Submission of Matters to a Vote of Security Holders..................     12

Item 5.       Market for Common Equity and Related Stockholder Matters.......           12

Item 6.       Management's Discussion and Analysis of Financial Condition
              and Results of Operations............................................     13

Item 7.       Financial Statements.................................................     25

Item 8.       Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure.............................................     25

Item 8a.      Controls and Procedures..............................................     26

Item 9.       Directors, Executive Officers, Promoters and Control Persons:
              Compliance with Section 16(a) of the Exchange Act..................       26

Item10.       Executive Compensation...............................................     28

Item 11.      Security Ownership of Certain Beneficial Owners and
              Management...........................................................     30

Item 12.      Certain Relationships and Related Transactions.......................     32

Item 13.      Exhibits and Reports on Form 8-K.....................................     32

Item 14.      Principal Accountant Fees and Services...............................     35
</TABLE>


                                       2
<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,  win the
outstanding  law suit brought against us by certain of our  shareholders,  bring
our financial records and SEC filings up to date,  achieve a listing on the over
the  counter  bulletin  board,  raise debt and,  or,  equity to fund  negotiated
settlements  with our creditors and to meet our ongoing  operating  expenses and
merge with another  entity with  experienced  management and  opportunities  for
growth  in  return  for  shares  of our  common  stock to  create  value for our
shareholders. 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
4704 Harlan Street, Suite 420, Denver,  Colorado, 80212 and our telephone number
is 303-380-9784.

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

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

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

    -SOLUTION SERVICES.  Through our CCI, Jade Communications  Limited ("Jade"),
RGB/Trinet Limited ("RGB"), (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.


                                       3
<PAGE>

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

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

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

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

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

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

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

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

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

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


                                       4
<PAGE>

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

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

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

 In October 2000, the Nasdaq Stock Market  ("Nasdaq")  suspended  trading in 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 has once again appealed  against the dismissal and the appeal
is anticipated to be heard before the end of 2005.

In December 2000 we restated the results for the fiscal quarters ended September
30,  1999,  December 31, 1999 and March 31, 2000 by an aggregate of $1.7 million
or $0.19 per share.  Revenue was reduced by $679,000 or 1.05%,  our gross profit
was decreased by $206,000 or 1.22%,  $1.4 million of the restatement  related to
an  adjustment  to increase the amount  recorded for the  beneficial  conversion
feature  associated with the issuance of our 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.


                                       5
<PAGE>

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
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


                                       6
<PAGE>

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

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

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

On April 22, 2005 our sole  director,  David J Cutler  entered into an agreement
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI creditors, subject to due diligence, to invest up to $50,000 cash
in us for the benefit of our  creditors  in return for a number of shares of our
common stock to be determined.  The due diligence process is yet to be finalized
and no shares of our common stock have been issued in respect of this  agreement
as yet.

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

On  September  9, 2005 we  received a letter  from the SEC dated  June 24,  2005
indicating that unless we came into  compliance with the reporting  requirements
under the Securities Exchange Act of 1934 within 15 days we may be deregistered.
On  September  12,  2005 we faxed a letter  to the SEC's  Office of  Enforcement
Liaison  indicating  our  intention to come into  compliance  with the reporting
requirements under the Securities  Exchange Act of 1934 by November 15, 2005. We
have had no response to our fax to the SEC and there can be no assurance that we
will not be deregistered by the SEC in due course.

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

PLANNED OPERATIONS

Our plan of operation is to reach satisfactory  negotiated  settlements with our
outstanding  creditors,  win the  outstanding  law suit  brought  against  us by
certain of our  shareholders,  bring our financial records and SEC filings up to
date, obtain debt 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.  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.



                                       7
<PAGE>


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

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

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

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

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

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

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


                                       8
<PAGE>

thereafter.  If such registration occurs, it will be undertaken by the surviving
entity after it has  successfully  consummated a merger or acquisition and is no
longer  considered an inactive company.  The issuance of substantial  additional
securities and their potential sale into any trading market which may develop in
our  securities  may have a depressive  effect on the value of our securities in
the future. There is no assurance that such a trading market will develop.

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

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

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

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

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

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


                                       9
<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 June 30, 2004, we had 1 part-time employee.

As of October 20, 2005 we have 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,  win the outstanding law suit brought against us
by certain of our  shareholders,  bring our financial records and SEC filings up
to date, obtain debt and, or, equity finance to fund negotiated settlements with
our creditors and to meet our ongoing operating  expenses,  seek 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 4704 Harlan Street,  Suite 420, Denver,  Colorado,  80212
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.  The
lease  expired in 2003.  The  outstanding  liability in respect of this lease is
recorded in our balance of accounts payable.

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.  The lease expired in
2003.  The  outstanding  liability  in respect of this lease is  recorded in our
balance of accounts payable.


                                       10
<PAGE>

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.  The  outstanding  liability  in respect of
this lease is recorded 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 scheduled to expire in 2005.  The
outstanding  liability  in respect of this lease is  recorded  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. 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. 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 although
we ceased to be responsible for this lease with the sale of RGB in March 2002.

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.

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


                                       11
<PAGE>

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
States District Court dismissed the suit with prejudice and entered  judgment in
favor of the us and our officers.  On September  20, 2001 the lead  plaintiff in
the class action suit appealed against the dismissal of the case. On January 21,
2003 the  decision  to dismiss  the case was upheld but the lead  plaintiff  was
given the opportunity to remedy the  deficiencies in the complaint that had been
filed.  Accordingly  on May 30, 2003 the  plaintiff  filed its  "Second  Amended
Consolidated  Complaint" which again was subsequently  dismissed by the District
Court.  On  November  26,  2003 the lead  plaintiff  filed  its  "Third  Amended
Consolidated  Complaint" which was again dismissed with prejudice in March 2004.
The lead plaintiff has once again appealed  against the dismissal and the appeal
is anticipated to be heard before the end of 2005.

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

In August 2001, we, together with our Chief Executive Officer, filed a six count
complaint against our former auditors,  PWC, alleging  professional  negligence,
intentional   interference  with  prospective   business  advantage,   negligent
interference  with  prospective  economic  advantage,  violation  of  California
Business and  Professions  Code Sections  17200 and 17500,  and  defamation.  In
August 2003 we reached an out of court  settlement  in our law suit against PWC.
Under the terms of the  settlement  we  received a payment of $1.3  million  and
agreement to write off certain  outstanding  invoices for  accounting  and legal
fees. Consequently we recognized a gain of $1,007,000 on the settlement although
the net cash we received after all costs totaled only $136,000.

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

ITEM 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, 2004 or  subsequent  to that
date.

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


                                       12
<PAGE>

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

Last  Reported  Price.  On October 20, 2005,  the last reported bid price of our
shares of common stock reported on the Grey Sheets was $0.0001 per share.

Holders.  As of October  20,  2005 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 11. Stockholders'
Deficit of our Financial Statements on page 62 below.

Stock  Incentive  Plans -- details  concerning  the activities and status of our
stock  incentive  plans during the period are set out in Note 11.  Stockholders'
Deficit of our Financial Statements on page 62 below.

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.


                                       13
<PAGE>

OVERVIEW

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

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

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

    -SOLUTION SERVICES.  Through our CCI, Jade Communications  Limited ("Jade"),
RGB/Trinet Limited ("RGB"), (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.

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.


                                       14
<PAGE>

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.

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

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

 In October 2000, the Nasdaq Stock Market  ("Nasdaq")  suspended  trading in 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,


                                       15
<PAGE>

styled  as a  "First  Amended  Consolidated  Complaint."  On  June 4,  2001  the
defendants  moved to dismiss this complaint and on September 17, 2001 the United
States District Court dismissed the suit with prejudice and entered  judgment in
favor of the us and our officers.  On September  20, 2001 the lead  plaintiff in
the class action suit appealed against the dismissal of the case. On January 21,
2003 the  decision  to dismiss  the case was upheld but the lead  plaintiff  was
given the opportunity to remedy the  deficiencies in the complaint that had been
filed.  Accordingly  on May 30, 2003 the  plaintiff  filed its  "Second  Amended
Consolidated  Complaint" which again was subsequently  dismissed by the District
Court.  On  November  26,  2003 the lead  plaintiff  filed  its  "Third  Amended
Consolidated  Complaint" which was again dismissed with prejudice in March 2004.
The lead plaintiff has once again appealed  against the dismissal and the appeal
is anticipated to be heard before the end of 2005.

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

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

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

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

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

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

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

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


                                       16
<PAGE>

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.

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

On April 22, 2005 our sole  director,  David J Cutler  entered into an agreement
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI creditors, subject to due diligence, to invest up to $50,000 cash
in us for the benefit of our  creditors  in return for a number of shares of our
common stock to be determined.  The due diligence process is yet to be finalized
and no shares of our common stock have been issued in respect of this  agreement
as yet.

During the fiscal  year ended June 30, 2005 our sole  director,  David J Cutler,
advanced  to us  $88,000  by way of loan,  bearing  interest  at 8%, to meet our
ongoing  operating  expenses  and  fund  the  costs of  bringing  our  financial
statements  and SEC  reporting  up to date.  Since  that date David J Cutler has
continued  to make  further  advances  to us by way of loan to meet our  ongoing


                                       17
<PAGE>

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

On  September  9, 2005 we  received a letter  from the SEC dated  June 24,  2005
indicating that unless we came into  compliance with the reporting  requirements
under the Securities Exchange Act of 1934 within 15 days we may be deregistered.
On  September  12,  2005 we faxed a letter  to the SEC's  Office of  Enforcement
Liaison  indicating  our  intention to come into  compliance  with the reporting
requirements under the Securities  Exchange Act of 1934 by November 15, 2005. We
have had no response to our fax to the SEC and there can be no assurance that we
will not be deregistered by the SEC in due course.

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

PLAN OF OPERATION

Our  plan of  operations  is to  negotiate  satisfactory  settlements  with  our
outstanding  creditors,  win the  outstanding  law suit  brought  against  us by
certain of our  shareholders,  bring our financial records and SEC filings up to
date, 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  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,  2004,  we had $0 cash on hand,  $5,600 of assets,  no  operating
business or other source of income,  outstanding  liabilities  in excess of $7.9
million  and an  outstanding  law suit  brought  against  us by  certain  of our
shareholders.

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

Consequently we are now dependent on raising  additional equity and, or, debt to
fund 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.

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

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

It is our current intention to seek to reach satisfactory negotiated settlements
with our outstanding creditors,  win the outstanding law suit brought against us
by certain of our  shareholders,  bring our financial records and SEC filings up
to date, 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.


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<PAGE>

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 45 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. 9 to our Financial Statements on page 58 below.

FISCAL YEAR ENDED JUNE 30, 2004

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

Revenue.

Revenue for the fiscal year ended June 30, 2004 was $865,000. Our only operating
business  during  the fiscal  year ended June 30,  2004 was CCI as all our other
operating  businesses  had been  sold or  terminated  in prior  fiscal  periods.
$458,000  of our revenue  related to products  sold by CCI in the period July 1,
2003 through August 3, 2003 when CCI ceased production, and $408,000 to services
provided by CCI, the majority  though the use of  subcontractors,  in the period
July 1, 2003 through December 31, 2003 when CCI ceased all operations.

Cost of Sales

Cost of sales for the fiscal  year ended June 30,  2004 was  $848,000,  $709,000
relating to the cost of supplying products and $139,000 to the cost of providing
services.  Our focus in the period  was to  generate  maximum  cash flow for our
creditors  during the close down of our  operations  rather than  attempting  to
maximize profits.  Consequently we used existing inventory that had already been
paid for to manufacture  and sell products that  generated  revenue and cash for
our creditors even if such sales were at less than the historic cost of sales.

Gross Profit

Gross  profit for the fiscal  year ended  June 30,  2004 was  $17,000,  or 2% of
revenue, for the reasons set out above.


                                       19
<PAGE>

General and Administrative Expenses.

General and administrative expenses for the fiscal year ended June 30, 2004 were
$512,000.  $356,000  related to the overhead costs of operating CCI prior to the
close down of its production operations effective August 3, 2003 and its service
operations  effective  December 31, 2003. The balance of $156,000 related to the
costs  of  Aspeon  principally   relating  Directors'  and  Officers'  insurance
($78,000) and director's and consultants' remuneration ($76,000) incurred in the
close down of our operations.

Selling and Marketing Expenses

Selling  and  marketing  expenses  for the fiscal  year ended June 30, 2004 were
$13,000.  These related to expenses  incurred by CCI prior to the termination of
its operations.

Depreciation

Depreciation  expense  for the fiscal  year ended June 30,  2004 was $92,000 and
related to the equipment used by CCI during the period in which it operated.

Gain on Settlement of Litigation

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

Gain on Assignment for the Benefit of Creditors

The gain on the  establishment  of the  assignment for the benefit of Aspeon and
CCI creditors recorded effective January 1, 2004 was $3,173,000.  All the assets
of Aspeon and CCI were  transferred  to the trustee for the  assignment  for the
benefit of Aspeon and CCI creditors effective January 1, 2004. The fair value of
the assets transferred was $496,000.  Creditors totaling $3,669,000 agreed to be
bound by the terms of the assignment for the benefit of Aspeon and CCI creditors
resulting in a gain of $3,173,000 on the establishment of the assignment for the
benefit of Aspeon and CCI creditors.

Profit from Operations.

The profit from  operations  was  $3,580,000  for the fiscal year ended June 30,
2004 due to the factors discussed above.

Interest and Other Income / (Expense), net

Interest and other  income /  (expense),  net for the fiscal year ended June 30,
2004 was an expense of  $(4,000)  largely  relating to the  interest  expense on
notes payable provided to us by certain of our directors and officers

Provision for Income Taxes.

No provision for income taxes was required in fiscal year ended June 30, 2004 as
we had significant tax losses brought forward from prior years.

Net Profit and Comprehensive Profit.

We reported a net profit of  $3,576,000  for the fiscal year ended June 30, 2004
due to the factors outlined above.

The  comprehensive  profit was  identical  to the net profit for the fiscal year
ended June 30, 2004.

CASH FLOW INFORMATION

For the twelve months ended June 30, 2004,  net cash generated in operations was
$320,000.  Net profit,  adjusted for non-cash items, resulted in a negative cash
flow of $(489,000) including a $(113,000) transfer of cash to the trustee of the
assignment for the benefit of Aspeon and CCI creditors. However, we were able to


                                       20
<PAGE>

generate  positive  cash flow of $809,000  from the  movement  in our  operating
assets and  liabilities  through  aggressive  collection of accounts  receivable
($901,000) and liquidation of our existing inventory ($586,000).

$79,000  positive  cash flow was  generated by our  investing  activities in the
fiscal year ended June 30, 2004 from the sale of fixed assets and proceeds  from
an investment  of ours.  The sale of fixed assets was in respect of assets which
had already been restated at fair value in prior fiscal periods and consequently
generated no gain or loss on sale.

Cash flow used in financing  activities was $401,000 for the twelve months ended
June 30, 2004 relating to the repayment of outstanding notes payable provided to
us by certain of our directors and officers.

ACCOUNTING PRONOUNCEMENTS

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

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

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

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

In May 2005,  the FASB issued SFAS No. 154,  "Accounting  Changes and Error - an
amendment  of APB  Opinion  No.  29." This  Statement  applies to all  voluntary
changes in  accounting  principle.  It also  applies to changes  required  by an
accounting  pronouncement in the usual instance that the pronouncement  does not
include specific transition  provisions.  When a pronouncement includes specific
transition  provisions,   those  provisions  should  be  followed.   Opinion  20
previously  required  that most  voluntary  changes in  accounting  principle be
recognized by including in net income of the period of the change the cumulative
effect of changing to the new  accounting  principle.  This  Statement  requires
retrospective  application to prior periods' financial  statements of changes in
accounting  principle,  unless  it is  impracticable  to  determine  either  the
period-specific  effects of the cumulative effect of the change.  This Statement
is effective for  accounting  changes and  corrections  of errors made in fiscal
years  beginning  after December 15, 2005. We do not expect  application of SFAS
No. 154 to have a material affect on our financial statements.

EFFECTS OF INFLATION

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


                                       21
<PAGE>

SUBSEQUENT EVENTS

In April 2005, we appointed David J Cutler as a new director and Chief Executive
Officer  and  subsequent  to  that  are now  focused  on  reaching  satisfactory
negotiated settlements with our outstanding  creditors,  winning the outstanding
law suit  brought  against  us by  certain  of our  shareholders,  bringing  our
financial records and SEC filings up to date,  seeking a listing on the over the
counter  bulletin  board,  raising  additional  debt and, or, equity to fund our
negotiated  settlement 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. PC, trustee of the assignment for the benefit of Aspeon
and CCI creditors,  subject to due diligence, to invest up to $50,000 cash in us
for the benefit of our  creditors in return for a number of shares of our common
stock to be determined.  The due diligence process is yet to be finalized and no
shares of our common stock have been issued in respect of this agreement as yet.

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

On  September  9, 2005 we  received a letter  from the SEC dated  June 24,  2005
indicating that unless we came into  compliance with the reporting  requirements
under the Securities Exchange Act of 1934 within 15 days we may be deregistered.
On  September  12,  2005 we faxed a letter  to the SEC's  Office of  Enforcement
Liaison  indicating  our  intention to come into  compliance  with the reporting
requirements under the Securities  Exchange Act of 1934 by November 15, 2005. We
have had no response to our fax to the SEC and there can be no assurance that we
will not be deregistered by the SEC in due course.

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

                                  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 us and our business.

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, win the outstanding 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 no assurance that this series of
events  will be  successfully  completed.  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. Any acquisition or merger will most likely be
dilutive to our existing stockholders.

WE HAVE A SUBSTANTIAL BALANCE OF OUTSTANDING LIABILITIES

As at June 30, 2004 we had  outstanding  liabilities  in excess of $ 7.9 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.
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


                                       22
<PAGE>

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

At  present we believe  that the  proceeds  from our  Directors'  and  Officers'
insurance policy will be sufficient to meet the legal cost incurred in defending
the consolidated law suit. However, there is no assurance that the proceeds from
our  Directors'  and Officers'  insurance  policy will be sufficient to meet the
legal cost  incurred  in  defending  the  consolidated  law suit and if they are
exhausted  there are no  further  funds to defend  the suit and we would have no
alternative  but to file for  bankruptcy.  Moreover,  if we were to lose the law
suit it is  unlikely  that  the  proceeds  from  the  Directors'  and  Officers'
insurance  policy would be sufficient to cover any damages assessed and again we
would have no alternative  but to file for  bankruptcy.  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 June  30,  2004 we had  retained  deficit  in  excess  $90  million  and a
stockholders'  deficit of approximately $ 7.9 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,  2004 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, winning the outstanding law suit brought against
us by  certain of our  shareholders,  bringing  our  financial  records  and SEC
filings up to date,  seeking a listing on the over the counter  bulletin  board,
raising  additional debt and, or, equity to 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 can be no
assurance  that  this  series  of  events  will be  successfully  completed.  No
assurances  can be given that we will be  successful  in  acquiring  operations,
generating revenues or reaching or maintaining profitable operations.

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


                                       23
<PAGE>

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.

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.

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. We
have had no response to our fax to the SEC and there can be no assurance that we
will not be  deregistered  by the SEC in due course.  If the SEC were deregister
the shares of our common stock 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.


                                       24
<PAGE>

IT IS  POSSIBLE  THAT WE WILL  HAVE A  MAJORITY  STOCKHOLDER  WHO WILL  HAVE 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. PC, trustee of the assignment for the benefit of Aspeon
and CCI creditors,  subject to due diligence, to invest up to $50,000 cash in us
for the benefit of our  creditors in return for a number of shares of our common
stock to be determined.  The due diligence process is yet to be finalized and no
shares of our common stock have been issued in respect of this agreement as yet.

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.

If both of the above  transactions  are completed it is probable that Mr. Cutler
will own more than 50% of our issued  shares of common stock.  Accordingly,  Mr.
Cutler would be 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 was filed in respect of our financial year ended June 30, 2000
and the last  Form  10-Q we filed was in  respect  of the  three and nine  month
period ended March 31, 2001.Unaudited extracts from our financial statements for
the financial  years June 30, 2001 through June 30, 2003 are attached on page 36
below.  We do not intend to have these  accounts  audited as we believe that the
cost of completing such audits would exceed any benefit to shareholders.

Our  audited  financial  statements  for the fiscal year ended June 30, 2004 are
included herein commencing on page 39 below.

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


                                       25
<PAGE>

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.

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, 2004 (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.

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,  2004 our sole  director  and  executive
officer was:


                                       26
<PAGE>

           NAME                   AGE             POSITION

    Richard P Stack               39       President, Chief Executive Officer,

Richard P. Stack - had been President, Chief Executive Officer and a director of
the Company since the Company's 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.

As  reported  in our form  10-K for our  fiscal  year  ended  June 30,  2000 our
directors were Richard P Stack,  Edmund Brooks,  Andrew F Puzder, Jay L Kear and
Thomas Nolan.

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 in 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.

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.

Effective April 22, 2005, our sole director was:


             NAME                  AGE             POSITION

      David J. Cutler              49       President, Chief Executive Officer,

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.


                                       27
<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.

However,  following the resignation of Messrs.  Kear and Hertz on June 30, 2003,
we 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, 2004, 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, Jay Kear and
Horace Hertz 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;

-    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 sets forth the compensation paid by us for services rendered
during  the  fiscal  year  ended  June 30,  2004 to Richard P Stack as our Chief
Executive  Officer and director.  We had no other  directors  and, or,  officers
during the fiscal year ended June 30, 2004.


                                       28
<PAGE>

<TABLE>
<CAPTION>

                                                             FISCAL YEAR
                                                               ENDED                ANNUAL COMPENSATION
         NAME AND PRINCIPAL POSITION                         JUNE 30,            SALARY             BONUS
--------------------------------------------             ----------------  ----------------- ------------
<S>                                                      <C>               <C>               <C>
Richard  P Stack............................                   2004             $49,998             --
  President,  Chief Executive Officer, Chief
  Financial Officer and Director
</TABLE>


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

There were no employment  contracts or consulting  agreements with our directors
or officers during the fiscal year ended June 30, 2004.

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

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.


                                       29
<PAGE>

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 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
                                                ===========         =======

<TABLE>
<CAPTION>

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

                       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 June 30, 2004 and October 20, 2005, by:


                                       30
<PAGE>

        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 June 30, 2004:

                                                       NUMBER OF    PERCENT OF
         NAME AND ADDRESS OF BENEFICIAL OWNER           SHARES      OUTSTANDING

Richard P Stack (1)                                  1,379,700            13.61%
                                                     ------------  ------------
All executive officers and directors as a group.     1,379,700            13.61%
L. Bruce Madsen (2)                                    568,621             6.03%

As at October 20, 2005:....

                                                         NUMBER OF    PERCENT OF

David J. Cutler (3)                                            --       --%
                                                      ------------    ----------
All executive officers and directors as a group.               --       --%

Richard P Stack (1) (4)                                    679,700      7.20%

L. Bruce Madsen (2)                                        568,621      6.03%

(1) Mr.  Stack's  address is c/o Aspeon,  Inc.  4704 Harlan  Street,  Suite 420,
Denver, Colorado, 80212.

Includes  700,000  shares  issuable upon exercise of options to purchase  common
stock within 60 days of September 30, 2004 and 9,700 shares owned by Mr. Stack's
children.

(2) Mr Madsen's address is 16 Prospect Drive, Great Falls, MT, 59405

(3) Mr.  Cutler's  address is c/o Aspeon,  Inc. 4704 Harlan  Street,  Suite 420,
Denver, Colorado, 80212

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.

On April 22, 2005 our sole  director,  David J Cutler  entered into an agreement
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI creditors, subject to due diligence, to invest up to $50,000 cash
in us for the benefit of our  creditors  in return for a number of shares of our
common stock to be determined.  The due diligence process is yet to be finalized
and no shares of our common stock have been issued in respect of this  agreement
as yet.

(4) 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


                                       31
<PAGE>

stock as Mr.  Stack's  options were cancelled  subsequent to his  resignation in
April 2005.

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 11 Stockholders Deficit of our Financial Statements on page 62 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.

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

On April 22, 2005 our sole  director,  David J Cutler  entered into an agreement
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI creditors, subject to due diligence, to invest up to $50,000 cash
in us for the benefit of our  creditors  in return for a number of shares of our
common stock to be determined.  The due diligence process is yet to be finalized
and no shares of our common stock have been issued in respect of this  agreement
as yet

During the fiscal year ended June 30, 2005, our sole  director,  David J Cutler,
advanced  to us  $88,000  by way of loan,  bearing  interest  at 8%, to meet our
ongoing  operating  expenses  and  fund  the  costs of  bringing  our  financial
statements  and SEC  reporting  up to  date.  Since  that  date Mr.  Cutler  has
continued  to make  further  advances  to us by way of loan to meet our  ongoing
operating  expenses and fund the costs of bringing our financial  statements and
SEC  reporting up to date as required.  There can be no assurance  that we shall
continue to receive further funding from Mr. Cutler in the future.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits


                                       32
<PAGE>

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.

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.


                                       33
<PAGE>

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.

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 (included on page 54 of this 10-K)

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.


                                       34
<PAGE>

(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

(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.

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

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees.

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

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


                                       35
<PAGE>

All Other Fees.

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

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, 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.




















                                       36
<PAGE>


                          INDEX TO FINANCIAL STATEMENTS

                                                                            PAGE

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.....................  38

CONSOLIDATED BALANCE SHEET - As at June 30, 2004 and 2003...................  39

CONSOLIDATED STATEMENTS OF OPERATIONS -- For the Year Ended June 30, 2004...  40

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Year Ended June 30, 2004............................................  41

CONSOLIDATED STATEMENTS OF CASH FLOWS -- For the Year Ended June 30, 2004...  42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS..................................  43















                                       37
<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,
2004 and 2003, and the related statements of operations,  stockholders' deficit,
and cash flows for the year ended June 30, 2004. 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, 2004
and 2003,  and the results of its  operations  and cash flows for the year ended
June 30, 2004 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, 2004 and 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 CPA, P.C.
Larry O'Donnell CPA, P.C.
Aurora, Colorado
October 7, 2005



                                       38
<PAGE>

<TABLE>
<CAPTION>

                                          ASPEON, INC.
                                   CONSOLIDATED BALANCE SHEET



                                                                                                        JUNE 30,
                                                                                                2004             2003
                                                                                         ----------------------------------
<S>                                                                                      <C>              <C>
                              ASSETS

CURRENT ASSETS

      Cash & Cash Equivalents                                                            $              0 $          1,531
      Accounts Receivable                                                                               0          986,823
      Other Receivables                                                                             5,637           22,038
      Inventory                                                                                         0          586,426
      Prepaid Expenses                                                                                  0          211,409
                                                                                         ----------------------------------
                  Total Current Assets                                                              5,637        1,808,227

FIXED ASSETS                                                                                            0          473,239

OTHER ASSETS                                                                                            0            5,164
                                                                                         ----------------------------------
      TOTAL ASSETS                                                                       $          5,637 $      2,286,630
                                                                                         ==================================

                              LIABILITIES & STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES

      Accounts Payable                                                                   $      6,763,028 $     10,780,772
      Unearned Income & Customer Deposits                                                         236,128          442,458
      Accrued Expenses                                                                            568,884          803,303
      Notes Payable                                                                               128,000          610,431
      Deferred Earnouts                                                                           208,195        1,123,868
                                                                                         ----------------------------------
                  Total Current Liabilities                                                     7,904,235       13,760,832

COMMITMENTS AND CONTINGENCIES (Note. 9)

STOCKHOLDERS' DEFICIT

      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,  9,436,225                      94,361           94,361
      shares issued and outstanding.
      Additional Paid In Capital                                                               84,938,361       84,938,361
      Treasury Stock                                                                              (60,000)         (60,000)
      Accumulated Deficit                                                                     (92,871,320)     (96,446,924)
                                                                                         ----------------------------------
                  Total Stockholders' Deficit                                                  (7,898,598)     (11,474,202)
                                                                                         ----------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                              $          5,637 $      2,286,630
                                                                                         ==================================
</TABLE>

                See accompanying Notes to Consolidated Financial Statements.

                                       39
<PAGE>

                                  ASPEON, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS


                                                        FOR THE YEAR ENDED
                                                           JUNE 30, 2004
                                                         ----------------
REVENUE

      Products                                           $       457,754
      Services                                                   407,705
                                                         ----------------
      Total Revenue                                              865,459

COST OF SALES

      Products                                                   708,718
      Services                                                   139,325
                                                         ----------------
      Total Cost of Sales                                        848,043
                                                         ----------------
GROSS PROFIT / (LOSS)                                             17,416

OPERATING EXPENSES / (INCOME)

      General & Administrative Expenses                          512,575
      Selling & Marketing Expenses                                13,428
      Depreciation                                                92,082
      Gain on Settlement of Litigation                       (1,007,211)
      Gain on Assignment for the Benefit of Creditors        (3,173,150)
                                                         ----------------
      Total Operating Expenses / (Income)                      3,562,275

OPERATING PROFIT / (LOSS)                                      3,579,691

Interest and Other Income / (Expenses) Net                        (4,087)
                                                         ----------------
Profit / (Loss) before Income Taxes                            3,575,604

Provision for Income Taxes                                       -
                                                         ----------------
NET PROFIT / (LOSS)                                      $     3,575,604
                                                         ================

NET PROFIT / (LOSS) PER COMMON SHARE

      Basic & Diluted                                              $0.38
                                                         ================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

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

           See accompanying Notes to Consolidated Financial Statements.

                                       40
<PAGE>

<TABLE>
<CAPTION>

                                           APEON, INC.
                        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                                FOR THE YEAR ENDED JUNE 30, 2004



                          Common Stock      Treasury Stock   Additional                  Accumulated
                                                             Paid - in   Accumulated   Comprehensive   Comprehensive
                       Shares     Amount  Shares    Amount   Capital     Deficit      Profit / (Loss)  Profit/(Loss)    Total


                          #          $      #         $         $           $              $                              $
<S>                    <C>        <C>      <C>       <C>       <C>         <C>           <C>            <C>            <C>
Balance, June 30 2003  9,436,225   94,361  (200,000)  (60,000)  84,938,361  (96,518,791)  71,867                        (11,474,202)

Comprehensive Profit                                                          3,575,604                    3,575,604      3,575,604
                      ----------- -------- --------- --------- ----------- ------------- -------------  ------------   -------------
Balance, June 30 2004  9,436,225  $94,361  (200,000) $(60,000) $84,938,361 $(92,943,187) $71,867                       $ (7,898,598)
                      =========== ======== ========= ========= =========== ============= =============  ============   =============
</TABLE>









               See accompanying Notes to Consolidated Financial Statements.


                                               41
<PAGE>

<TABLE>
<CAPTION>

                                  ASPEON, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS



                                                                        FOR THE YEAR ENDED
                                                                           JUNE 30, 2004
                                                                          ---------------
<S>                                                                     <C>
CASH FLOW PROVIDED BY / (USED IN) OPERATING ACTIVITIES

NET  PROFIT / (LOSS)                                                      $    3,575,604

ADJUSTMENTS TO RECONCILE NET PROFIT / (LOSS) TO NET CASH
PROVIDED BY / (USED IN) OPERATING ACTIVITIES
      Depreciation                                                                92,082
      Gain on Settlement of Litigation                                        (1,007,211)
      Net Cash Received on Settlement of Litigation                              136,000
      Gain on Assignment for Benefit of Creditors                             (3,173,150)
      Cash transfered to Assignment for Benefit of Creditors                    (112,515)

CHANGES IN OPERATING ASSETS & LIABILITIES
      (Increase)/Decrease in Accounts Receivable                                 900,738
      (Increase)/Decrease in Other Receivables                                    15,020
      (Increase)/Decrease in Inventory                                           585,677
      (Increase)/Decrease in Prepaid Expenses                                    177,830
      Increase/(Decrease) in Accounts Payable                                   (481,065)
      Increase/(Decrease) in Unearned Income & Customer Deposits                (199,247)
      Increase/(Decrease) in Accrued Expenses                                   (189,328)
                                                                          ---------------
      Total Cash Flow provided by / (used in) Operating Activities               320,437

CASH FLOW FROM INVESTING ACTIVITIES
      Decrease in Other Assets                                                     1,992
      Purchase of Fixed Assets                                                      (891)
      Proceeds from Sale of Fixed Assets                                          78,361
                                                                          ---------------
      Total Cash Flow provided by / (used in) Investing Activities                79,462

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

INCREASE / (DECREASE) IN CASH & CASH EQUIVALENTS                          $       (1,531)
                                                                          ===============

Cash and Cash Equivalents at the beginning of the period                  $        1,531
                                                                          ===============
Cash and Cash Equivalents at the end of the period                        $            0
                                                                          ===============

SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid for interest                                                    $        3,129
                                                                          ---------------
Cash paid for income tax                                                  $            0
                                                                          ---------------
Assets transferred to assignment for the benefit of creditors             $      383,558
                                                                          ---------------
Liabilities transferred to assignment for the benefit of creditors        $    3,669,223
                                                                          ---------------
</TABLE>

      See accompanying Notes to Consolidated Financial Statements.


                                       42
<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,
winning  the  outstanding  law  suit  brought  against  us  by  certain  of  our
shareholders, bringing our financial records and SEC filings up to date, seeking
a listing on the over the counter  bulletin board,  raising debt and, or, equity
to fund  negotiated  settlements  with our  creditors  and to meet  our  ongoing
operating  expenses and attempting to merge with another entity with experienced
management and opportunities for growth in return for shares of our common stock
to create value for our shareholders. There can be no assurance that this series
of events will be successfully completed.

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

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

    -SOLUTION SERVICES.  Through our CCI, Jade Communications  Limited ("Jade"),
RGB/Trinet Limited ("RGB"), (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.

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


                                       43
<PAGE>

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.

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

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


                                       44
<PAGE>

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

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

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

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

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

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

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

During fiscal 2001,  despite our efforts to return to profitability and the sale
of certain of our subsidiaries,  we continued to generate significant losses, to
be in default of certain covenants under the terms of our Preferred Stock, to be
delinquent  in the  payment of various  trade  payables  and had been  unable to
replace  our line of credit  which had been  repaid in full during the course of
the year.  While we had  appointed  new  auditors,  we were  unable to  generate
audited  financial  accounts  due to the lack of  cooperation  from our previous


                                       45
<PAGE>

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
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


                                       46
<PAGE>

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

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

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

On April 22, 2005 our sole  director,  David J Cutler  entered into an agreement
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI creditors, subject to due diligence, to invest up to $50,000 cash
in us for the benefit of our  creditors  in return for a number of shares of our
common stock to be determined.  The due diligence process is yet to be finalized
and no shares of our common stock have been issued in respect of this  agreement
as yet.

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

On  September  9, 2005 we  received a letter  from the SEC dated  June 24,  2005
indicating that unless we came into  compliance with the reporting  requirements
under the Securities Exchange Act of 1934 within 15 days we may be deregistered.
On  September  12,  2005 we faxed a letter  to the SEC's  Office of  Enforcement
Liaison  indicating  our  intention to come into  compliance  with the reporting
requirements under the Securities  Exchange Act of 1934 by November 15, 2005. We
have had no response to our fax to the SEC and there can be no assurance that we
will not be deregistered by the SEC in due course.

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

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.

Inventories - Inventories at June 30, 2003 consisted  primarily of point of sale
computer  hardware and components and were stated at the lower of cost (first-in
first-out) or market.


                                       47
<PAGE>

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

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

Maintenance  and repairs were  charged to expense as incurred,  and the costs of
additions  and  betterments  were  capitalized.   Leasehold   improvements  were
amortized  over the  shorter of the useful  life of the asset or the life of the
related  lease.  When assets were sold or  otherwise  disposed  of, the cost and
related accumulated depreciation and amortization were removed from the accounts
and any resulting gain or loss was recognized.

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

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

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

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

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

 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.


                                       48
<PAGE>

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.

Comprehensive Income (Loss) -- Comprehensive income is defined as all changes in
stockholders'  equity (deficit),  exclusive of transactions with owners, such as
capital  investments.  Comprehensive income includes net income or loss, changes
in certain assets and liabilities  that are reported  directly in equity such as
translation  adjustments on investments in foreign  subsidiaries  and unrealized
gains  (losses) on  available-for-sale  securities.  During  fiscal 2004 our net
income / (loss) was identical to our comprehensive income / (loss).

Income  (Loss)  Per  Share  -- The  income  (loss)  per  share is  presented  in
accordance  with the provisions of Statement of Financial  Accounting  Standards
(SFAS) No. 128,  Earnings Per Share.  SFAS No. 128 replaced the  presentation of
primary and fully diluted earnings (loss) per share (EPS) with a presentation of
basic EPS and diluted  EPS.  Basic EPS is  calculated  by dividing the income or
loss available to common  stockholders by the weighted  average number of common
stock  outstanding for the period.  Diluted EPS reflects the potential  dilution
that could occur if  securities  or other  contracts  to issue common stock were
exercised or converted  into common  stock.  Basic and diluted EPS were the same
for  fiscal  2004 as our share  price was less  than the  exercise  price of all
outstanding stock options and there were no warrants outstanding.

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

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

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

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

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


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<PAGE>

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

In May 2005,  the FASB issued SFAS No. 154,  "Accounting  Changes and Error - an
amendment  of APB  Opinion  No.  29." This  Statement  applies to all  voluntary
changes in  accounting  principle.  It also  applies to changes  required  by an
accounting  pronouncement in the usual instance that the pronouncement  does not
include specific transition  provisions.  When a pronouncement includes specific
transition  provisions,   those  provisions  should  be  followed.   Opinion  20
previously  required  that most  voluntary  changes in  accounting  principle be
recognized by including in net income of the period of the change the cumulative
effect of changing to the new  accounting  principle.  This  Statement  requires
retrospective  application to prior periods' financial  statements of changes in
accounting  principle,  unless  it is  impracticable  to  determine  either  the
period-specific  effects of the cumulative effect of the change.  This Statement
is effective for  accounting  changes and  corrections  of errors made in fiscal
years  beginning  after December 15, 2005. We do not expect  application of SFAS
No. 154 to have a material affect on our financial statements.

Business  Segments -- In June 1997,  the Financial  Accounting  Standards  Board
issued SFAS No. 131,  Disclosures  About  Segments of an Enterprise  and Related
Information  ("SFAS No.  131").  SFAS No. 131 changes  the way public  companies
report  segment  information  in annual  financial  statements and also requires
those  companies to report  selected  segment  information in interim  financial
reports to stockholders.  It also establishes  standards for related disclosures
about products and services,  geographic areas, and major customers.  Management
believes  that  following  our decision to terminate  the last of our  operating
businesses  effective June 30, 2003, that our activities  during the fiscal year
ended June 30, 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,  2004,  we had $0 cash on hand,  $5,600 of assets,  no  operating
business or other source of income,  outstanding  liabilities  in excess of $7.9
million  and an  outstanding  law suit  brought  against  us by  certain  of our
shareholders.

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

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

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

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


                                       50
<PAGE>


<TABLE>
<CAPTION>

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:

<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>


                                       51
<PAGE>

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. FIXED ASSETS

As at June 30, 2003 our fixed assets comprised:

Leasehold improvements                                        $   126,512
Office furniture and equipment                                    116,502
Computer equipment                                                599,032
Equipment on lease                                                362,285
Warehouse equipment                                                26,760
Test equipment                                                     37,088
Depot spares                                                      323,910

Less: accumulated depreciation                                 (1,118,850)

                                                              ---------------
Net book value                                                    473,239
                                                              ===============

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 $92,083 in the fiscal year ended June 30, 2004.

6. 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.


                                       52
<PAGE>

7. LINES OF CREDIT, DEBT & NOTES PAYABLE

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

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

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

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

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

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

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

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

         ii) an amount not to exceed the lesser of:

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

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

         iii) any Loan Reserves.

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

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

Jade had a line of credit facility of approximately $1,800,000 from an unrelated
financial  institution.  Borrowings under the line of credit were collateralized
by all of the  assets of Jade and bore  interest  at the U.K.  Base rate plus 2%


                                       53
<PAGE>

(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 June 30, 2004, the balance of notes payable  represented a note payable 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 this note payable as at June 30, 2004 which  remains an
outstanding liability of ours.

During the fiscal year ended June 30, 2005, our sole  director,  David J Cutler,
advanced  to us  $88,000  by way of loan,  bearing  interest  at 8%, to meet our
ongoing  operating  expenses  and  fund  the  costs of  bringing  our  financial
statements  and SEC  reporting  up to  date.  Since  that  date Mr.  Cutler  has
continued  to make  further  advances  to us by way of loan to meet our  ongoing
operating  expenses and fund the costs of bringing our financial  statements and
SEC reporting up to date. There can be no assurance that Mr. Cutler will provide
us with further funding in the future.

8. MANDATORILY REDEEMABLE SERIES A PREFERRED STOCK

 In March 2000,  we completed a private  placement in which we sold an aggregate
of 10,000  shares of Series A  Convertible  Exchangeable  Preferred  Stock  (the
"Preferred  Stock"),  a warrant to acquire 583,334 shares of our common stock at
an initial exercise price of $17.00 per share and a warrant to acquire 1,250,000
shares of common stock of our wholly owned subsidiary company, Aspeon Solutions,
at an exercise price of $5.00 per share.  Proceeds to us amounted to $9,568,400,
net of $431,600 in issuance costs.

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


                                       54
<PAGE>

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
and  twenty-five  percent  (125%) and (b) an amount  determined  by dividing the
aggregate value of the Preferred  Shares being redeemed by the conversion  price
in  effect  on the  mandatory  redemption  date and  multiplying  the  resulting
quotient by the average closing trade price for the common stock on the five (5)
trading days immediately  preceding (but not including) the mandatory redemption
date.

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

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

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


                                       55
<PAGE>

<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
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.


                                       56
<PAGE>

9.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.  The leases were scheduled to expire
at various dates through December 2007.

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, 2000 are as follows:

YEAR ENDING JUNE 30                                 CAPITAL          OPERATING
-------------------                                ---------         ----------

2001.....................................          $  151,400        $1,842,300
2002.....................................             111,800         1,734,300
2003.....................................             105,500         1,519,300
2004.....................................              71,900           929,100
2005.....................................              53,900           769,500
Thereafter...............................                  --         1,461,100
                                                    ----------        ----------
Total minimum lease payments.............             494,500        $8,255,600
                                                                      ==========
Less amount representing interest........             (51,700)
                                                    ----------
Present value of minimum obligations.....             442,800
Current portion..........................            (137,600)
                                                    ----------
Long-term portion........................           $ 305,200
                                                    ==========

We  had  borrowing  under  capital  equipment  leases  with  principal  balances
outstanding at September 30, 2000 totaling $711,200.

We  had  borrowing  under  capital  equipment  leases  with  principal  balances
outstanding at December 31, 2000 totaling $1,080,400.

We  had  borrowing  under  capital  equipment  leases  with  principal  balances
outstanding at March 31, 2001 totaling $999,200.

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 $ 6,000
for the year ended June 30, 2004 and was included in general and  administrative
expenses in our consolidated statements of operations.


                                       57
<PAGE>

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,
2000 were as follows:

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

2001............................  $2,118,000
2002............................   1,830,000
2003............................   1,491,000
                                  ----------
Total...........................  $5,439,000
                                  ==========

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 have  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  States  District  Court  dismissed  the suit with  prejudice and entered
judgment  in favor of us and our  officers.  On  September  20,  2001,  the lead
plaintiff in the class action suit  appealed  against the dismissal of the case.
On January  21,  2003 the  decision  to dismiss the case was upheld but the lead
plaintiff was given the opportunity to remedy the  deficiencies in the complaint
that had been filed. Accordingly on May 30, 2003 the plaintiff filed its "Second
Amended  Consolidated  Complaint" which again was subsequently  dismissed by the
District Court. On November 26, 2003 the lead plaintiff filed its "Third Amended
Consolidated  Complaint" which was again dismissed with prejudice in March 2004.
The lead plaintiff has once again the dismissal and the appeal is anticipated to
be heard before the end of 2005.  At present we believe  that the proceeds  from
our  Directors'  and Officers'  insurance  policy will be sufficient to meet the
legal cost incurred in defending the consolidated law suit. However, there is no
assurance that the proceeds from our Directors' and Officers'  insurance  policy
will be sufficient to meet the legal cost incurred in defending the consolidated
law suit and if they are exhausted there are no further funds to defend the suit
and we would have no alternative  but to file for  bankruptcy.  Moreover,  if we
were to lose the law suit it is unlikely that the proceeds  from the  Directors'
and Officers' insurance policy would be sufficient to cover any damages assessed
and again we would have no alternative but to file for bankruptcy


                                       58
<PAGE>

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  alleges 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.

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.

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.

10. 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 loan
principal and interest was repaid in full in November 2000.

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

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

On September  12, 2002 we entered  into a Secured  Convertible  Promissory  Note
Purchase  Agreement with three  individuals.  Under that agreement,  those three
individuals,  who were Richard Stack, one of our directors,  Kenneth Kadlec, our
Vice President of Engineering,  and Horace Hertz, loaned to us $125,000, $50,000
and  $75,000,  respectively.  Each of those loans was  represented  by a Secured
Convertible  Promissory  Note,  and bore interest at the rate of ten percent per
annum.  Interest on the loans was due monthly,  and the principal  amount of the
loans was due on the first anniversary of the loans.  Repayment of the loans was


                                       59
<PAGE>

secured by a security interest in substantially all of our assets. The principal
amount of the loans was  convertible  at any time at the election of the lenders
into shares of our common  stock at a  conversion  price of $0.08 per share.  In
connection  with the  consummation  of these  loans,  Robert  Nichols and Edward
Brooks resigned from our Board of Directors, and Horace Hertz was elected to our
Board of Directors.  These Secured  Convertible  Promissory Notes were repaid in
full in September 2003.

On April 22, 2005 our sole  director,  David J Cutler  entered into an agreement
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI creditors, subject to due diligence, to invest up to $50,000 cash
in us for the benefit of our  creditors  in return for a number of shares of our
common stock to be determined.  The due diligence process is yet to be finalized
and no shares of our common stock have been issued in respect of this  agreement
as yet.

During the fiscal year ended June 30, 2005, our sole  director,  David J Cutler,
advanced  to us  $88,000  by way of loan,  bearing  interest  at 8%, to meet our
ongoing  operating  expenses  and  fund  the  costs of  bringing  our  financial
statements  and SEC  reporting  up to  date.  Since  that  date Mr.  Cutler  has
continued  to make  further  advances  to us by way of loan to meet our  ongoing
operating  expenses and fund the costs of bringing our financial  statements and
SEC reporting up to date. There is no assurance that Mr. Cutler will continue to
provide us with further funding in the future.

11.  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.

Common  Stock - Since our Form 10K issued in  respect  of the fiscal  year ended
June 30, 2000 the following issues of common stock have taken place:

 In August 2000, 150 shares of Preferred Stock plus accrued and unpaid dividends
were converted into 53,054 shares of our common stock valued at $94,700.

On April 22, 2005 our sole  director,  David J Cutler  entered into an agreement
with Frank G Blundo,  Jr.  P.C.,  trustee of the  assignment  for the benefit of
Aspeon and CCI creditors, subject to due diligence, to invest up to $50,000 cash
in us for the benefit of our  creditors  in return for a number of shares of our
common stock to be determined.  The due diligence process is yet to be finalized
and no shares of our common stock have been issued in respect of this  agreement
as yet.

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

 In March 2000, we issued  warrants a warrant to acquire  583,334  shares of our
common stock at an initial  exercise  price of $17.00 per share and a warrant to
acquire 1,250,000 shares of common stock of our wholly owned subsidiary,  Aspeon


                                       60
<PAGE>

Solutions,  Inc., at an exercise price of $5.00 per share in connection with its
issuance of our Preferred  Stock (Note 8). On May 1, 2002 both of these warrants
were  cancelled  as  part  of our  negotiated  settlements  of  the  liabilities
outstanding with our Preferred Shareholders.

Consequently as at June 30, 2003 and 2004, 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

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
                                               ===========         =======

                                       61
<PAGE>

<TABLE>
<CAPTION>

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

                       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
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 .

12. INCOME TAXES:

We currently have very  substantial  net operating  losses  carried  forward for
Federal and State tax purposes which, unless utilized,  expire from 2012 through
2024.  However,  it is likely that if we are  successful in our attempt to merge
with  another  entity,  our ability to use these  losses  will be  substantially
restricted by the impact of section 382 of the Internal  Revenue Code  following
such a merger.

13.  SUBSEQUENT EVENTS:

In April 2005, we appointed David J Cutler as a new director and Chief Executive
Officer  and  subsequent  to  that  are now  focused  on  reaching  satisfactory
negotiated settlements with our outstanding  creditors,  winning the outstanding
law suit  brought  against  us by  certain  of our  shareholders,  bringing  our
financial records and SEC filings up to date, seeking re-listing on the over the
counter  bulletin  board,  raising  additional  debt and, or, equity to fund our
negotiated  settlement 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
can be successfully completed.

On April 22, 2005 our sole  director,  David J Cutler  entered into an agreement
with Frank G Blundo, Jr. PC, trustee of the assignment for the benefit of Aspeon
and CCI creditors,  subject to due diligence, to invest up to $50,000 cash in us
for the benefit of our  creditors in return for a number of shares of our common
stock to be determined.  The due diligence process is yet to be finalized and no
shares of our common stock have been issued in respect of this agreement as yet.

                                       62

<PAGE>


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

On  September  9, 2005 we  received a letter  from the SEC dated  June 24,  2005
indicating that unless we came into  compliance with the reporting  requirements
under the Securities Exchange Act of 1934 within 15 days we may be deregistered.
On  September  12,  2005 we faxed a letter  to the SEC's  Office of  Enforcement
Liaison  indicating  our  intention to come into  compliance  with the reporting
requirements under the Securities  Exchange Act of 1934 by November 15, 2005. We
have had no response to our fax to the SEC and there can be no assurance that we
will not be deregistered by the SEC in due course.

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
















                                       63
<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: October 31, 2005                       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        October 31, 2005
------------------------
      David  J. Cutler                         &
                                Chief Financial Officer
                                (Principal Financial and
                                Accounting Officer)




                                       64

<PAGE>

                 UNAUDITED EXTRACTS FROM 2001 - 2003 FINANCIAL STATEMENTS


<TABLE>
<CAPTION>

                                          ASPEON, INC.
                                   CONSOLIDATED BALANCE SHEET
                                          AS AT JUNE 30

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

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

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

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

Current liabilities

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

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

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

Stockholders' equity / (deficit)

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


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


                                       64
<PAGE>

<TABLE>
<CAPTION>

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

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

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

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

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

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

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

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


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

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

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

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


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<PAGE>
<TABLE>
<CAPTION>

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

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

                                         #          $          $          $            $           $          $              $

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Forgiveness of Deferred Earnouts                               741,000                                                      741,000

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

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

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


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