FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549

          [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]

                                       OR

           [   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]

                   For the fiscal year ended December 31, 1999

                         Commission File Number 0-17977

                              BOUNDLESS CORPORATION

             (Exact name of registrant as specified in its charter)

                 DELAWARE                                    13-3469637
      (State or other jurisdiction of                     (I.R.S. Employer
      incorporation or organization)                     Identification No.)

      100 MARCUS BLVD. HAUPPAUGE, NY                            11788
 (Address of principal executive offices)                    (Zip Code)

       Registrant's telephone number, including area code: (516) 342-7400

           Securities registered pursuant to Section 12(b) of the Act

                                      None

           Securities registered pursuant to Section 12(g) of the Act
                          Common Stock, $.01 par value

                                (Title of Class)

     Indicate by check mark 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 X    No
                                       ---      ---
   Indicate by check mark if disclosure of delinquent filers pursuant to Item
  405 of Regulation S-K is not contained herein, and will not be contained, to
     the best of registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-K or
                      any amendment to this Form 10-K. [ ]

     Theaggregate market value of the voting stock held by non-affiliates of
          the registrant, computed by reference to the last sale price
       of the registrant's Common Stock on March 2, 2000, is $42,252,255.
       As of March 2, 2000, the registrant had 4,498,035 shares of Common
                  Stock, $.01 par value per share, outstanding.

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

<PAGE>

                                     PART I

ITEM 1.  BUSINESS

General

         Boundless  Corporation  (the "Company") was  incorporated in 1988 under
the  laws of the  State of  Delaware.  The  Company  through  its  subsidiaries-
Boundless Technologies, Inc. ("Boundless Technologies"), Boundless Manufacturing
Services, Inc. ("Boundless  Manufacturing"),  and Merinta Inc. ("Merinta")- is a
provider  of text  and  Windows-based  Terminals,  manufacturing  services,  and
software for the Internet appliances ("IA") market.

         Boundless  Technologies  is  engaged  in  designing  and  manufacturing
computer  terminals  for business  use.  The  Company's  general  strategy is to
provide highly efficient,  low cost access to corporate computing  environments,
including client/server, mainframes, LANS, WANS, intranets and the Internet.

         Boundless  Technologies  principally  designs,   assembles,  sells  and
supports (i) desktop  computer  display  terminals,  which generally do not have
graphics   capabilities,   although  some  have  limited  graphics  capabilities
("General Display Terminals"); (ii) desktop display devices which enable simple,
easy   and   cost-effective   access   to   corporate   computing   environments
("Windows(R)-based  Terminals"  or "WBTs") and  supporting  software;  and (iii)
other  terminal  products  that are used in  multi-user,  personal  computer and
mini-computer-based environments ("MultiConsole Terminals"). Until September 30,
1999,  Boundless  Technologies  was a limited partner in a partnership (the "GAI
Partnership")  formed by Boundless  Technologies  and General  Automation,  Inc.
("GA") and managed by GA. The GAI  Partnership  designs,  integrates,  sells and
supports  multi-user  computer  systems  that can manage  large  volumes of data
running  Boundless' and GA's versions of a data-based  system licensed from Pick
Systems  ("Pick").  On  September  30,  1999,  Boundless  Technologies  sold its
interest in the GAI Partnership to GA for $1,500,000 in cash,  1,133,333  shares
of  restricted  common  stock of GA, notes, and  warrants to purchase  shares of
common stock of GA.

         The  Company  entered  into  the  General  Display  Terminal  and  high
resolution,  high  performance  desktop  graphics  display  terminals  ("Network
Graphics  Displays")  businesses  in December  1994 when the  Company  purchased
Applied  Digital Data  Systems,  Inc.  ("ADDS")  from NCR  Corporation  ("NCR"),
formerly   AT&T   Global   Information   Solutions   Company   (the   "Boundless
Acquisition").  ADDS changed its name to SunRiver  Data  Systems,  Inc.  and, in
1996, to Boundless  Technologies,  Inc. For more than 25 years,  ADDS had been a
supplier of general-purpose desktop display terminals worldwide under either the
customer's or ADDS(R) trademark.  Simultaneously, with the Company's acquisition
of ADDS, the Company  acquired all of the assets and business of SunRiver Group,
Inc. (the "SunRiver Group  Acquisition").  Prior thereto,  SunRiver Group,  Inc.
("SunRiver  Group")  had  been  engaged,  for  more  than  nine  years,  in  the
development and manufacture of software and hardware for MultiConsole Terminals.
SunRiver  Group,  subsequently  renamed  Morgan Kent Group,  Inc.  ("Morgan Kent
Group"), was a pioneer in the development of high-speed  MultiConsole  Terminals
for open system, multi-user platforms.

         In October 1995, Boundless Technologies acquired assets relating to the
General Display Terminal products of Digital Equipment  Corporation  ("Digital")
sold under the VT(R) and  Dorio(R)  brands,  excluding  the VT 400  Series  (the
"Digital  Acquisition").  As no  manufacturing  facilities  were included in the
Digital  Acquisition,  Boundless  Technologies has transferred all production of
the VT and Dorio  product  lines from  Digital's  facilities  in the Far East to
Boundless' plant in Hauppauge, New York.

         Boundless Technologies offers standard and custom models of its General
Display  Terminals  primarily  to  retail,  financial,   telecommunications  and
wholesale  distribution  businesses  requiring  them for data entry and point of
sale activities.  Standard and custom model Windows(R)-based Terminals are being
marketed  by  Boundless  primarily  to  telecommunications,  retail,  financial,
general services, healthcare and transportation businesses with light processing
requirements  and the need to provide  concurrent  information to customers on a
variety of topics,  such as billing  and  current  and  historical  product  and
service   information.    MultiConsole   Terminals   are   typically   used   by
small-to-medium-sized  businesses, such as chain stores, requiring predominantly
transaction-oriented  applications.  Sales of systems by the GAI Partnership are
primarily to large distribution centers,  retail establishments,  manufacturers,
local  governments  and  databases  for credit  and  collection,  which  require
management of large volumes of data.

<PAGE>

         On September  23,  1999,  the Company  announced  the creation of a new
subsidiary,  Boundless  Manufacturing,  which will pursue  opportunities  in the
electronic  manufacturing services ("EMS") marketplace.  Boundless Manufacturing
will utilize the Company's  state-of-the-art  ISO 9002  certified  manufacturing
facility in Hauppauge  and acquire  additional  manufacturing  facilities as the
business expands. Services include supply chain optimization, global supply base
management,  systems  assembly  and test,  distribution  and  logistics,  repair
centers and end-of-life management. Boundless Manufacturing also offers in-house
engineering expertise- product design, test development, product development- to
significantly reduce time-to-market for OEM customers.  Boundless  Manufacturing
will  provide  a  complete  supply  chain  that is  designed  and  built to each
customer's specifications.

         On March 6, 2000,  Boundless  Manufacturing  acquired the manufacturing
assets of Boca Research  Inc.  ("Boca") and assumed the lease of a 70,000 sq ft.
facility  located in Boca Raton,  Florida.  The  transaction  extends  Boundless
Manufacturing's existing capabilities by adding printed circuit board assemblies
("PCBAs") to its expertise. The transaction included the immediate employment of
approximately 70 Boca Research manufacturing employees. As part of the agreement
Boundless  Manufacturing will manufacture modems and other electronic components
for Boca.

         On January  12,  2000,  the  Company  announced  the  creation of a new
subsidiary,  Merinta,  a provider  of enabling  software  and  technologies  for
Internet appliances ("IA"). Merinta will develop solutions to offer end-users an
easy,  enjoyable and visually rich Internet browsing  experience while providing
companies with a revolutionary  way to market and grow online business.  Merinta
will initially  market and sell hardware,  software and services to corporations
including   financial   services    institutions,    service   providers,    and
telecommunications companies allowing these companies to provide their customers
with a customized IA solution that should  increase  brand  awareness,  customer
loyalty and retention as well as decrease costs for acquiring customers. Merinta
will license the software on a variety of operating systems- including Linux and
Microsoft Windows CE.  Complimentary  services will be offered to other consumer
device manufacturers, accelerating the IA market for these organizations.

         On March 6, 1998, the Company filed an  Information  Statement with the
Securities and Exchange Commission announcing,  among other items, a one-for-ten
reverse  split (the  "Reverse  Split") of the  Company's  Common  Stock.  As the
Reverse Split was effective as of March 26, 1998,  information  contained within
this Form 10-K has been  presented  to reflect  retroactive  application  of the
Reverse Split.

         Reference  is made to Notes  1, 3, 7,  and 16 of Notes to  Consolidated
Financial   Statements  for  definitions  of  certain   capitalized   terms  and
information  regarding the GAI Partnership and  acquisitions and dispositions by
the Company since December 1994.

Risk Factors

         The  following  factors  relating  to the  Company,  its  business  and
management  should  carefully be considered  in  evaluating  the Company and its
prospects.

         Debt Structure and Liquidity.  As of December 31, 1999, the Company had
tangible net worth of $14,703,000 and total liabilities of $29,045,000. On April
14,  1999,  the  Company  signed  an  agreement  with The Chase  Manhattan  Bank
("Chase") to replace the existing credit line with a new three-year  $15,000,000
revolving  line of credit  (the  "Chase  Credit  Line")  on terms  substantially
similar to those previously in effect. The Chase Credit Line also provides for a
$4,000,000  term  loan,  payable  over a  three-year  period in equal  quarterly
installments  beginning June 1999. The Company's cash  requirements  at December
31, 1999 included repayment of $5,500,000, plus interest,  outstanding under the
revolving credit portion of the Chase Credit Line;  payment of $3,000,000,  plus
interest,  under the term loan; and payment of a $6,713,000  mortgage note, plus
interest,  on the Company's Hauppauge,  NY, facility.  The Company believes that
cash generated from operations and available under the Chase Credit Line will be
sufficient  to pay its  obligations  as they become due;  however,  in the event
there is a decline in the  Company's  sales and  earnings  and/or a decrease  in
availability  under the Chase  Credit  Line,  the  Company's  cash flow would be
adversely affected.  Accordingly, the Company may not have the necessary cash to
fund all of its obligations. The Company's ability to obtain equity financing to
reduce its debt and increase its stockholders'  equity is adversely  affected by
such leverage and other risks described below. See "Management's  Discussion and
Analysis of Financial Condition and Results of Operations  Liquidity and Capital
Resources."

                                       2
<PAGE>

         Strategy.  Approximately  80% of the Company's sales for the year ended
December 31, 1999 were of General Display Terminals.  The Company's strategy has
been to increase its share of the General  Display  Terminals  market.  However,
other manufacturers have been abandoning the General Display Terminals business,
principally  because of the  erosion of gross  margins  and the market  trend to
newer technologies. The Company has been increasing its market share in order to
increase its installed  base of customers to which it can offer General  Display
Terminals  or, for those  desiring  them,  alternative  products  with  enhanced
features,  such as  Windows(R)-based  Terminals.  The  success of the  Company's
strategy  depends  on  its  ability  to  compete  in the  intensely  competitive
marketplace  for its  products.  Initially,  the  success  of this  strategy  is
dependent on the success of the Company's Windows(R)-based  Terminals. There can
be no  assurance  that the  Company's  strategy  is valid.  See  "-Products  and
Services - Windows(R)-based Terminals."

         Declining  Gross  Profit  Margins;  Competition.  The  business  of the
Company is intensely competitive and characterized by constant pricing pressure.
The computer  industry  has  experienced  industry-wide  declines in the average
sales  prices of  computer  hardware.  As a result,  there has been  significant
downward pressure on gross margin. Many of the Company's current and anticipated
competitors  are much larger  companies with  substantially  greater  technical,
financial and other resources than the Company. The Company's ability to compete
favorably is, in significant part,  dependent upon its ability to control costs,
react  timely and  appropriately  to short and long term  trends,  including  by
developing and  introducing new products that gain wide market  acceptance,  and
competitively price its products. There is no assurance that the Company will be
able to compete effectively.  See "Competition" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

         Dependence  Upon  Major  Customers.  IBM,  Digital  and  NCR  were  the
Company's most significant  customers in 1999, accounting for approximately 15%,
7% and 3%, respectively,  of the Company's total revenue.  Digital's contractual
commitments  to  purchase  95% of its  terminal  requirements  from the  Company
expired October 23, 1999. In addition,  NCR's contractual commitment to purchase
90% of its  terminal  requirements  from the Company  expired  December 9, 1999.
While the Company  believes  its product  solutions  best meet the needs of IBM,
Digital  and NCR,  a  decline  in the  level of sales to these  customers  could
adversely affect the Company's results of operations.

         Dependence Upon Key Personnel.  The Company's  success will depend upon
its key management, sales and technical personnel. The Company has an employment
contract with Mr. J. Gerald Combs, its Chairman and Chief Executive Officer. The
Company and Merinta have an employment contract with Mr. Kenneth East, its Chief
Technology  Officer.  The Company and Boundless  Manufacturing  have  employment
contracts with Mr. Joseph Joy, its President,  and Mr. Anthony Giovaniello,  its
Executive  Vice  President,  Business  Development.  The  Company  does not have
employment contracts with any of its other employees.  In addition,  the Company
believes  that,  to succeed in the  future,  it will be  required to continue to
attract,  retain and motivate  additional  skilled executive and technical sales
and  engineering  employees  who are in short  supply  because  of great  demand
throughout the industry for their services.  The loss of any of its existing key
personnel  or the  inability  to attract and retain key  employees in the future
could  have a  material  adverse  effect  on the  Company.  See  "Directors  and
Executive Officers of the Registrant."

         New  Products  and  Technological  Change.  The  computer  industry  is
characterized by a rapid rate of product  improvement,  technological change and
product  obsolescence.  As a result,  the Company's product lines are subject to
short life cycles.  While the Company is engaged in research and  development of
new  products,  no assurance can be given that the Company will be able to bring
any new products to market to replace  existing  products  rendered  obsolete by
technological  change.  The failure of the  Company to market new  products on a
timely basis could  materially  and  adversely  affect the  Company's  business.
Furthermore,  inventory  management is critical to decreasing  the risk of being
adversely  affected by obsolescence and there is no assurance that the Company's
inventory management and flexible  manufacturing systems will adequately protect
against this risk.

         Dependence Upon Suppliers;  Shortages of Subassemblies  and Components.
The Company  purchases  subassemblies  and  components  for its products  almost
entirely from more than 40 domestic and Far East suppliers.  Purchases from Wong
Electronics Corp. and Tonghah  Electronics  SDN.BHD,  which manufacture  plug-in
logic boards in China and  Malaysia,  respectively,  for the  Company's  General
Display Terminals and  Windows(R)-based  Terminals,  accounted for approximately
25% and 20%, respectively, of the dollar amount of the Company's total purchases
in 1999 of subassemblies and components.  While there are at least two qualified
suppliers for the  subassemblies  and components  that are made to the Company's
specifications, they are generally single-sourced so that the Company is able to
take advantage

                                       3
<PAGE>

of  volume  discounts  and more  easily  ensure  quality  control.  The  Company
estimates  that the lead-time  required  before an alternate  supplier can begin
providing the necessary  subassembly or component would generally be between six
to ten weeks.  The  disruption of the Company's  business  during such period of
lead-time  could  have a  material  adverse  effect on its sales and  results of
operations.

         The Company has  experienced  shortages of supplies for components from
time to time as a result of industry-wide  shortages,  which sometimes result in
market price increases and allocated  production  runs.  However,  to date, such
shortages have not had a material adverse effect on the Company's business.

         Research and Development. The process of developing new high-technology
products and  solutions is inherently  complex and  uncertain.  The  development
process  requires  innovation  and  anticipation  of changing  market  needs and
technological  trends.  The  Company  will need to  continue  to  introduce  new
products that match the price/performance  levels of competitive  products.  The
development of new products is inherently  risky and expensive and the Company's
working  capital may not be  sufficient  to permit it to fund the  research  and
development  required.  Furthermore,  there can be no assurance that the Company
will  successfully  develop  new  products  or that  any new  products  that are
developed  will be  introduced  in a  timely  manner  and  receive  wide  market
acceptance. See "-Manufacturing - Research and Development".

         Fluctuations in Quarterly Results.  The Company's  quarterly  operating
results  have  fluctuated  in the past and may  fluctuate  significantly  in the
future due to a number of factors, including timing of new product introductions
by the  Company  and  its  competitors;  changes  in the mix of  products  sold;
availability  and pricing of  subassemblies  and components  from third parties;
timing of orders;  difficulty  in  maintaining  margins;  and changes in pricing
policies by the Company,  its competitors or suppliers.  See  "-Manufacturing  -
Suppliers" and "Management's  Discussion and Analysis of Financial Condition and
Results of Operations - Results of Operations."

         Substantial  Control by Morgan Kent Group. As of March 2, 2000,  Morgan
Kent Group owns  approximately 37%  (approximately 43% on a fully diluted basis)
of the  outstanding  shares of the  Company's  Common Stock  (including  457,502
shares underlying warrants) and,  accordingly,  has the ability to significantly
influence  the  election  of all  directors  and to  otherwise  control  Company
policies.  Morgan Kent Group's substantial ownership position of the Company may
have an  adverse  effect  on the  market  price of the  Common  Stock due to the
perception by existing or potential  stockholders  that  influencing or changing
the Company's management or policies, without Morgan Kent Group's consent, would
be difficult,  or the  perception  that public sales of  significant  amounts of
Common  Stock by Morgan Kent Group is likely.  In this  regard,  public sales of
significant  amounts the Company's  Common Stock by Morgan Kent Group may result
for many  reasons, including  funding  requirements  related  to other  business
activities  and  investments  of Morgan Kent Group.  Such control by Morgan Kent
Group would likely  discourage  hostile bids for control of the Company in which
stockholders  may  receive  premiums  for  their  shares of  Common  Stock.  See
"Security Ownership of Certain Beneficial Owners and Management" for information
regarding a possible future change of control.

         Possibility  of  Volatility  of  Common  Stock  Price.  There  has been
significant  volatility in the market price of the Company's Common Stock and of
the  securities  of companies  engaged in  businesses  similar to the  Company's
business. Various factors and events may have a significant impact on the market
price of the Common  Stock  including  fluctuations  in the  prices of  computer
industry and Internet related stocks,  generally;  announcements by the Company,
its suppliers or its  competitors  concerning  quarterly and year end results of
operations;  technological  innovations  or the  introduction  of new  products;
shortages or failure of components or  subassemblies;  and public  concern about
the economy,  generally.  See "Market for Registrant's Common Equity and Related
Stockholder Matters."

         Forward-Looking  Information  May  Prove  Inaccurate.  This  Form  10-K
contains   forward-looking   statements  and  information   that  are  based  on
management's  beliefs as well as assumptions made by, and information  currently
available to, management.  When used in this document,  the words  "anticipate,"
"believe,"  "estimate,"  and "expect," and similar  expressions  are intended to
identify  forward-looking  statements.  Such  statements  reflect the  Company's
current  views with respect to future  events and are subject to certain  risks,
uncertainties  and  assumptions,  including the specific risk factors  described
above. Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect,  actual results may vary materially from
those anticipated,  believed, estimated or expected. The Company does not intend
to update these forward-looking statements and information.

                                       4
<PAGE>

Products and Services

         General Display Terminals.  The Company's General Display Terminals are
ANSI/ASCII desktop terminals, which generally do not have graphics capabilities,
although some have limited  graphics  capabilities.  The Company offers standard
and  custom  models,  primarily  for data  entry and  point of sale  activities.
General Display  Terminals are sold by the Company under the Company's  ADDS(R),
Dorio(R) and VT(R)  trademarks.  The ADDS, Dorio and VT brands are complementary
products, providing slightly different features to various user segments.

         Windows(R)-based  Terminals. The Company's  Windows(R)-based  Terminals
("WBTs")  have  no  applications  storage,   utilize  the  network  servers  for
processing  and are  significantly  smaller than a general  purpose PC. They use
Intel and Intel-compatible processors. The Company believes that the lower total
operating costs and ease of administrating WBTs,  generally,  will allow WBTs to
compete with PCs used in business  networks  although  there is no assurance the
Company's belief is correct.

         Target  users  for the  Company's  Windows(R)-based  Terminals  include
retail,  services,  financial,  education,  healthcare,  telecommunications  and
transportation  customers  with light  processing  requirements  and the need to
provide  concurrent  information  to customers  on a variety of topics,  such as
billing and current and historical product and service information.

         MultiConsole  Terminals.  The  Company's  MultiConsole  Terminals  were
developed   by  Morgan  Kent  Group  and  are  based  on  patented   technology.
MultiConsole  Terminals offer a cost-effective upgrade or replacement for serial
character  terminals in multi-user,  microcomputer  and personal  computer-based
environments.  The  MultiConsole  Terminal  has the same  look and feel as a PC.
Nevertheless,  MultiConsole  Terminals do not have CPUs since they share the CPU
of the host  computer.  MultiConsole  Terminals  are best  suited  for  small to
medium-sized    businesses    requiring    predominantly    transaction-oriented
applications. Typical users include financial branch offices, hospitals, hotels,
retailers,  pharmacies  and  professional  offices,  such as  accounting  firms,
doctors' and dentists' offices and law firms.

         During 1998 the Company  signed an exclusive  alliance  agreement  with
Infinite  Solutions  pertaining to its MultiConsole  Terminals  products.  Under
terms of this alliance Infinite  Solutions assumes  responsibility for sales and
support,  product  development,  maintenance  and  warranty  logistics  for  the
MultiConsole  Product.  Boundless will continue to  manufacture  and service the
MultiConsole product exclusively for Infinite Solutions.  Infinite Solutions has
been a  Boundless  channel  partner  for over a  decade  and  involved  with the
MultiConsole product since the product's development.

          GAI Partnership.  Up to September 30, 1999, Boundless Technologies was
a limited partner with GA, the managing partner, in the GAI Partnership. The GAI
Partnership  combined  into a single  business  the  development,  distribution,
maintenance  and support of  Pick-based  computer  systems and software  running
Boundless'  version  and GA's  version of the Pick  system on  various  hardware
platforms.  Boundless'  systems  consisted of Unix software with NCR System 3000
hardware and operating system software under the Mentor(R) Operating Environment
brand name,  as well as a lower cost system  under the Mentor PRO brand name for
use with standard PCs (collectively,  "Mentor Systems"). Mentor Systems are used
to  manage  large  volumes  of  data.  Users of  Mentor  Systems  include  large
distribution centers,  retail establishments,  manufacturers,  local governments
and  databases for credit and  collections.  The business and affairs of the GAI
Partnership were managed  exclusively by GA subject to consultation from time to
time with  Boundless.  On September 30, 1999,  Boundless  Technologies  sold its
interest in the GAI Partnership to GA for $1,500,000 in cash,  1,133,333  shares
of  restricted  common stock of GA,  notes,  and warrants to purchase  shares of
common stock of GA.

         Professional Services. Prior to the formation of the GAI Partnership, a
material portion of the Company's  revenues was derived from its activities as a
provider  of  consulting,   installation,  software  and  hardware  maintenance,
software upgrade and tuning,  disaster backup and other  professional  services.
These  services were provided  almost  exclusively  to Mentor  Systems users and
value added resellers  ("VARs") of systems purchased from the Company as well as
to users of the Company's other products  desiring more service and support than
the basic warranty provides. The Company is continuing to provide these services
with respect to its desktop  terminals  and  Windows(R)-based  Terminals.  Depot
service during normal  business hours is also provided  within the United States
by the Company for its desktop terminals.

                                       5
<PAGE>

         Electronic  Manufacturing  Services.  Boundless  Manufacturing Services
participates  in the  EMS  market  space  and  provides  services  that  include
build-to-order mass-customized manufacturing,  supply chain optimization, global
supply base management,  systems assembly and test,  distribution and logistics,
repair centers and end-of-life  management.  Boundless Manufacturing also offers
in-house  engineering  expertise-  product  design,  test  development,  product
development- to significantly reduce time-to-market for OEM customers. Boundless
Manufacturing will provide a complete supply chain that is designed and built to
each customer's specifications.

         Internet  Appliance  Software and Services.  Merinta creates  tailored,
co-branded IA solutions for corporations.  Merinta's  solutions and services are
not  dependent  on  any  hardware   platform,   software   operating  system  or
connectivity  type.  The  solutions  are  adaptable to the multitude of Internet
devices, plug-ins, and server-based applications.  These IA solutions facilitate
new revenue  opportunities for corporations and assist them in building stronger
relationships  with their  customers.  The  Merinta IA  solutions  are  modular,
allowing  Merinta's OEM customers to tailor  services to their volume and needs.
The Merinta  Software  Development  Kits allow third party software  developers,
value-added  resellers,  systems  integrators,  and large  end users to  develop
applications,  interfaces,  and plug-ins for the Merinta software backplane. The
Merinta software architecture and resultant flexibility allows for fast and easy
customization in specific market segments.

         Percentage of Total Revenues.  The table below sets forth,  for each of
the  last  three  years  ended  December  31 the  percentage  of  total  revenue
contributed by those classes of similar products or services which accounted for
a material portion of consolidated revenue in any of such years.

                              General                            Windows(R)-
                              Display                              Based
Period                       Terminals                           Terminals
------                       ---------                           ---------

1999                           80.0%                               16.8%
1998                           84.9%                                9.3%
1997                           83.6%                                3.3%


                                       6
<PAGE>

         Foreign  Sales.  Net  foreign  sales  were  approximately  $28,069,000,
$29,544,000 and $30,911,000  for 1999, 1998 and 1997,  respectively.  The tables
below  set  forth  for  each of the  last  three  years  ended  December  31 the
approximate  percentage of total revenue  attributable  to foreign sales and the
percentage attributable to the European region.

                            % of Total Revenue
                            ------------------

Period                        Total                     Europe
------                        -----                     ------

1999                          34.9%                     29.6%

1998                          32.8%                     28.3%

1997                          31.6%                     27.0%


Manufacturing

             Assembly  Operations.  The Company's  manufacturing  operations are
located at its main facility in Hauppauge,  New York and include  procurement of
components  and the assembly and testing of its  products.  The Company does not
currently  manufacture  any of  the  subassemblies  or  components  used  in the
assembly of its products.  Investment in production equipment is not material to
the  Company's  manufacturing  operations.   Semi-skilled  and  skilled  workers
assemble  products  using a  cell-based  manufacturing  process  that allows the
Company  to  assemble  various  models at mass  production  costs.  The  Company
generally  cross-trains  its  workers  so that they are able to work at all work
stations. Once assembled,  all systems undergo a test cycle, using sophisticated
diagnostic  procedures.  The Company has earned ISO 9002  certification  for its
manufacturing standards.

             The Company has a flexible manufacturing control system that is run
by  software  developed  by  the  Company.  This  system  provides  a  flexible,
customer-focused  manufacturing  approach  that  enables  the Company to quickly
customize products for orders of one to one thousand. Just-in-time systems allow
the Company to achieve  efficient  asset  utilization  and fast response time to
customers.  The Company is  generally  able to fill orders  within three to five
days after receipt of an order. Accordingly,  backlog has not traditionally been
material to the Company.

             The Company is using  approximately  90,000 of its  155,000  square
feet of space in the  Hauppauge,  NY,  facility  for  manufacturing  and has the
capacity to manufacture approximately 1,000,000 units per year.

         Suppliers.  The Company purchases  subassemblies and components for its
products  from more than 40 domestic and Far East sources.  Purchases  from Wong
Electronics Corp. and Tonghah  Electronics  SDN.BHD,  which manufacture in China
and Malaysia,  respectively,  of plug-in logic boards for the Company's  General
Display Terminals and  Windows(R)-based  Terminals,  accounted for approximately
25% and 20%,  respectively,  of the total dollar amount of the  Company's  total
purchases in 1999 of subassemblies and components.  While there are at least two
qualified  suppliers for the  subassemblies  and components that are made to the
Company's specifications,  they are generally single-sourced so that the Company
is able to take  advantage of volume  discounts and more easily  ensure  quality
control.  The Company estimates that the lead-time  required before an alternate
supplier can begin  providing  the  necessary  subassembly  or  component  would
generally be between six to ten weeks. The disruption of the Company's  business
during  such period of  lead-time  could have a material  adverse  effect on its
sales and  results of  operations.  The  Company has  experienced  shortages  of
supplies  for  components  from  time  to  time  as a  result  of  industry-wide
shortages,  which  sometimes  result in market  price  increases  and  allocated
production  runs. To date, such shortages have not had a material adverse effect
on its business.

                                       7
<PAGE>

             Warranties  and  Returns.  The Company  provides a one- to ten-year
warranty covering  defective  materials and workmanship.  The Company's products
are serviced at depots that are geographically  dispersed  throughout the world.
Users can purchase extended warranties of up to ten years or can pay for repairs
on a time and materials  basis. For the years 1997, 1998 and 1999, the Company's
cost of warranty repairs was approximately 2.0% of the Company's total revenues.
Software is not  warranted  by the  Company,  but users are  permitted to return
software for a refund within 30 days after purchase. Accordingly,  customers are
afforded the  opportunity to use software on a trial basis through the Company's
evaluation  program.  Revenue  on  software  sales  is  recorded  upon  customer
acceptance.

             The Company also grants  90-day stock  rotation  rights to selected
distributors  and,  pursuant to an agreement  with the  Company,  NCR can return
products within 90 days of shipment. If the Company cannot resell such products,
NCR is  required  to pay the  Company  15% of the  sales  price of the  returned
products.   Because  of  the  Company's   ability  to  provide   products  using
just-in-time  manufacturing  techniques,  the Company believes that NCR has been
limiting  orders  to  products  for  which  it has  firm  commitments  from  its
customers.

             A provision for  estimated  future  returns and potential  warranty
liability is recorded at the time revenue is recognized.

             Research and  Development.  During 1999, 1998 and 1997, the Company
expended approximately $5,908,000,  $3,666,000 and $2,912,000,  respectively, on
research  and  development  activities.   Boundless'  research  and  development
activities have historically  related primarily to General Display Terminals and
Network  Graphics  Displays.   Because  General  Display  Terminals  are  mature
products,   development  activities  over  the  past  year  have  only  included
enhancements to the existing product family,  freeing  resources for development
of the Company's Windows(R)-based Terminals and Internet Appliances. The Company
has  devoted  more  efforts  to  developing   and  acquiring  new  products  and
technologies that can shorten the time-to-market of the Company's products.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations - Results of Operations."

Sales and Marketing

             The  Company  markets  its  terminal   products   through  original
equipment  manufacturers ("OEMs") and reseller distribution channels.  OEMs that
do not want to  maintain  engineering  or  manufacturing  resources  can  obtain
products  with their brand name from  Boundless.  Customers  can buy  Boundless'
products  from an  international  network of  value-added  resellers  (VARs) and
regional  distributors.  In order to  reduce  its  dependence  on  existing  OEM
customers,  the Company has been increasing its distribution  channel  marketing
and sales efforts and seeking additional OEM customers. Through its sales force,
the Company  sells  directly to large VARs and  regional  distributors  and also
sells to major  national and  international  distributors.  The Company's  sales
force  operates  out of six  geographically  dispersed  locations  in the United
States and a European office in the Netherlands.

             As a result of the Digital  Acquisition,  the Company has  expanded
its OEM  relationships and worldwide  channels of distribution,  particularly in
Europe. The Company entered into distribution  agreements with approximately ten
Western  European  distributors  in 1997.  Sales of VT and Dorio General Display
Terminals have historically been particularly  strong in Europe,  while sales of
the ADDS General Display Terminals have been stronger in the United States.

             In 1998 the Company  launched the VARiety Access program to address
the  emerging  Windows(R)-based  terminal  market.  This  program is designed to
facilitate  the ease with which  Microsoft  Certified  Solutions  Providers  and
Citrix  Solutions  Network  Resellers market and sell WBTs. To date, the Company
has recruited over 250 Value Added Resellers into the program.

             In selling its General Display  Terminals,  the Company  emphasizes
customization,  reliability and  compatibility  with a broad range of UNIX, Pick
and  other  operating  systems.   In  selling  the  Company's   Windows(R)-based
Terminals,   the  Company   emphasizes   total  cost  of   ownership,   ease  of
administration,  security and the ability to access numerous  applications.  The
Company's   Windows(R)-based   Terminals   can  access  the  more  than  100,000
applications that run under Microsoft Windows,  including Windows NT, Windows 95
and Windows 98. The Company's  Windows(R)-based Terminals also provide access to
UNIX and legacy applications.  The Company believes its expertise in integrating
Windows(R)-based  Terminals within the total system architecture is an important
selling benefit.

                                       8
<PAGE>

             The  Company  uses  direct  mail,   telemarketing  and  cooperative
advertising and promotion to promote its products.  The Company's installed user
base of more than  5,000,000  General  Display  Terminals is the primary  target
market  for its  Windows(R)-based  Terminals.  The  Company  believes  the  most
effective way to reach this market is via cooperative marketing with its channel
partners and an aggressive use of public relations.

             The Company's  business is not  seasonal.  The third quarter of the
calendar  year  contributes  slightly  less  revenue,  as a percent of the total
year's revenue,  due to extended vacation periods in Europe,  where sales of the
Company's  VT/Dorio products are strong.  Other  fluctuations in quarterly sales
result from large orders that are unrelated to the time of year.

Competition

             The General Display Terminal market has undergone consolidation and
the two largest  competitors  that have emerged are Boundless  Technologies  and
Wyse  Technology,  Inc.  ("Wyse").  General Display Terminal  customer  purchase
criteria  are  based  on  quality,   customization,   compatibility  with  other
terminals, and price.

             Currently,   Boundless  Technologies'  principal  competitors  that
manufacture and market  Windows(R)-based  Terminals are Wyse,  Neoware  Systems,
Inc.,  and  Network  Computing  Devices,  Inc.  The  Company's  Windows(R)-based
Terminals  also  compete  with  low-cost PCs and  traditional  higher-cost  PCs.
Customer  purchase criteria for  Windows(R)-based  Terminals are primarily based
upon  reduced  total cost of  ownership,  ease of  administration,  reliability,
security and the breadth of applications access.

             The EMS market in 1998 was estimated to be in excess of $90 billion
and served by over 800  competitors.  Within the top 100, based on 1998 revenue,
the competitors ranged in size from approximately $6.5 billion in revenue to $24
million in  revenue.  Boundless  Manufacturing  believes it provides an array of
outsourcing  services  which will  allow it to  compete in the EMS market  space
which is  characterized  by a need for low  cost,  high  quality,  and fast lead
times.

             Internet Appliances are defined as low-cost, easy-to-use,  consumer
focused  electronic  devices  designed to bring the features and benefits of the
Internet to  consumers  on a mass scale.  The market is evolving  rapidly and is
heavily  influenced  by  consumers'  adoption  of the  Internet  as a  means  of
conducting  commerce.  The  market  for  Internet  devices  is  well  served  by
manufacturers  including Sony, Compaq,  Acer, and Palm Computing.  Additionally,
startup firms taking  advantage of the interest in the  Internet,  and deploying
various business models including "free" PCs, have entered this market.  Merinta
believes its  strategy to combine the  hardware,  software  and services  into a
series of easily deployable solutions is a competitive advantage in this market.

Patents, Trademarks and Licensing

             The Company  owns over 30 patents  issued in the United  States and
various  foreign  countries,  none of which is  believed  to be  material to its
business.  The  Company  believes  that  the  knowledge  and  experience  of its
management  and personnel and their ability to develop,  manufacture  and market
the  Company's   products  in  response  to  specific  customer  needs  is  more
significant than its patent rights.

             The trademarks ADDS, Viewpoint,  VT and Dorio are registered in the
United States Patent and Trademark Office and in a number of foreign countries.

Environmental Regulation

             Amounts incurred by Boundless in complying with federal,  state and
local  legislation  pertaining to protection of the environment  during the past
three years did not have a material  effect  upon  capital  expenditures  or the
financial condition of the Company. Employees

                                       9
<PAGE>


             At December 31, 1999, the Company had  approximately  332 full-time
employees  engaged as  follows:  39 in product  design and  engineering,  206 in
manufacturing and repair services,  51 in sales,  systems services and marketing
and 36 in  administration.  None of the  Company's  employees  is  covered  by a
collective  bargaining  agreement.  The  Company  considers  relations  with its
employees to be satisfactory.

ITEM 2.       PROPERTIES

             The  Company  owns a 155,000  square  foot  facility  at 100 Marcus
Boulevard,   Hauppauge,  New  York,  the  principal  manufacturing,   sales  and
distribution facility of Boundless. The Company also leases approximately 11,743
square  feet of office  space in  Austin,  Texas.  The  lease for this  facility
expires  December 31, 2000.  The  Company's  current  annual rent for the Austin
facility  is  approximately  $247,000.  The  Company  leases  four  other  small
facilities  throughout the United States for depot repair and support  services.
The annual lease commitments for these facilities are not material.

ITEM 3.     LEGAL PROCEEDINGS

         Not applicable.

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

         No matter was submitted  during the fourth quarter of 1999 to a vote of
stockholders of the Company through the solicitation of proxies or otherwise.

                                     PART II

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

         On March 6, 1998, the Company  delivered to its  shareholders and filed
with the Securities and Exchange  Commission an Information  Statement  relating
to, among other matters,  a one-for-ten  reverse split (the "Reverse  Split") of
the Common Stock.  The Reverse  Split became  effective  March 26, 1998.  Unless
otherwise  noted,  all  information  in this Annual Report on Form 10-K has been
restated, applying retroactive treatment of the Reverse Split.

         The  Company's  Common Stock is quoted on The American  Stock  Exchange
("AMEX") under the symbol BND. As of March 1, 2000, there were approximately 948
holders of record of the Company's  Common Stock. The following table sets forth
the high and low last sale prices for the Company's Common Stock, as reported by
AMEX, for the periods  indicated.  Price per share information has been restated
for the one-for-ten reverse split.

Year Ended December 31, 1999:                               High         Low

             First quarter...........................     $ 6.06       $ 4.25
             Second quarter..........................     $ 6.25       $ 4.00
             Third quarter...........................     $ 5.88       $ 3.88
             Fourth quarter..........................     $ 9.81       $ 3.44

Year Ended December 31, 1998:

             First quarter...........................     $10.00       $ 6.25
             Second quarter..........................     $ 9.09       $ 4.88

                                       10
<PAGE>


             Third quarter...........................     $  6.38      $ 3.06
             Fourth quarter..........................     $  7.13      $ 3.00

The last sale price of the Company's Common Stock on March 2, 2000 was  $ 15.00.

Dividend Policy

             The Company  presently  anticipates that all of its future earnings
will be retained for development of its business and does not anticipate  paying
cash dividends on its Common Stock in the foreseeable future. The payment of any
future  dividends will be at the discretion of the Company's  Board of Directors
and will  depend  upon,  among  other  things,  restrictions  on the  payment of
dividends imposed by its lenders,  future earnings,  capital  requirements,  the
general financial condition of the Company, and general business conditions. The
Chase  Credit Line  prevents  the Company from  declaring  any  dividends on the
Company's Common Stock and any other class of capital stock of the Company.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations - Liquidity and Capital Resources."

ITEM 6.      SELECTED CONSOLIDATED FINANCIAL DATA

             The following table sets forth selected consolidated financial data
for the  Company  for the  periods and the dates  indicated.  The  statement  of
operations and balance sheet data for the years ended  December 31, 1999,  1998,
1997,  1996 and 1995 set  forth  below  have  been  derived  from the  financial
statements  of  the  Company  which  have  been  audited  by BDO  Seidman,  LLP,
independent certified public accountants.  The selected financial data should be
read  in  conjunction  with,  and  are  qualified  in  their  entirety  by,  the
Consolidated  Financial  Statements  of the Company and related  Notes and other
financial information included elsewhere herein.


                                       11
<PAGE>

Consolidated Statement of Operations Data
For the years ended December 31:
(in thousands, except per share data)
<TABLE>
<CAPTION>

                                               1999        1998        1997         1996       1995
                                               ----        ----        ----         ----       ----
<S>                                            <C>         <C>         <C>          <C>        <C>

Total revenues                                $80,510     $90,202      $98,271    $138,225    $94,957
Gross margin                                   23,812      25,999       24,766      28,557     25,573
Operating expenses:
  Sales and marketing                          10,292       8,308        7,417      10,433      7,940
  General and administrative                    6,979       5,845        6,213       8,120      6,337
  Research and development                      5,908       3,666        2,912       4,855      4,569
  Other charges (credits)                      (3,711)        (16)        (255)      1,980         --
                                               ------      ------       ------     ------     -------

     Total operating expenses                  19,468      17,803       16,287      25,388     18,846
                                               ------      ------       ------      ------     ------

Operating income                                4,344       8,196        8,479       3,169      6,727
Interest expense                               (1,438)     (2,539)      (3,730)     (3,794)    (1,907)
Other income                                       --          --           --          --        572
                                               ------      ------        -----      ------     ------

Income (loss) from continuing
  operations                                    2,906       5,657        4,749        (625)     5,392
Income tax (credit) expense                      (333)        749         (134)        962     (1,323)
Loss from discontinued operations                  --          --           --      (9,652)      (870)
Extraordinary item- loss on
extinguishment of debt                             --          --           --         --        (589)
                                               ------     -------       ------     -------     ------
Net income (loss)                              $3,239      $4,908       $4,883   $(11,239)     $2,610
                                               ======      ======       ======   =========     ======
Income (loss) per common share from
continuing operations:

Basic                                            $.72        $.90         $.89       $(.44)      $.37
                                                 ====        ====         ====      ======       ====
Diluted                                          $.71        $.90         $.86       $(.44)      $.35
                                                 ====        ====         ====      ======       ====

Net income (loss) per common share:

Basic                                            $.72        $.90         $.89      $(2.50)      $.04
                                                 ====        ====         ====      =======     =====
Diluted                                          $.71        $.90         $.86      $(2.50)      $.04
                                                 ====        ====         ====      =======     =====
Consolidated Balance Sheet Data
At December 31:
(in thousands)
Working capital                               $17,942      $9,401       $8,780      $3,172    $15,416
Total assets                                   50,460      49,348       54,548      69,525     75,856
Revolving credit loan (short-term)                 --          --        7,650      13,950      8,000


Long-term obligations                          15,125       7,129       10,288      14,300     25,492
Mandatorily redeemable preferred
stock                                              --       3,555        3,555       3,555      3,555

Stockholders' equity                          $21,415    $ 16,657      $15,407      $8,802    $12,837
</TABLE>

                                       12
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

General

         Reference  is made to  Notes  1,3,7  and 16 of  Notes  to  Consolidated
Financial   Statements  for  definitions  of  certain   capitalized   terms  and
information  regarding the GAI Partnership and  acquisitions and dispositions by
the Company since December 1994.

Results of Operations

The numbers and  percentages  contained in this Item 7 are  approximate.  Dollar
amounts are stated in thousands.

Years Ended December 31, 1999 and 1998

         Revenues:  Revenues for the year ended  December 31, 1999 were $80,510,
as compared to $90,202 for the year ended December 31, 1998.

         Sales of the Company's General Display  Terminals  declined by 15.8% to
$64,486 for the year ended  December  31,  1999 from  $76,612 for the year ended
December 31, 1998. The decline is primarily attributable to a reduction in sales
of the  Company's  VT/Dorio  product  line  and  sales  to  Digital,  which,  in
combination,  accounted  for a decline of  approximately  $7,763,  or 20.2% from
sales in 1998.  The Company  believes the market for General  Display  Terminals
will  continue to decline in the future as  customers  move toward  applications
requiring graphical user interfaces.

         Sales of the Company's  Windows(R)-based  Terminals grew by over 60% to
$13,533 versus $8,409 for the years 1999 and 1998, respectively. The thin client
computing  concept has been  implemented  and in use for over two years.  During
this period the market has had the  opportunity  to validate thin client ease of
use and lower cost of ownership versus  alternatives for accessing  information,
substantially enhancing market acceptance of thin client computing. In addition,
changes in licensing  schemes from software  vendors and the creation of the ASP
(application  service  providers)  Consortium,  an industry group supporting the
computing concept of delivering software  applications to multiple entities from
centralized  data  servers,  were  positive  driving  forces  in  enhancing  the
prospects of the thin client market.

         During 1999 the Company  released the Capio(R),  a new low-cost product
platform,  and  substantially  enhanced the features  and  functionality  of its
administration software. In addition,  Boundless Technologies signed a strategic
OEM and distribution agreement with COMPAREX  Informationsysteme and eSESIX that
extends the company's WBT product line in Germany and throughout Europe.

         Net  sales  from  the  Company's   repairs  and  spare  parts  business
approximated  the 1998  results,  increasing  from  $2,428  for the  year  ended
December 31, 1998 to $2,440 for the year ended  December  31, 1999.  Reliability
improvements and enhanced product quality have reduced the Company's spare parts
revenues as compared to prior years.  In addition the general  downtrend in unit
sales have adversely affected this component of the Company's  business.  Due to
these  factors  and new  designs  and  engineering  changes  resulting  in fewer
components and increased  reliability,  the Company  anticipates reduced repairs
and spare parts revenue in the future.

         IBM was the  most  significant  customer  for the  Company's  products,
accounting  for 15% of revenues for the year ended  December 31, 1999.  Sales to
Digital and NCR accounted for 7% and 3%, respectively,  of revenues in 1999. The
loss of IBM, NCR or Digital as a customer, and as a distribution channel for the
Company's General Display Terminals, would have a material adverse effect on the
Company's results of operations and liquidity.

                                       13
<PAGE>

         Gross  Margin.  Gross  margin for the year ended  December 31, 1999 was
$23,812  (29.6% of  revenue),  as  compared  to gross  margin for the year ended
December 31, 1998 of $25,999 (28.8% of revenue).  Cost reduction  activities and
changes in the  Company's  product mix have  enabled the Company to increase its
gross margin percent despite the decline in revenues.

         The Company  anticipates  that increased  sales of WBTs will negatively
impact gross margin due to the software license fees associated with the sale of
this product.  Gross margin in future periods may be affected by several factors
such as sales volume,  shifts in product mix, pricing  strategies and absorption
of manufacturing costs.

          Changes in retail  pricing did not have a material  adverse  effect on
the Company's  gross margin in 1999 or 1998. In a continuing  effort to maintain
and improve margins in an industry otherwise characterized by commodity pricing,
management has focused on quality, flexibility, and product cost reductions.

         From time-to-time  margins are adversely affected by industry shortages
of key  components.  The Company  emphasizes  product and cost reductions in its
research  and  development   activities  and  frequently  reviews  its  supplier
relationships  with the view to obtaining the best component  prices  available.
See "Asset Management."

         Total  Operating  Expenses.  For the  year  ended  December  31,  1999,
operating  expenses  were $19,468  (24.2% of revenue),  compared to expenses for
1998 of $17,803 (19.7% of revenue).

         Sales and Marketing  Expenses.  Sales and marketing  expenses increased
23.9% from $8,308 (9.2% of revenue) for the year ended 1998 to $10,292 (12.8% of
revenue) for the year ended December 31, 1999. The increase is  attributable  to
spending to develop the  Windows(R)-based  Terminal market,  including  expenses
relating to the  introduction  of the  Company's  new Capio(R) WBT. In addition,
sales and marketing  expenses for 1999 increased  versus the prior period as the
Company  increased  the sales  headcount to  accelerate  acceptance  of Internet
appliances.

         The Company  promotes  its products by means of a balanced mix of media
advertising,  direct mail,  telemarketing,  trade shows,  public  relations  and
cooperative  channel marketing  programs.  The Company's  installed base of over
5,000,000 units is the primary target market for the Company's  Viewpoint(R) and
Capio WBTs.  The  Company's  plan to reach this market is based on direct  mail,
telemarketing and advertising and participating in events with its key partners,
including  Microsoft.   Within  Merinta,  spending  is  targeted  at  developing
alliances and  partnerships  to achieve speed to market and leverage  technology
partnerships  that provide joint marketing  relationships  or reference  selling
opportunities.

         General  and  Administrative   Expenses.   General  and  administrative
expenses  increased 19.4%, or $1,134,  to $6,979 (8.7% of revenue),  from $5,845
(6.5%  of  revenue)  for  the  periods  ending   December  31,  1999  and  1998,
respectively.  The  increase  stems  from  spending  for  professional  services
including  legal,  standard  accruals for the Company's  employee  bonus program
payable  within  the  first  quarter  of  2000,  and  expenses  related  to  the
implementation  of  the  Company's  new  enterprise  resource  planning  ("ERP")
software.

         Research and Development  Expenses.  Research and development  expenses
increased to $5,908 in 1999 from $3,666 in 1998. The increase is attributable to
Merinta's  development  efforts in software  related to Internet  appliances and
Boundless  Technologies'  development  of  its  WBTs.  Spending  increases  were
primarily related to the recruitment and retention of key development  employees
resulting in an increase of over 50% in headcount-related expenditures.

         Research and  development  expenses  will continue to shift to software
and  hardware   development  that  will  deliver   user-friendly   Windows-based
applications to the desktop while  maintaining  current cost and  administrative
benefits of the shared resource  multi-user  computing model. The Company's WBTs
are  designed  to offer  customers  simple,  easy and  cost-effective  access to
current and emerging  computing  environments  that include Windows NT, UNIX and
Java applications, corporate intranets and the Internet.

         Other Charges  (Credits).  On September 30, 1999,  the Company sold the
entirety of its interest in the GAI

                                       14
<PAGE>

Partnership  to GA  for  $1,500,000  in cash,  1,133,333  shares  of  restricted
common stock of GA,  notes,  and warrants to purchase  shares of common stock of
GA.  The  Company  previously  disclosed  that  GA was in  default  of  material
obligations  under the  partnership  agreement,  including  payment  of past due
royalties  and other fees,  which  totaled  $2,468 as of December 31, 1998.  The
Company  reserved  against all outstanding  receivables  during 1997, and, since
that time, has recorded revenue  attributable to the partnership on a cash basis
only. The Company  recorded a credit of $2,324 relating to the sale after having
received a third-party  valuation  assessment of the value of the securities and
convertible debt components of the settlement.  In addition the Company released
a number of  overaccruals  from  prior  years  including  $636  relating  to the
estimated  warranty  liability  associated  with the  shipment of the  Company's
products to DEC as well as $494 relating to the estimate of  outstanding  claims
against the Company's marketing development funds programs.

         Interest Expense. Interest expense (net of interest income) amounted to
$1,438 for the year ended  December  31, 1999  compared to $2,539 for 1998.  The
decline  in  interest  expense  stems  from a  reduction  in the  amount  of the
Company's  outstanding debt,  completion of the amortization of capitalized debt
financing costs relating to previous acquisitions, as well as a slight reduction
in the rate of interest applicable to the Company's debt obligations.

         Income Tax Credit/Expense. The Company recorded an income tax credit of
$333 for the year ended  December 31, 1999  compared to an income tax expense of
$749 for the year ended  December 31, 1998.  In 1999,  the Company  recorded tax
benefits of $1,531 relating to the reversals of a prior year overaccrual and the
adjustment  of  deferred  taxes as a  result  of tax  examinations.  In 1998 the
Company  released  all of the  valuation  allowance  reserved  against  its  net
deferred  tax  asset,  resulting  in an  effective  tax rate  below the  federal
statutory  rate.  At December 31, 1999,  the Company had no net  operating  loss
carryforward credits remaining.

         Net Income. For the year ended December 31, 1999, net income was $3,239
(4.0% of revenue),  compared to a net income of $4,908 (5.4% of revenue) for the
year ended December 31, 1998.

Years Ended December 31, 1998 and 1997

         Revenues.  Revenues for the year ended  December 31, 1998 were $90,202,
as compared to $98,271 for the year ended December 31, 1997.

         Sales of the Company's  General Display  Terminals  declined by 6.8% to
$76,612 for the year ended  December  31,  1998 from  $82,200 for the year ended
December 31, 1997. The decline is primarily attributable to a reduction in sales
of the Company's  VT/Dorio  product line.  Sales to Digital and to the Company's
distribution channel in the United States increased $8,640 offsetting,  in part,
the decline in sales of VT/Dorio products.

         Sales of Network  Graphics  Displays were not  significant in 1998 and,
due to the small customer base and low margins  associated with Network Graphics
Displays and the emergence of WBTs, the Company announced a  discontinuation  of
this product family in the first quarter of 1998.

         Sales of the Company's  Windows(R)-based  Terminals  amounted to $8,409
versus  $3,218  for the years  1998 and 1997,  respectively.  The  increase  was
attributable to an increase in market acceptance of this computing technology as
well as the  release,  in July 1998,  of a key  enabling  server  software  from
Microsoft(R) Corporation.

         Net sales from the Company's repairs and spare parts business decreased
28%, or $922, from $3,350 for the year ended December 31, 1997 to $2,428 for the
year ended  December 31, 1998.  An increase in the  proportion  of the Company's
sales to OEMs,  who  generally  provide  their own service,  reduced the overall
repairs  revenue.  Also,  spare parts sales to Digital  and NCR  decreased  as a
result of the overall  decline in unit sales to each of them in recent years. In
addition, reliability improvements and enhanced product quality have reduced the
Company's spare parts revenues

         The GAI Partnership  agreement provided for the payment of royalties to
the Company as a percentage of

                                       15
<PAGE>

partnership revenues,  commencing May 1995, as follows: months 1-12, 12%; months
13-24,  10%;  months  25-36,  9%; months  37-48,  8%; and months 49-60,  7%. The
Company has previously  disclosed that GA is in default of material  obligations
under the  partnership  agreement,  including  payment of past due royalties and
other  fees.  As  a  result,   the  Company  reserved  against  all  outstanding
receivables during 1997, and, since that time, recorded revenue  attributable to
the partnership on a cash basis only.

         IBM was the  most  significant  customer  for the  Company's  products,
accounting  for 15% of revenues for the year ended  December 31, 1998.  Sales to
Digital and NCR accounted for 9% and 4%, respectively, of revenues in 1998.

         Gross  Margin.  Gross  margin for the year ended  December 31, 1998 was
$25,999  (28.8% of  revenue),  as  compared  to gross  margin for the year ended
December 31, 1997 of $24,766 (25.2% of revenue).  Cost  reduction  activities in
the Company's General Displays Terminals product line increased the gross margin
percent  6.4  points  from 1997 to 1998.  In  addition,  sales of the  Company's
discontinued Network Graphics Displays accounted for a smaller percentage of the
Company's total revenues in 1998 as compared to 1997. This change in product mix
increased the gross margin  percent,  year-to-year,  due to the  relatively  low
gross margin associated with Network Graphics Displays.

         Total  Operating  Expenses.  For the  year  ended  December  31,  1998,
operating  expenses  were $17,803  (19.7% of revenue),  compared to expenses for
1997 of $16,287 (16.6% of revenue).

         Sales and Marketing  Expenses.  Sales and marketing  expenses increased
12.0% from $7,417  (7.5% of revenue)  for the year ended 1997 to $8,308 (9.2% of
revenue) for the year ended December 31, 1998. The increase is  attributable  to
spending to develop the  Windows(R)-based  Terminal market,  including increased
participation  at  important  tradeshows  throughout  1998,  as well as expenses
relating to the introduction of the Company's new Capio WBT.

         General  and  Administrative   Expenses.   General  and  administrative
expenses  decreased  5.9% from  $6,213  (6.3% of  revenue),  to $5,845  (6.5% of
revenue) for the periods ending  December 31, 1997 and 1998,  respectively.  The
decline stems from reductions in spending for  professional  services  including
legal and audit fees.

         Research and Development  Expenses.  Research and development  expenses
increased to $3,666 in 1998 from $2,912 in 1997. The increase is attributable to
the development efforts in software related to WBTs.

         Other Charges.  Interest  expense (net of interest  income) amounted to
$2,539 for the year ended  December  31, 1998  compared to $3,730 for 1997.  The
decline  in  interest  expense  stems  from a  reduction  in the  amount  of the
Company's outstanding debt as well as a slight reduction in the rate of interest
applicable to the Company's debt obligations.

         Income Tax  Credit/Expense.  The Company recorded income tax expense of
$749 for the year ended  December  31, 1998  compared to an income tax credit of
$134 for the year ended  December 31, 1997. In 1998 the Company  released all of
the valuation  allowance reserved against its net deferred tax asset,  resulting
in an  effective  tax rate below the  federal  statutory  rate.  In 1997 the tax
credit resulted from the utilization of net operating loss carryforward  credits
of $1,481 and a tax  adjustment  for  valuation  of the  Company's  deferred tax
asset.

         Net Income. For the year ended December 31, 1998, net income was $4,908
(5.4% of revenue),  compared to a net income of $4,883 (5.0% of revenue) for the
year ended December 31, 1997.

                                       16
<PAGE>

Impact of Inflation

         The  Company  has not been  adversely  affected  by  inflation  because
technological  advances and competition  within the microcomputer  industry have
generally caused prices of products sold by the Company to decline.  The Company
has flexibility in its pricing and could, if necessary, pass along price changes
to most of its customers.

Year 2000 Compliance

         Year 2000 Update

         Through the first two months of the year 2000, the Company's operations
around the world are functioning and have not experienced any significant issues
associated with the Year 2000 problem (as described below). Boundless' customers
have not reported any Year 2000  incidents.  The Company has not experienced any
significant   Year   2000-related   issue  that  would  affect  our  ability  to
manufacture, ship, sell, or service our products.

         Year 2000 Readiness

         Computers,  software and other equipment utilizing microprocessors that
use only two digits to  identify a year in a date field may be unable to process
accurately  certain  date-based  information  referencing the year 2000. This is
commonly  referred to as the "Year 2000 issue." The Company is  addressing  this
issue on several different  fronts.  With respect to products the Company offers
for sale, either to OEMs or through  distribution,  the Company has verified the
products  are Year 2000  compliant.  The Company has  assigned a team to monitor
Year 2000  compliance.  This team is charged with ensuring Year 2000  compliance
for all hardware and software products through its purchasing  process,  as well
as  assessing  Year 2000  readiness  and risk to the Company with respect to the
compliance of its critical  vendors and  suppliers.  Finally,  the Company has a
team assigned to coordinate  the Year 2000 program for its internal  systems and
devices.  Year 2000 compliance of the Company's internal systems and devices was
substantially tested and complete by November of 1999, with continued testing of
compliance  throughout  1999. To date,  the total costs related to the Company's
Year 2000 program have not been material to the Company's  financial position or
results of  operations,  and have been charged to expense as incurred.  Based on
current  information and assessment,  the Company does not believe that the Year
2000 issue  discussed  above as it relates to products  sold to customers or the
Company's internal systems will be material to its financial position or results
of operations  or that its business  will be adversely  affected in any material
respect.  Nevertheless,  achieving  Year 2000  compliance  is  dependent on many
factors,  some of which are not completely within the Company's control.  Should
either  the  Company's  internal  systems  or one or more  critical  vendors  or
suppliers fail due to Year 2000 issues,  the Company's  business and its results
of operations could be adversely affected.

Liquidity and Capital Resources

         The discussion below regarding  liquidity and capital  resources should
be read together with the information  included under Notes 4, 7 and 11 of Notes
to Consolidated Financial Statements.

         Working  capital was  approximately  $17,942 as of December  31,  1999,
compared to $9,401 as of December 31, 1998. Historically, the Company has relied
on cash flow from  operations,  bank borrowings and sales of its common stock to
finance its working capital, capital expenditures and acquisitions.

         The Company  currently  has a bank credit  facility that is provided by
Chase. A Revolving Loan with Chase,  originally scheduled to expire December 31,
1998, had been extended to April 15, 1999. On April 14, 1999, the Company signed
an agreement  with Chase to replace that  existing  Chase Credit Line with a new
three-year  $15,000 revolving line of credit on terms  substantially  similar to
those  previously in effect.  The new credit facility also provides for a $4,000
term loan,  payable over a  three-year  period in equal  quarterly  installments
beginning  June 1999. At December 31, 1999, the

                                       17
<PAGE>

Chase Credit Line consisted of a $15,000  revolving  line of credit  ("Revolving
Loan").  Borrowing under the Revolving Loan is based on a borrowing base formula
of up to 80% of eligible receivables, plus 50% of delineated eligible inventory,
plus 30% of  non-delineated  eligible  inventory.  At December 31,  1999,  up to
$5,000 was available under the Revolving Loan for letters of credit. At December
31, 1999, the Company owed Chase $3,000 under the term loan and $5,500 under the
line of credit and had  availability  of $4,000 under the  Revolving  Loan. As a
result of the borrowing base formula,  the credit available to the Company could
be adversely  restricted in the event of further declines in the Company's sales
and increased  purchases and  production to meet  increases in orders may not be
able to be financed under the Chase Credit Line.

          In order to fund the Company's activities in Boundless  Manufacturing,
the  Company is  negotiating  an  amendment  to the Chase  Credit  Line which it
expects to complete shortly.

         Net  cash  provided  by  operating  activities  related  to  continuing
operations  during the year ended  December  31,  1999 was  $2,180,  principally
related to net income of $3,239 and non-cash expenses,  principally depreciation
and amortization,  of $2,111. These increases were partially offset by increases
in  inventory  of $1,526,  reductions  in  accounts  payable  and other  accrued
expenses of $1,266 as well as a change in the Company's deferred tax position of
$827. Net cash provided by investing activities was comprised of $1,500 stemming
from the  sale of the  Company's  partnership  interest  in the GAI  Partnership
offset by capital  expenditures of $1,023. Net cash used in financing activities
was  principally  comprised  of the  repayment of $8,000 to NCR to retire a note
originally  issued  in  connection  with  the  Boundless   Acquisition  and  the
retirement of the Company's mandatorily redeemable preferred stock in the amount
of $3,555.  These  amounts were offset by proceeds from the issuance of a $6,750
mortgage note to a financial  institution  and $4,000 from a term loan which was
obtained in connection with the renewal of the Chase Credit Line.

         In addition to  obligations  previously  discussed,  long-term  capital
requirements  at December  31, 1999  included:  (i) a mortgage  note  payable to
Independence  Community Bank in the amount of $6,713,  bearing interest at 7.75%
per annum and payable  monthly  over a 25-year  amortization  schedule due on or
before July 1, 2009 and secured by the  Company's  facility  in  Hauppauge,  New
York; and (ii) a lease commitment of $247 per year through December 31, 2000 for
Merinta's Austin, Texas facility.

         At December 31, 1999, the Company's  total long-term  liabilities  were
approximately   $15,125  and  its  current   portion  of   long-term   debt  was
approximately  $1,650.  The Company  believes that cash  generated by Boundless'
operations will be sufficient to pay the Company's  current and long-term debts,
when due.

Asset Management

         Inventory.   Management  has  instituted  policies  and  procedures  to
maximize product  availability and delivery while minimizing inventory levels so
as to lessen  the risk of  product  obsolescence  and price  fluctuations.  Most
components and sub-assemblies are stocked to provide for an order-to-ship  cycle
of seven days.  The  Company  follows an  inventory  cycle  count  program  that
dictates monthly,  quarterly, or semi-annual physical inventory counts depending
upon product cost and usage.

         The Company utilizes various  subcontractors that manufacture component
parts of its products  based on  specifications  supplied by the  Company.  As a
guideline, the Company attempts to have two qualified subcontractors for each of
its high dollar value, long lead time,  customized components that it chooses to
outsource.  In certain cases, the Company may decide to purchase components from
only one of the qualified  subcontractors in an attempt to control manufacturing
overhead  costs tied to  supplier  management  and  development.  In most cases,
backup qualified  subcontractors are identified by the Company in the event that
termination  of the primary source should occur.  If such a termination  occurs,
the  Company  may  experience  short-term  production  delays and  increases  in
material and freight costs as the alternate  subcontractor  initiates production
runs and expedites delivery to the Company. Furthermore,  worldwide shortages of
raw material  creates  supply  problems for the computer  industry  from time to
time.  Such supply  shortages  may cause market price  increases  and  allocated
production runs which could have an adverse effect on the Company's business.

Inventory  turnover was 4.2 times in 1997,  4.4 times in 1998,  and 3.8 times in
1999.  The decline in 1999 resulted  from the  Company's  decision to accelerate
receipt  of  material  ahead of  December  31,  1999 in order  to  minimize  any
potential  Year 2000  disruption.  Inventory  reserves at December 31, 1999 were
$2,920 and were $3,273 for the year ended December 31,

                                       18
<PAGE>

1998.

         Accounts  Receivable.  The Company sells its products on prepayment and
net 30-day terms.  Receivable  turnover was 6.0 in 1997,  6.2 in 1998 and 6.0 in
1999.

New Accounting Pronouncement

         Statement of Financial  Accounting  Standard  No.133,  "Accounting  for
Derivative  Instruments  and Hedging  Activities"  ("SFAS No. 133")  establishes
accounting  and  reporting  standards  for  derivative  instruments  and hedging
activities.  SFAS No. 133 requires that an entity  recognize all  derivatives as
either assets or liabilities in the statement of financial  position and measure
those  instruments  at fair  value.  SFAS No.  133 is  effective  for all fiscal
quarters of fiscal years beginning after June 15, 2000. The Company is assessing
the  impact  that  the  adoption  of SFAS  No.  133 will  have,  if any,  on its
consolidated financial statements.

         In December 1999, the Securities and Exchange  Commission  issued Staff
Bulletin  No. 101  "Revenue  Recognition  in  Financial  Statements."  The staff
accounting  bulletin is effective no later than January 31, 2001. The Company is
in the process of determining the impact adoption will have on its  consolidated
financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

            The Company's  exposure to market risk for changes in interest rates
relates primarily to the Company's  revolving credit facility and long-term debt
obligations.  The Company manages this risk through utilization of interest rate
swap agreements in amounts not exceeding the principal amount of its outstanding
obligations.  At December 31, 1999 the Company had in place  interest  rate swap
agreements  in the amount of $7,000 at an  effective  average  interest  rate of
8.66%.  Of this dollar  amount,  $3,000  represents  an  effective  hedge of the
Company's  exposure to interest rate changes against the outstanding  balance of
the term loan; and such swap amount shall amortize in concert with the term loan
payment schedule.  The remaining balance of the swap agreement is intended as an
effective hedge to interest rate changes against the outstanding  balance of the
company's Revolving Loan.

         The Company places its  investments  with high credit  quality  issuers
and,  by  policy,  is  averse to  principal  loss and  ensures  the  safety  and
preservation  of its invested  funds by limiting  default risk,  market risk and
reinvestment risk. As of December 31, 1999 the Company's  investments  consisted
of the investment of excess cash balances in overnight time deposits  offered by
Chase Manhattan Bank in London.

         All sales arrangements with international  customers are denominated in
U.S.  dollars.  These  customers  are  permitted to elect  payment of their next
month's orders in local currency based on an exchange rate provided one month in
advance from the  Company.  The Company  does not use foreign  currency  forward
exchange  contracts or purchased  currency  options to hedge local currency cash
flows or for trading purposes. Foreign currency transaction gains or losses have
not been material to the Company's results of operations.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See Item 14(a)(1) and (2) of Part IV of this Report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.

                                       19
<PAGE>

                                    PART III

ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors and Executive Officers

         The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>

Name                                Age      Positions and Offices
<S>                                 <C>               <C>

J. Gerald Combs                     50       Chairman of the Board of Directors, Chief Executive Officer

Joseph Joy                          46       President, Boundless Manufacturing Services, Inc.

Anthony Giovaniello                 44       Executive Vice President- Boundless Manufacturing Services, Inc.

Kenneth East                        41       Chief Technology Officer- Merinta, Inc.

Jeffrey K. Moore                    30       Vice President, Corporate Development, Director, President- Merinta Inc.

Joseph Gardner                      40       Vice President - Finance, Chief Financial Officer

Stephen Maysonave                   53       Director

Gary Wood                           56       Director

Daniel Matheson                     50       Director
</TABLE>

         J. Gerald Combs has served as Chairman and Chief  Executive  Officer of
the Company and its subsidiaries  since May 9, 1997. From April 1997 to December
1999 Mr. Combs had been the  Chairman and CEO of Morgan Kent Group,  the largest
shareholder  of the Company.  Since 1992 Mr. Combs has been  Chairman and CEO of
Merrico Corporation,  a privately held financial consulting firm. Mr. Combs also
served as President of All-Quotes,  Inc., the  predecessor of the Company,  from
October 1993 to December 1994.

         Joseph Joy has served as President,  Boundless  Manufacturing Services,
Inc.  since  September  1999.  Mr. Joy has over twenty years  experience  in the
computer and computer  peripherals  industries.  Mr. Joy's  experience  includes
general management,  supply-based management,  marketing,  quality assurance and
engineering.  Previously  Mr. Joy held senior  management  positions in computer
supply chain  management  and sales and  marketing  for both  Solectron  and NCR
corporations.  He  received  his  MBA  from  Columbia  University  and  BA  from
Georgetown University.

         Anthony  Giovaniello has served as Executive Vice  President,  Business
Development,  for Boundless Manufacturing since August 1999. Mr. Giovaniello has
been a professional  in the high  technology  area for over 20 years.  Over that
period he has amassed extensive sales and sales management  experience,  both in
corporate and indirect sales  activities.  More recently,  Mr.  Giovaniello  was
Director,  Business  Development,  for Solectron  Corporation  and had served as
Chief Operating Officer of Boundless Technologies.

                                       20
<PAGE>

         Kenneth East has served as Chief  Technology  Officer of Merinta  since
November 1999. Prior thereto,  from September 1998 until November 1999, Mr. East
had  served as Chief  Operating  Officer of the  Company.  Mr.  East  joined the
Company in February 1998 as Chief Technology  Officer.  Prior to that time, from
1990 to 1998,  Mr. East  served as  Director of Software  Development-Integrated
Network  Management  Systems at NEC America,  Inc.,  a worldwide  leader in high
technology  offering  products  and systems in  semiconductors,  communications,
computer peripherals, imaging, and computers.

         Jeffrey K. Moore has  served as a member of the  Company's  Board and a
Vice  President of Boundless  since  January  1997. He joined the Company in May
1996 as a financial  analyst  reporting to the Company's Chief Financial Officer
and  President.  From  September  1996 to April 1997, he served as President and
Chairman of the Board,  and from  February  1999 to December  1999 had served as
Assistant  Secretary and as a director,  of Morgan Kent Group.  In December 1999
Mr. Moore was named  Chairman of Morgan Kent Group,  and during January 2000 was
named President of Merinta.

         Joseph  Gardner  has  served  as  Vice  President-  Finance  and  Chief
Financial  Officer of the Company since October 31, 1997.  Mr.  Gardner has been
employed by  Boundless  since  April of 1990.  Prior to October  31,  1997,  Mr.
Gardner  served as the  Controller  and Vice  President-  Quality  Assurance  of
Boundless.

         Stephen Maysonave has been a member of the Company's Board of Directors
since September  1998. Mr.  Maysonave has thirty years of experience in the high
technology   business,   including  twenty  years  of   international   business
experience.  Mr. Maysonave is currently the principal of Maysonave & Associates,
a consulting group specializing in high technology companies.  Prior thereto Mr.
Maysonave was employed as Vice President, Global Partners, by Informix Software,
a worldwide supplier of database solutions.  Mr. Maysonave is the voting trustee
of  3,330,000  shares of Series B Preferred  Stock of Morgan  Kent  Group,  Inc.
pursuant  to a voting  trust  expiring  April 30,  2000.  (See Item 12).  During
January 2000, Mr.  Maysonave  resigned his position as a member of the Company's
Board of Directors. Mr. Maysonave continues to serve as a member of the Board of
Directors for Merinta.

         Gary Wood has been a member of the Company's  Board of Directors  since
November 1996.  Since  September 1, 1997, Mr. Wood has been serving as Executive
Vice President and Chief Operating Officer of Collins Financial  Services,  Inc.
Collins purchases  nationwide  portfolios of consumer debt and either resells or
collects the accounts.  He has served as Staff Economist for Senator John Tower;
was named Chief Economist of the Republican Policy Committee, U.S. Senate; was a
Finance Professor and Director of Governmental Affairs at Baylor University; and
is a former Director of the Federal Reserve Bank of Dallas.  He also served as a
member of the Regional  Advisory  Oversight  Board of the R.T.C.  as well as the
Boards of The Capital Network and the Mental Health  Association in Texas.  From
April 1988 to December  1995 Mr. Wood served as President of the Texas  Research
League.

         Daniel  Matheson has been a member of the Company's  Board since August
1996. Mr.  Matheson  received his JD with Honors from the University of Texas in
1974 and his BA from the University of Texas at Austin in 1971.  Mr.  Matheson's
legal  experience has involved  counseling  and advice to emerging  companies on
choice of entity structuring, venture financing, and corporate governance. He is
a member of the American, Texas and Travis County Bar Associations. Mr. Matheson
is the Past  Chairman  and a Member of the  Board of  Directors  of The  Capital
Network, Inc.; Immediate Past-Chairman and a Member of the Board of Directors of
the Mental Health  Association of Texas;  and a Member of the Board of Directors
and  Executive  committee  of the  Paramount  Theater,  Inc. He also serves as a
Trustee  of the Texas  Mental  Health  Foundation  and is a member of the Austin
Leadership Council of the University of Texas "We're Texas" Capital Campaign.

         The  following   individuals,   although  not  executive   officers  or
directors, are key employees and are expected to make significant  contributions
to the business of the Company:

         James  Tillinghast  has  been  serving  as  Vice  President,  Sales  of
Boundless since January 1999.  Prior to joining the Company Mr.  Tillinghast was
employed  by  Informix  Software  and served as  executive  director  for Global
Partners, responsible for managing sales and business development activities for
Informix's strategic software partners.

                                       21
<PAGE>

         Brian L. Hann has been  serving  as Vice  President  of  Operations  of
Boundless since March 1997 after serving as Vice President of  Manufacturing  of
Boundless  since December  1994.  Mr. Hann has been employed by Boundless  since
March of 1986 and has served as Assistant  Vice President of  Manufacturing  and
Customer Services.

         Non-employee  members  of the  Company's  Board  of  Directors  receive
$12,000  annually,  and $500 for each Board of  Director  meeting  attended,  as
compensation for services rendered to the Company in their capacity as directors
of the Company.  In addition,  non-employee  members of the  Company's  Board of
Directors  receive $6,500  annually for services  provided as a member of either
the Audit or Compensation Committees. Messrs. Wood, Matheson, and Maysonave were
each granted  options on February 18, 1999, to purchase  15,000 shares of Common
Stock at $5.00 per share that expire in February  2004.  The options vest over a
four-year period as follows- 25% following the first  anniversary of the date of
grant and pro rata over the remaining  three-year period. The options granted to
Mr.  Maysonave were for  consulting  services  provided to the Company,  and the
Company  recorded an expense of $40,000  related to the grant.  On September 17,
1999,  the  Company  granted to each of Messrs.  Wood,  Matheson  and  Maysonave
options  to  purchase  10,000  shares of Common  Stock at $4.125  per share that
expire  September 2004. These options vest similarly to the options noted above.
On September 17, 1999 the Company  granted to each of Messrs.  Wood and Matheson
options  to  purchase  10,000  shares  of Common  Stock at  $4.125  per share in
connection with their work as members of the company's  Compensation  Committee.
These shares vest as to 50% one-year  following the date of grant and, as to the
remainder,  on the second anniversary  following the date of grant. In addition,
on September  17, 1999,  Mr.  Maysonave was granted  15,000  options to purchase
shares of Common  Stock at $4.125  per share that  expire  September  2004.  The
15,000 options were granted for services Mr. Maysonave  provided as a consultant
to the Company and vested immediately on the date of grant. The Company recorded
an expense of $25,000 relating to the grant of the 15,000 options.

Section 16(a) Beneficial Ownership Reporting Compliance

         A  review  of the  Forms 3 and 4 filed or due in 1999  relating  to the
Company's   securities  indicates  that  the  following  filing  made  with  the
Commission  was not timely:  a Form 4 relating to Mr.  Maysonave's  purchases of
5,000 shares of Common Stock in March 1999 was filed approximately 20 days late.
The Company has been advised that the tardiness of this filing was inadvertent.

                                       22
<PAGE>

ITEM 11.      EXECUTIVE COMPENSATION

         The table below discloses all cash  compensation  awarded to, earned by
or paid to the Company's Chief Executive Officer,  the executive officers of the
Company who earned more than $100,000 for services rendered in all capacities to
the Company  during the fiscal year ended December 31, 1999, and the two highest
paid  individuals  who earned more than  $100,000 for  services  rendered to the
Company but who were not executive officers at December 31, 1999  (collectively,
the "named  executive  officers").  In addition,  it provides  information  with
respect to the compensation paid by the Company to the named executive  officers
during 1998 and 1997.

<TABLE>
<CAPTION>
                           Summary Compensation Table
                           --------------------------
                                     Annual Compensation                                   Long-Term
                                     -------------------                                  Compensation
                                                                                          ------------
Name and Principal                                                         Other Annual                          All Other
Position                       Year            Salary          Bonus       Compensation   Options(#) (4)      Compensation
-----------                    ----            ------          -----       ------------   -----------         ------------
<S>                             <C>             <C>             <C>             <C>           <C>                  <C>

J. Gerald Combs(1)          12/31/99         $325,000       $ 50,000                  -           50,000            -
CEO and Chairman            12/31/98         $291,462       $150,000                  -          150,000            -
                            12/31/97         $123,436              -            $ 8,497           65,000            -

Jeffrey K. Moore(5)         12/31/99         $112,500        $25,000                  -           50,000            -
Vice President, Corporate   12/31/98          $90,719              -                  -                -            -
Development                 12/31/97          $69,327        $15,500                  -           65,000            -

Kenneth East(3)             12/31/99         $164,640        $50,000                  -           20,000            -
Chief Technology Officer    12/31/98         $137,489        $35,000            $17,130           30,000            -
                                                                                                                    -
Joseph Gardner              12/31/99         $140,193        $40,000                  -           20,000            -
Vice President-Finance      12/31/98         $140,962        $25,000                  -                -            -
Chief Financial Officer     12/31/97         $100,000        $25,000                  -           10,000            -

James Tillinghast(2)        12/31/99         $140,000        $30,000            $69,448           45,000            -
Vice President,
Sales

Kevin Sieck(2)               12/31/99         $96,924        $10,000            $52,766           25,000            -
Sales Director
</TABLE>



(1)  Other annual  compensation for 1997 includes  taxable fringe  benefits.  In
     1997, Mr. Combs'  pre-existing  options to purchase 90,000 shares of Common
     Stock at an  exercise  price of $15.00 per share  (expiring  on January 24,
     1999 as to 20,000 options and on October 3, 1999 as to 70,000 options) were
     amended so that the  exercise  price is $6.60 per share and they  expire on
     July 1, 2002.  See "Certain  Relationships  and Related  Transactions"  for
     options  granted in 1999 to Mr. Combs to purchase shares of common stock of
     the Company's  subsidiaries,  Boundless  Manufacturing  and Merinta,  which
     options were exercised by Mr. Combs during 1999.

(2)  Other annual compensation consisted of commissions and, in addition for Mr.
     Tillinghast, consisted of $30,000 for

                                       23
<PAGE>

     reimbursement of relocation expenses.

(3)  Other annual compensation consisted of relocation expense reimbursement.

(4)  With the exception of the options granted to Mr. Tillinghast in 1999, which
     have a strike price of $5.31 per share of Common  Stock,  all other options
     granted  in 1999 to the named  executive  officers  have a strike  price of
     $5.00 per share of Common Stock.  With the exception of the 150,000 options
     granted to Mr. Combs in 1998,  which have a strike price of $4.88 per share
     of Common Stock, the Company repriced the exercise price of all outstanding
     employee options on May 18, 1998 to $5.63 per share of Common Stock.

(5)  See "Certain Relationships and Related Transactions" for options granted in
     1999 to Mr.  Moore to  purchase  shares  of common  stock of the  Company's
     subsidiaries,  Boundless  Manufacturing  and  Merinta, which  options  were
     exercised by Mr. Moore during 1999.

Employment Agreements and Change-in-Control Arrangements

         The Company has entered into employment  agreements with Mr. Combs, the
Company's Chairman of the Board and Chief Executive  Officer,  and Mr. East, the
Company's Chief Operating  Officer.  The term of these agreements,  as described
below,  may be extended  beyond the initial term by the mutual  agreement of Mr.
Combs and Mr. East, respectively, and the Company and on such basis as Mr. Combs
and Mr. East,  respectively,  and the Company shall agree.  Each such extension,
unless  expressly  agreed  otherwise,  will be for one year  commencing the year
following  the  expiration  of the  initial  term  or  any  renewal  term.  Both
agreements  may be terminated at any time by the written  mutual  consent of the
Company  and Mr.  Combs  and Mr.  East,  respectively.  Both  agreements  may be
terminated by the Company for cause,  as defined in the  employment  agreements,
and, in such event, the employee will be entitled to such salary and benefits as
have  accrued  under  the  employment  agreements,   respectively,  through  the
effective date of the termination.

         With respect to Mr. Combs,  the agreement was entered into June 1, 1998
and expires May 31, 2001. The agreement  calls for an annual salary of $325,000,
subject  to an  annual  review  by the  Compensation  Committee  of the Board of
Directors,  as well as the grant of 150,000  options to  purchase  shares of the
Company's  Common Stock,  such shares to vest pro rata on an annual basis over a
three-year  period.  Should Mr. Combs' employment with the Company be terminated
without  cause,  Mr. Combs would be entitled to deferred  payments  totaling two
years salary. In the event of a change-in-control,  as defined in the agreement,
Mr. Combs would be entitled to deferred  payments  totaling two years salary, as
well as immediate vesting of all options.

         Mr. East's  employment  agreement was entered into February 9, 1998 and
expired February 8, 2000. The agreement called for an annual salary of $150,000,
subject to an annual review by the Chairman and Chief  Executive of the Company;
as well as the grant of  30,000  options  to  purchase  shares of the  Company's
Common Stock, such shares to vest pro rata over a four-year  period.  Should Mr.
East's  employment with the Company be terminated  without cause, Mr. East would
be entitled to deferred payments totaling  six-month's  salary. As the agreement
expired February 8, 2000, the Company and Mr. East have entered  negotiations to
extend the contract for one additional  year on terms  substantially  similar to
those of the expired  agreement.  The Company believes the negotiations  will be
successful.

         The Company and  Boundless  Manufacturing  Services,  Inc. have entered
into  employment  agreements  with Messrs.  Joseph Joy and Anthony  Giovaniello,
respectively  the  President  of  Boundless  Manufacturing  and  Executive  Vice
President,  Business Development. The terms and conditions of the agreements for
each of Messrs. Joy and Giovaniello are substantially similar, having an initial
term of  approximately  four  years and  expiring  July 1, 2003,  unless  sooner
extended or terminated as provided for in the agreements.

         The  agreements  call  for the  purchase,  by each of  Messrs.  Joy and
Giovaniello,  of 12.5% of Boundless  Manufacturing  Services,  Inc.'s issued and
outstanding   common  stock.  These  shares  may  be  repurchased  by  Boundless
Manufacturing  Services,  in a manner as defined in the agreements,  should that
company fail to meet defined minimum performance standards.  The agreements call
for annual salaries of approximately $155,000,  subject to an annual review; and
a cash  bonus of up to  $100,000  annually  determined  by  achievement  against
specified objectives.

                                       24
<PAGE>

         In the event either of Messrs.  Joy or  Giovaniello  is terminated  for
failure to attain the minimum  performance  standards,  as defined,  he would be
entitled to  continuation  of base salary for a period not to exceed six months.
In  the  event  of  termination  without  cause,  or if  either  Messrs.  Joy or
Giovaniello  resigns as a result of a change of control of the Company, he would
be entitled to continuation of base salary for a period not to exceed 18 months.
In addition,  in the event of termination without cause or resignation resulting
from a change of  control,  the  employee is entitled to payment of the pro rata
portion  of the cash  bonus the  employee  would  have been  entitled  to had he
remained  continuously  employed  through  the  end of  the  year  within  which
termination occurs.

Compensation Committee Interlocks and Insider Participation

         Mr. Combs and Mr.  Jeffrey Moore,  who were  executive  officers of the
Company  during  1999,  were also  members of the  Company's  Board of Directors
during such times and participated in deliberations concerning executive officer
compensation.  Their joint  deliberations  gave rise to  conflicts  of interest,
which could have affected  their  compensation,  and the number of stock options
granted to them  individually  and as a group. Mr. Combs and Mr. Moore were also
members of the Board and  officers  of Morgan  Kent Group  during 1999 which had
certain relationships,  and entered into certain transactions,  with the Company
during 1999 as described below under "Item 13- Certain Relationships and Related
Transactions."

                                       25
<PAGE>

1995/ 1997 Incentive Plans

The Company's  1995  Incentive Plan covered the issuance of up to 600,000 shares
of Common  Stock.  As  additional  shares were no longer  available to be issued
under the 1995 Incentive Plan, the Board adopted the 1997 Incentive Plan in July
1997 which covers the issuance of up to 1,000,000 shares of Common Stock.

                        Option Grants in Last Fiscal Year

         The following  table sets forth  information,  as of December 31, 1999,
regarding the outstanding options to purchase the Company's Common Stock granted
in 1999 under the  Company's  1997  Incentive  Plan  ("1997  Plan") to the named
executive officers:
<TABLE>
<CAPTION>
                             Number of                                                      Potential Realizable
                             Securities     Percent of Total                                  Value at Assumed
                             Underlying       Options/SARs     Exercise or                  Annual Rates of Stock
                            Options/SARs     Granted under     Base Price    Expiration    Price Appreciation for
          Name              Granted (#)         1997 Plan         ($/Sh)        Date             Option Term
          ----              -----------     --- ----------   --   -------    ----------          -----------
<S>       <C>                   <C>                <C>             <C>           <C>                  <C>
                                                                                               5% ($)      10% ($)
                                                                                               ------      -------
J.Gerald Combs (1)             50,000             7.1%           $ 5.00      2/18/04           69,070      152,627
Jeffrey K. Moore(1)            50,000             7.1%           $ 5.00      2/18/04           69,070      152,627
Kenneth East(2)                20,000             2.8%           $ 5.00      2/18/04           27,628       61,051
Joseph Gardner(2)              20,000             2.8%           $ 5.00      2/18/04           27,628       61,051
James Tillinghast(2)           45,000             6.4%           $ 5.31      1/04/04           66,017      145,881
Kevin Sieck(2)                 25,000             3.5%           $ 5.00      3/15/04           34,535       76,314
</TABLE>



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

         (1) Options were granted 2/18/99 and vest over a three-year period at a
rate of 50%, 25% and 25% respectively,  per year, on the anniversary of the date
of grant.

         (2) Options  were granted  2/18/99,  except for Mr.  Tillinghast  whose
options were granted  1/04/99,and vest 25% one year following the grant date and
the remainder on a pro rata monthly basis over the subsequent three years.


                                       26
<PAGE>

                 Aggregated Option Exercises in Last Fiscal Year
                        and Fiscal Year-End Option Values

         The  following  table  provides  information  on the value of the named
executive  officers'  unexercised  options to purchase shares of Common Stock at
December 31, 1999.
<TABLE>
<CAPTION>

                                                                                               Value of Unexercised
                                                     Number of Unexercised Options at        In-the-Money Options at
                                                          December 31, 1999 (#)              December 31, 1999 ($)(1)
                                                        -------------------------           -------------------------
                             Shares
                          Acquired on      Value
         Name             Exercise(#)    Realized      Exercisable      Unexercisable      Exercisable      Unexercisable
         ----             -----------    --------      -----------      -------------      -----------      -------------
<S>       <C>                 <C>           <C>            <C>               <C>                <C>              <C>

J. Gerald Combs(2)             $0           $0           205,000           150,000          $601,250          $518,750
Kenneth East                    0            0            12,500            37,500            34,375           115,625
Jeffrey K. Moore(2)             0            0            50,000            50,000           137,500           168,750
Joseph Gardner                  0            0            13,437            22,563            36,952            74,548
James Tillinghast               0            0               0              45,000               0             137,925
Kevin Sieck                     0            0               0              25,000               0              84,375

</TABLE>


(1)  The last sale price of the Company's  Common Stock on December 31, 1999, as
     reported by The American Stock Exchange, was $ 8.375.

(2)  See "Certain Relationships and Related Transactions" for options granted in
     1999 to Mr. Combs and Mr.  Moore to purchase  shares of common stock of the
     Company's subsidiaries,  Boundless Manufacturing and Merinta, which options
     were exercised by Mr. Combs and Mr. Moore during 1999.

                                       27
<PAGE>


ITEM 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  following  table  sets forth  certain  information  regarding  the
beneficial  ownership of the Company's  outstanding  Common Stock as of March 2,
2000, by (i) each of the Company's  directors  and "named  executive  officers,"
(ii)  directors and executive  officers of the Company as a group and (iii) each
person  believed  by  the  Company  to  own  beneficially  more  than  5% of its
outstanding  shares of Common  Stock.  Except as indicated  each such person has
sole  voting and  investment  powers  with  respect to his and her  shares.  The
address of Morgan Kent Group is 145 West 57th Street,  19th Floor,  New York, NY
10019.  The address of Stephen  Maysonave is 3300 Bee Cave Road,  Suite 650-221,
Austin, TX 78746.

<TABLE>
<CAPTION>

                                                       Number of Shares                    Percentage of
Name of Beneficial Owner                              Beneficially Owned                Outstanding Shares
------------------------                              ------------------                ------------------
<S>                                                         <C>                                <C>

Morgan Kent Group, Inc.                                    2,128,720(1)                      43.0%
Stephen Maysonave, Voting Trustee                          2,128,720(1)(2)                   43.0%
Stephen Maysonave                                             78,750(3)(4)                    1.7%
J. Gerald Combs                                              230,000(3)                       4.9%
Gary Wood                                                     18,750(3)                          *
Daniel Matheson                                               28,750(3)                          *
Jeffrey Moore                                                 75,000(2)(3)                    1.6%
Joseph Gardner                                                18,916(3)                          *
Kenneth East                                                  19,375(3)                          *
James Tillinghast                                             13,125(3)                          *
Kevin Sieck                                                    6,250(3)                          *
All current directors and executive
 officers as a group
 (seven individuals)                                       2,598,261(1)(3)                   52.4%
--------------------------------
</TABLE>

*    Less than 1%.

(1)  Includes  457,502 shares  underlying the warrants held by Morgan Kent Group
     (the "Morgan Kent Group Warrants") to purchase shares of Common Stock at an
     exercise price of $7.50 per share as to a warrant for 307,502 shares and at
     an exercise price of $5.82 as to a warrant for 150,000 shares.

(2)  Includes the shares beneficially owned by Morgan Kent Group, as a result of
     Mr.  Maysonave's  beneficial  ownership,  as voting  trustee,  of 3,330,000
     shares of Series B  Preferred  Stock of Morgan  Kent Group  (the  "Series B
     Preferred")  pursuant to a voting trust  expiring  April 30, 2000.  Under a
     stockholders agreement, the Series B Preferred has the power to elect three
     of the five  directors  constituting  Morgan Kent  Group's  entire board of
     directors  which has the sole voting power and,  with the  stockholders  of
     Morgan Kent Group,  shares the investment  power with respect to the Common
     Stock owned by Morgan Kent Group. The 3,330,000 shares  constitute 51.2% of
     the 6,500,000 outstanding shares of the Series B Preferred. Messrs. Jeffrey
     K.  Moore and  Matthew  R.  Moore (the  "Moore  Brothers")  together  own a
     majority of the outstanding shares of the Series B Preferred and a majority
     of the shares in the voting trust,  and,  voting  together,  have the power
     under the voting  trust  agreement to replace  Stephen  Maysonave as voting
     trustee at any time for any reason.  Each of the Moore  Brothers  disclaims
     beneficial  ownership of the other's shares of Morgan Kent Group's Series B
     Preferred.  There can no assurance  that a change of control of the Company
     will not occur as a result of (i) sales of Series B Preferred  owned by the
     Moore Brothers to achieve liquidity, or for any other reason, or (ii) sales
     of the Company's  Common Stock by Morgan Kent Group to fund other  business
     activities or investments or for any other reason.

(3)  Includes or consists of shares of Common Stock  issuable  upon  exercise of
     options as follows:  Mr. Combs:  230,000;  Mr. Wood:  18,750; Mr. Matheson:
     28,750; Mr. Moore: 75,000; Mr. Maysonave:  68,750; Mr. Gardner: 18,916; Mr.
     East: 19,375; Mr. Tillinghast: 13,125; and Mr. Sieck: 6,250.

(4)  Resigned as a Member of the Board of  Directors  of the  Company  effective
     January 2000.

                                       28
<PAGE>

ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In April 1997,  the Company agreed to pay Morgan Kent Group $20,000 per
month for  financial  consulting  services  which  services  the Company  deemed
critical to its  success.  In October  1997 the Company  prepaid this fee in the
amount of $380,000 and for 1998 recorded an expense of $240,000.

         In connection with the Digital Acquisition in October 1995, Morgan Kent
Group  pledged  (the  "Pledge")  2,143,938  shares of Common  Stock to Chase and
500,000  shares of Common Stock to NCR. In  consideration  of such  Pledge,  the
Company  had agreed to issue to Morgan  Kent Group  warrants  to  purchase  such
number of shares of Common Stock at $38.75 per share, subject to adjustment,  as
the Board of Directors of the Company determined was appropriate after obtaining
independent  advice  regarding  the  fairness  of  such  warrants  (a  "fairness
opinion").  In December 1997,  Morgan Kent Group accepted the Company's offer of
$300,000 in lieu of such warrants,  an amount approved by the Board of Directors
after  receiving  quotations  for the cost of a fairness  opinion  regarding the
value of such warrants and  considering  the expense of preparing and delivering
an information  statement to  shareholders  prior to issuing such warrants.  The
Company paid this  obligation  during the first  quarter of 1998.  The Pledge to
Chase was terminated December 1997.

         The Company and Morgan Kent Group had  anticipated  that the  operating
results of the Company, as a result of the Digital Acquisition, would enable the
Company to meet its  covenants  under the Chase  Credit Line and  terminate  the
Chase  portion of the Pledge by November  1996.  The Company did not achieve the
operating  results  necessary  to release  Morgan  Kent Group from the Pledge to
Chase and, as a result,  the Company agreed to pay Morgan Kent Group,  effective
January 1, 1997, an asset  utilization  fee of $17,500 per month for each month,
or part thereof, that the Pledge, either to Chase or NCR, remains in effect. For
1999 such fees amounted to $52,500.  The Pledge to Chase was cancelled  December
1997. The Pledge to NCR was cancelled January 1999.

         In May 1998 the Company  repurchased  600,000  shares of the  Company's
then  outstanding  Common  Stock from Morgan  Kent Group at $5.00 per share,  or
approximately  14% below the closing market price on May 15, 1998 as reported on
the NASDAQ SmallCap Market.  The Company  repurchased these shares to reduce the
voting power of Morgan Kent Group from approximately 51% to 45% and to set aside
shares enabling the Company to issue up to 600,000 shares of its Common Stock in
acquisitive transactions without diluting public shareholders.  As an inducement
to the repurchase transaction, the Company issued a warrant to Morgan Kent Group
to purchase 150,000 shares of the Company's Common Stock at an exercise price of
$5.80 per common share. The warrant is exercisable immediately and has a term of
seven  years.  The  Company  recorded  an expense of  $300,000  relating  to the
issuance of the warrant.

         Mr.  Maysonave,  a member of the Board of Directors was granted options
on February 18,  1999,  to purchase  15,000  shares of Common Stock at $5.00 per
share that expire in February 2004. The options vest over a four-year  period as
follows- 25% following the first  anniversary  of the date of grant and pro rata
over the remaining  three-year period. The options granted to Mr. Maysonave were
for consulting  services  provided to the Company,  and the Company  recorded an
expense of $40,000  related to the grant.  On September 17, 1999, Mr.  Maysonave
was  granted  15,000  options to purchase  shares of Common  Stock at $4.125 per
share that expire  September  2004. The 15,000 options were granted for services
Mr. Maysonave  provided as a consultant to the Company and vested immediately on
the date of grant.  The Company  recorded an expense of $25,000  relating to the
grant of the 15,000  options.  In  addition,  the  Company  recorded  as expense
$150,000 paid to Mr. Maysonave relating to Mr. Maysonave's  consulting  services
to the Company throughout 1999.

         In  December  1998  the  Company  repurchased  110,620  shares  of  the
Company's  then  outstanding  Common  Stock from  Morgan Kent Group at $4.52 per
share, or approximately  20% below the average of the preceding five day trading
close as reported on the NASDAQ SmallCap Market.

         During  April  1999 the  Company  entered  into a  one-year  consulting
agreement with CrossRoads Capital  Corporation  ("CrossRoads") to render to the
Company financial advisory and investment banking services. CrossRoads is

                                       29
<PAGE>

headed by Mr. Fred Schulman, President, who also is President of the Morgan Kent
Group.  Fees  associated  with the  services  provided by  CrossRoads  amount to
$10,000 per month.  During March 2000 the consulting  agreement was extended for
an additional one-year period.

         In 1999 Morgan Kent paid the Company  $2,000 in interest  accruing on a
$50,000 loan from the Company to Morgan Kent.  The note  evidencing the loan and
originally due and payable July 1999 was extended to July 2000.

         During 1999, Boundless  Manufacturing issued shares of its common stock
as  follows:  400 shares  (12.5% of the  outstanding)  to each of Joseph Joy and
Anthony  Giovaniello for $5.00 per share, 320 shares (10% of the outstanding) to
each of J. Gerald Combs and Jeffrey Moore upon their  exercise of employee stock
options at an exercise  price of $5.50 per share,  and 1,760  shares (55% of the
outsanding) to the Company. Pursuant to their employment agreements, Mr. Joy and
Mr.  Giovaniello  will have the option,  upon the attainment of certain  defined
performance standards,  to convert their shares of Boundless  Manufacturing into
up to an  aggregate  of  300,000  shares  of the  Company's  Common  Stock.  See
"Executive    Compensation    Employment    Agreements   and   Change-in-Control
Arrangements" for terms of Boundless' employment agreements with Messrs. Joy and
Giovaniello. The Company has allocated 160 shares of its Boundless Manufacturing
common stock for future issuance under Boundless Manufacturing's incentive plan.

         During 1999,  Merinta adopted an incentive plan and reserved 30% of its
common stock for issuance under the plan.  Each of Mr. Combs and Mr. J. Moore in
1999 exercised Merinta employee stock options previously issued to him and, as a
result, each was issued shares representing 6.5% of Merinta's outstanding common
stock.  Boundless  Manufacturing  and  Merinta  received  third  party  fairness
opinions before granting options to Messrs. Combs and Moore.

                                     PART IV

<TABLE>
<CAPTION>

ITEM 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K                                     Page No.
              ---------------------------------------------------------------                                     --------
<S>                                   <C>                                                                            <C>

(a)      (1)(2)   Financial Statements and Schedules

                  Index to Financial Statements                                                                       F-1
</TABLE>

         All other  financial  statements  and  schedules  not listed  have been
         omitted  since  the  required  information  is either  included  in the
         Financial Statements and the Notes thereto as included in the Company's
         Annual  Report on Form 10-K for the Year ended  December 31, 1999 or is
         not applicable or required.

         (3)      The  exhibits  listed in the  exhibit  index  attached to this
                  Report are filed as part of this Report.

(b)      Reports on Form 8-K

         The  Company  did not file any  reports  on Form 8-K  during the fourth
quarter of 1999.



                                       30
<PAGE>

                                   SIGNATURES

    Pursuant  to the  requirements  of  Section  13 or 15(d)  of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date:  March 29, 2000

                                             BOUNDLESS CORPORATION

                                             By:      /s/
                                                --------------------------------
                                                     J. Gerald Combs
                                                     Chief Executive Officer

    Pursuant to the  requirements  of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
<S>                                                              <C>                                    <C>


/s/                                              Chairman of the Board of Directors,  Chief           March 29, 2000
------------------------------------             Executive Officer
J. Gerald Combs

/s/                                              Vice President - Finance, Chief Financial            March 29, 2000
------------------------------------             Officer (Principal Accounting Officer)
Joseph Gardner

/s/                                              Vice President, Director                             March 29, 2000
------------------------------------
Jeffrey K. Moore

 /s/                                             Director                                             March 29, 2000
------------------------------------
Daniel Matheson

/s/                                              Director                                             March 29, 2000
------------------------------------
Gary Wood
</TABLE>

                                       31

<PAGE>

                                  EXHIBIT INDEX

Exhibit No.*    Description of Exhibit


<TABLE>
<S>             <C>
3.1[3]          Certificate of Incorporation of Registrant and Certificates of Amendment thereto.

3.2[2]          By-Laws of Registrant

10(a)[1]        Lease, dated August 22, 1994, between International Software Systems, Inc. and SunRiver
                         Corporation (now Morgan Kent Group, Inc.) of the premises located at Suite 201,
                         Building IV, 9430 Research Blvd. Austin, Texas. (Originally filed as exhibit
                         10(e).)

10(b)           Registrant's 1995 Incentive Plan (Incorporated by  reference  to and  filed as  Exhibit  E to
                         Registrant's   Information  Statement,  dated September 28, 1995).

10(c)           Registrant's 1997 Incentive Plan (Incorporated by reference to and filed as Exhibit A to
                         Registrant's Information Statement, dated March 6, 1998).


10(d)[4]        Employment Agreement, dated June 1, 1998, among the Registrant, Boundless Technologies,
                         Inc. and J. Gerald Combs (Originally filed as Exhibit 10(aa)).

10(e)[4]        Employment Agreement, dated February 9, 1998, among the Registrant, Boundless Technologies,
                         Inc. and Kenneth East (Originally filed as Exhibit 10(bb)).

10(f)**         Employment Agreement, dated July 1, 1999, among Registrant, Boundless Manufacturing
                         Services, Inc. and Joseph Joy.


10(g)**         Employment Agreement, dated July 1, 1999, among Registrant, Boundless Manufacturing
                         Services, Inc. and Anthony Giovaniello.

10(h)[5]        Amended and Restated Credit Agreement and Guaranty (plus exhibits thereto) dated as of
                         April 14, 1999 among Boundless Technologies, Inc. as borrower, Boundless
                         Acquisition Corp. and Boundless Corporation, as guarantors, and The Chase
                         Manhattan Bank, Silicon Valley Bank and National Bank of Canada as the Banks.
                         (Originally filed as exhibit 10(a)).

10(i)[5]        Common  Stock  Purchase  Warrant  dated  as of April 14, 1999 issued to Chase Manhattan Bank for
                         the purchase of up to 50,000 shares of the Registrant's common stock (Originally filed
                         as exhibit 10(b)).

10(j)[6]        Restatement, Extension, Assumption and Modification Agreement, dated June 24, 1999, between
                         Boundless Technologies, Inc. and Independence Community Bank (Originally filed as
                         Exhibit 10(a)).


10(k)[6]        Restated Business Installment Promissory Note, dated June 24, 1999, from Boundless
                         Technologies, Inc. to Independence Community Bank (Originally filed as Exhibit
                         10(b)).
</TABLE>

                                      E-1
<PAGE>


Exhibit No.*    Description of Exhibit
<TABLE>
<S>             <C>
10(l)[6]        Restated Mortgage and Security Agreement, dated June 24, 1999, between Boundless
                         Technologies, Inc. and Independence Community Bank (Originally filed as Exhibit
                         10(c)).

10(m)**         Agreement, dated September 30, 1999, between General Automation, Inc. and Boundless
                         Technologies, Inc. relating to settlement of obligations and the transfer of
                         interests in General Automation LLC.

10(n)**         Promissory Note, dated September 30, 1999, in the amount of $250,000 from General
                Automation, Inc. to Boundless Technologies, Inc.


10(o)**         Promissory Note, dated September 30, 1999, in the amount of $500,000 from General
                         Automation, Inc. to Boundless Technologies, Inc.


10(p)**         Form of Secured Convertible Promissory Note from General Automation, Inc. to Boundless
                         Technologies, Inc.

10(q)**         Form of Warrant from General Automation, Inc. to Boundless Technologies, Inc.

11**            Statement re Computation of Per Share Earnings.  See Consolidated Financial Statements.

21**            List of Subsidiaries

23**            Consent of BDO Seidman, LLP.

27**            Financial Data Schedule.
<CAPTION>

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

*               Numbers inside brackets  indicate  documents from which exhibits have been incorporated by
                reference.  Unless  otherwise  indicated,  documents  incorporated by reference refer to the
                identical exhibit number in the original documents from which they are being incorporated.

**              Filed herewith.

[1]             Incorporated by reference to Registrant's Annual Report on Form 10-K
                for the transition period July 1 through December 31, 1994.

[2]             Incorporated by reference to Registrant's Registration Statement on Form S-18 (File No.
                33-32396-NY).

[3]             Incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended
                December 31, 1997.
</TABLE>


                                       E-2
<PAGE>



Exhibit No.* Description of Exhibit

<TABLE>
<S>             <C>
[4]             Incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended
                December 31, 1998.

[5]             Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the quarter
                ended March 31, 1999.

[6]             Incorporated by reference to the Registrant's Quarterly Report  on Form  10-Q for the  quarter
                ended  July 30, 1999.
</TABLE>


                                       E-3
<PAGE>
                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

                         INDEX TO FINANCIAL STATEMENTS


Reports of Independent Certified Public Accountants                F-2

Consolidated Balance Sheets as of December 31, 1999 and 1998       F-3

Consolidated Statements of Operations
  for the years ended December 31, 1999, 1998 and 1997             F-4

Consolidated Statements of Changes in Stockholders' Equity
  for the years ended December 31, 1999, 1998 and 1997             F-5

Consolidated Statements of Cash Flows
  for the years ended December 31, 1999, 1998 and 1997             F-6

Notes to Consolidated Financial Statements                         F-8

Schedule I - Condensed Financial Information of Registrant
 (Parent Company)

Condensed Balance Sheets as of December 31, 1999 and 1998          S-1

Condensed Statements of Operations
 for the years ended December 31, 1999, 1998 and 1997              S-2

Condensed Statements of Cash Flows
  for the years ended December 31, 1999, 1998 and 1997             S-3

Schedule II - Valuation and Qualifying Accounts                    S-4

                                      F-1
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                (in thousands)

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



To the Board of Directors and Stockholders
Boundless Corporation
Hauppauge, New York

We have  audited  the  accompanying  consolidated  balance  sheets of  Boundless
Corporation  and  Subsidiaries  as of December 31, 1999 and 1998 and the related
statements of  operations,  stockholders'  equity and cash flows for each of the
three years in the period  ended  December  31,  1999.  We have also audited the
schedules  listed in the index on page F-1 of this Form  10-K.  These  financial
statements  and  financial  statement  schedules are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements and financial statement schedules based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance  about whether the financial  statements and schedules are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence supporting the amounts and disclosures in the financial  statements and
schedules.  An audit also includes assessing the accounting  principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,   the  consolidated  financial  position  of  Boundless
Corporation  and  Subsidiaries  as  of  December  31,  1999  and  1998  and  the
consolidated  results of their  operations  and their cash flows for each of the
three years in the period ended  December 31, 1999 in conformity  with generally
accepted accounting principles.

Also, in our opinion,  the schedules present fairly,  in all material  respects,
the information set forth therein.

                                                   BDO Seidman, LLP

Melville, New York
February 11, 2000


                                      F-2
<PAGE>
                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

<TABLE>
                                     ASSETS
<CAPTION>
                                                                 December 31,
                                                      --------------------------------
                                                            1999            1998
                                                      --------------------------------
<S>                                                    <C>                  <C>
Current assets:
  Cash and cash equivalents                                    $ 1,285           $ 732
  Trade accounts receivable, net                                12,378          13,274
  Income tax refunds                                               833           1,905
  Inventories (Note 4)                                          13,751          12,565
  Deferred income taxes (Note 6)                                 2,576           2,470
  Prepaid expenses and other current assets                      1,039             462
                                                        --------------      ----------
     Total current assets                                       31,862          31,408
Property and equipment, net (Note 5)                            10,987          10,251
Goodwill, net (Note 2)                                           6,272           7,350
Other assets (Note 3)                                            1,339             339
                                                        --------------      -----------
                                                              $ 50,460        $ 49,348
                                                        ==============      ===========

        LIABILITIES, REDEEMABLE STOCK AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current portion of long-term debt (Note 7)                   $ 1,650         $ 8,000
  Accounts payable                                               6,148           6,817
  Accrued expenses                                               5,565           7,074
  Deferred revenue                                                 557             116
                                                        --------------      -----------
     Total current liabilities                                  13,920          22,007
                                                        --------------      -----------
Long-term liabilities:
  Long-term debt, less current maturities (Note 7)              14,206           5,500
  Deferred income taxes (Note 6)                                   281           1,002
  Other                                                            638             627
                                                        --------------      -----------
     Total long-term liabilities                                15,125           7,129
                                                        --------------      -----------

         Total liabilities                                      29,045          29,136
                                                        --------------      -----------
Commitments and contingencies (Notes 1 and 12)

Mandatorily redeemable preferred stock of subsidiary                 -           3,555
                                                        --------------      -----------
Stockholders' equity (Note 8):
  Preferred stock                                                    -               -
  Common stock                                                      45              44
  Additional paid-in capital                                    32,508          30,940
  Accumulated deficit                                          (11,138)        (14,327)
                                                        ---------------     -----------
     Total stockholders' equity                                 21,415          16,657
                                                        ---------------     -----------
                                                              $ 50,460        $ 49,348
                                                        ===============     ===========



                 The accompanying notes are an integral part of
                    these consolidated financial statements

                                      F-3
</TABLE>
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                        For the Year Ended December 31,
                     (in thousands, except per share data)

<TABLE>
<CAPTION>

                                                 1999            1998           1997
                                            --------------- -------------- --------------
<S>                                         <C>             <C>            <C>

Revenue:
  Product sales                                   $ 78,027       $ 87,774       $ 94,607
  Services                                           2,483          2,428          3,664
                                            --------------- -------------- --------------
     Total revenue                                  80,510         90,202         98,271
                                            --------------- -------------- -------------
Cost of revenue:
  Product sales                                     55,126         62,267         71,477
  Services                                           1,572          1,936          2,028
                                            --------------- -------------- --------------
     Total cost of revenue                          56,698         64,203         73,505
                                            --------------- -------------- --------------
       Gross margin                                 23,812         25,999         24,766
                                            --------------- -------------- --------------
Operating expenses:
  Sales and marketing                               10,292          8,308          7,417
  General and administrative                         6,979          5,845          6,213
  Research and development                           5,908          3,666          2,912
  Other charges (credits) (Note 3)                  (3,711)           (16)          (255)
                                            --------------- -------------- --------------
     Total operating expenses                       19,468         17,803         16,287
                                            --------------- -------------- --------------
       Operating income                              4,344          8,196          8,479
  Interest expense, net                              1,438          2,539          3,730
                                            --------------- -------------- --------------
Income before income taxes                           2,906          5,657          4,749
Income tax (credit) expense                           (333)           749           (134)
                                            --------------- -------------- --------------

Net income                                           3,239          4,908          4,883
Dividend on preferred stock of subsidiary               50            497            497
                                            --------------- -------------- --------------
Net income available for common
 stockholders                                     $  3,189       $  4,411       $  4,386
                                            =============== ============== ==============
Weighted average common shares outstanding           4,438          4,893          4,925
                                            =============== ============== ==============

Basic net income per common share                 $   0.72       $   0.90       $   0.89
                                            =============== ============== ==============
Net income available for common
 stockholders adjusted for income
 impact of assumed conversions                    $  3,189       $  4,411       $  4,426
                                            =============== ============== ==============
Weighted average dilutive shares
 outstanding                                         4,490          4,926          5,103
                                            =============== =============================
Diluted net income per common share               $   0.71       $   0.90       $   0.86
                                            =============== ============== ==============

</TABLE>


              The accompanying notes are an integral part of
                    these consolidated financial statements

                                      F-4
<PAGE>
                     BOUNDLESS CORPORATION AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCHOLDERS' EQUITY
                                 (in thousands)

<TABLE>
<CAPTION>


                                                      Common Stock       Additional
                                                  ----------------------   Paid-in     Accumulated
                                                    Shares      Amount     Capital       Deficit          Total
                                                  ------------ --------- ------------ --------------  --------------

<S>                                               <C>          <C>         <C>         <C>

Balance, January 1, 1997                                4,857      $ 49     $ 31,877      $ (23,124)        $ 8,802
Conversion of notes payable, net of expenses              218         2        1,520                          1,522
Options and warrants issued for
  services to non-employees                                                       63                             63
Stock options exercised                                    16                    116                            116
Dividend on preferred stock of subsidiary                  35                    497           (497)              -
Warrants exercised                                         13                     21                             21
Net income                                                                                    4,883           4,883
                                                  ------------------------------------------------------------------
Balance, December 31, 1997                              5,139        51       34,094        (18,738)         15,407
Common stock repurchased and retired                     (710)       (7)      (3,493)                        (3,500)
Options and warrants issued for
  services to non-employees                                                      339                            339
Dividend on preferred stock of subsidiary                                                      (497)           (497)
Net income                                                                                    4,908           4,908
                                                  ------------------------------------------------------------------
Balance, December 31, 1998                              4,429        44       30,940        (14,327)         16,657
Stock options exercised                                    25         1          163                            164
Options and warrants issued for
  services to non-employees                                                      504                            504
Tax benefit related to employee stock options                                    901                            901
Dividend on preferred stock of subsidiary                                                       (50)            (50)
Net income                                                                                    3,239           3,239
                                                  ------------------------------------------------------------------
Balance, December 31, 1999                              4,454      $ 45     $ 32,508      $ (11,138)       $ 21,415
                                                  ==================================================================
</TABLE>


                 The accompanying notes are an integral part of
                    these consolidated financial statements

                                      F-5
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                                   December 31,
                                                                    ---------------------------------------------
                                                                        1999          1998            1997
                                                                    ------------- ------------- ----------------

<S>                                                                 <C>                <C>             <C>
Cash flows from operating activities:
  Net income                                                             $ 3,239       $ 4,908      $ 4,883
  Adjustments to reconcile net income to net cash provided by
       operating activities:
    Depreciation and amortization                                          2,111         3,293        3,725
    Loss from disposal of assets                                              59           160            -
    Credit from sale of partnership                                       (2,324)            -            -
    Change in deferred revenues                                              441           (64)           -
    Provision (credit) for doubtful accounts                                 380           216          (20)
    Provision (credit) for excess and obsolete inventory                     340           808         (595)
    Options and warrants issued for services                                 504           339            -
    Deferred taxes                                                          (827)       (1,338)           -
Changes in assets and liabilities:
  Trade accounts receivable                                                  516          (201)       6,872
  Income tax refunds                                                       1,072
  Inventories                                                             (1,526)          310        5,438
  Other assets                                                              (539)           80         (470)
  Accounts payable and accrued expenses                                   (1,266)         (553)      (3,145)
                                                                    ------------- ------------- ------------
Net cash:
  Provided by continuing operations                                        2,180         7,958       16,688
  Used in discontinued operations                                              -            (4)      (3,492)
                                                                    ------------- ------------- ------------
Net cash provided by operating activities                                  2,180         7,954       13,196
Cash flows from investing activities:
  Capital expenditures                                                    (1,023)         (754)        (247)
  Proceeds from sale of partnership                                        1,500             -            -
                                                                    ------------- ------------- ------------
Net cash provided by (used in) investing activities                          477          (754)        (247)
                                                                    ------------- ------------- ------------
Cash flows from financing activities:

  Payment of mandatorily redeemable preferred stock                       (3,555)            -            -
  Proceeds from exercise of employee stock options                           164             -          136
  Net proceeds from issuance of long-term debt                            10,412             -        1,700
  Purchase and retirement of common stock                                      -        (3,500)           -
  Payments on loans payable and capital leases                            (9,075)       (5,400)     (16,432)
  Payment of preferred stock dividend                                        (50)         (497)        (637)
                                                                    ------------- ------------- ------------
Net cash (used in) financing activities                                   (2,104)       (9,397)     (15,233)
                                                                    ------------- ------------- ------------
Net increase (decrease) in cash and cash equivalents                         553        (2,197)      (2,284)
Cash and cash equivalents at beginning of year                               732         2,929        5,213
                                                                    ------------- ------------- ------------
Cash and cash equivalents at end of year                                 $ 1,285       $   732      $ 2,929
                                                                    ============= ============= ============

</TABLE>


                 The accompanying notes are an integral part of
                    these consolidated financial statements

                                      F-6
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
                              For the Years Ended
                                 (in thousands)




<TABLE>
<CAPTION>
                                                                                   December 31,
                                                                    --------------------------------------------
                                                                        1999          1998            1997
                                                                    ------------- ------------- ----------------
<S>                                                                 <C>           <C>               <C>
Non-cash transactions:
  Dividend on Preferred Stock of Subsidiary                              $     -       $     -      $   497
  Conversion of notes payable to common stock                                  -             -        1,700
  Options, warrants and common stock issued for services                     504           339           63
  Equipment acquisitions funded through capital leases                       681             -            -
Cash paid for:
  Interest                                                                 1,442         2,200        2,742
  Taxes                                                                      501         1,194          634

</TABLE>







                 The accompanying notes are an integral part of
                    these consolidated financial statements

                                      F-7
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                     (In thousands, except per share data)

1.   Background

Boundless  Corporation  (the  "Company")  is engaged,  through  its  subsidiary,
Boundless  Technologies,  Inc.  ("Boundless"),  in designing  and  manufacturing
computer terminals and network computers for business use. The Company's general
strategy is to provide highly efficient,  low cost access to corporate computing
environments, including client/server, mainframes, LANS, WANS, intranets and the
Internet.

The Company entered into the General Display Terminal and high resolution,  high
performance  desktop graphics display terminals  ("Network  Graphics  Displays")
businesses  in  December  1994  when  the  Company,  through  its  wholly  owned
subsidiary,  Boundless  Acquisition  Corp.  ("Acquisition"),  purchased  Applied
Digital  Data  Systems,   Inc.  ("ADDS")  from  NCR  Corporation  ("NCR"),  (the
"Boundless Acquisition").  ADDS, renamed in 1996 to Boundless Technologies, Inc.
had been a supplier of general purpose desktop display terminals worldwide under
either the  customer's  or ADDS  trademark.  Simultaneously,  with the Company's
acquisition  of ADDS,  the Company  acquired  all of the assets and  business of
SunRiver Group, Inc. (the "SunRiver Group Acquisition"). Prior thereto, SunRiver
Group, Inc.  ("SunRiver  Group") had been engaged,  for more than nine years, in
the  development  and  manufacture  of software and  hardware  for  MultiConsole
Terminals. SunRiver Group, subsequently renamed Morgan Kent Group, Inc. ("Morgan
Kent  Group")  was a  pioneer  in the  development  of  high-speed  MultiConsole
Terminals for open system,  multi-user  platforms.  In October  1995,  Boundless
acquired  (the "Digital  Acquisition")  assets  relating to the General  Display
Terminal  products of Digital Equipment  Corporation  ("Digital") sold under the
"VT" and "Dorio" brands (excluding the VT 400 Series).  A partnership  formed in
May 1995 by Boundless and General  Automation,  Inc. ("GA"),  and managed by GA,
designs,  integrates,  sells and supports  multi-user  computer systems that can
manage large volumes of data running Boundless' and GA's version of the database
system licensed from Pick Systems.

In April 1995, the Company, through OTW Corporation ("OTW"),  formerly TradeWave
Corporation, had been engaged in the business of developing and selling Internet
software and value-added  services which enabled  businesses to conduct private,
secure  communication  and electronic  commerce  transactions over the Internet.
During December 1996, the Company discontinued the operations of OTW and, during
the first quarter of 1997 finalized the discontinuation with the sale of certain
assets of OTW to a  company  for a  combination  of cash,  a  royalty  on future
revenue and the  assumption of certain  liabilities.

On September 23, 1999, the Company  announced the creation of a new  subsidiary,
Boundless  Manufacturing Services, Inc. ("Boundless  Manufacturing"), which will
pursue   opportunities   in  the  electronic   manufacturing   services  ("EMS")
marketplace. Boundless Manufacturing will utilize the Company's state-of-the-art
ISO 9002 certified  manufacturing  facility in Hauppauge and acquire  additional
manufacturing facilities as the business expands.  Services include supply chain
optimization,   global  supply  base  management,  systems  assembly  and  test,
distribution and logistics, repair centers and end-of-life management. Boundless
Manufacturing also offers in-house  engineering  expertise- product design, test
development, product development- to significantly reduce time-to-market for OEM
customers.  Boundless Manufacturing will provide a complete supply chain that is
designed and built to each customer's specifications.

On January 12, 2000,  the Company  announced  the creation of a new  subsidiary,
Merinta,   a  provider  of  enabling  software  and  technologies  for  Internet
appliances  ("IA").  Merinta will develop  solutions to offer end-users an easy,
enjoyable  and  visually  rich  Internet  browsing  experience  while  providing
companies with a revolutionary  way to market and grow online business.  Merinta
will initially  market and sell hardware,  software and services to corporations
including   financial   services    institutions,    service   providers,    and
telecommunications  companies  allowing  these  companies to provide  their best
customers with a customized IA solution that should  increase  brand  awareness,
customer  loyalty  and  retention  as  well  as  decrease  costs  for  acquiring
customers.  Merinta will license the software on a variety of operating systems-
including Linux and Microsoft Windows CE. Complimentary services will be offered
to other consumer  device  manufacturers,  accelerating  the IA market for these
organizations.

2.     Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated  financial  statements  include the accounts of the Company and
its wholly-owned  subsidiaries,  after elimination of intercompany  accounts and
transactions. Certain reclassifications have been made to prior years' financial
statements to conform to the current year presentation.

Cash and Cash Equivalents

All highly  liquid  investments  with  original  maturities at purchase of three
months or less are considered cash equivalents.

                                      F-8
<PAGE>
                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                     (In thousands, except per share data)

Property and Equipment

Property  and  equipment  are stated at cost.  Depreciation  is  computed on the
straight-line  method over the estimated  useful lives of the assets.  Buildings
and  improvements  are  depreciated  over a 25-year  period,  and  machinery and
equipment are depreciated over periods ranging from 2 to 15 years.  Expenditures
that  increase the value or extend the life of an asset are  capitalized,  while
costs of maintenance and repairs are expensed as incurred.  Gains or losses upon
disposal of assets are  recognized  in income.

Long-Lived  Assets

In accordance with Statement of Financial  Accounting  Standards (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of," management  reviews long-lived assets and intangible assets for
impairment  whenever  events or changes in  circumstances  indicate the carrying
amount  of an asset  may not be fully  recoverable.  As part of the  assessment,
management  considers   undiscounted  cash  flows  for  each  product  that  has
significant  long-lived or  intangible  asset values  associated  with it. As of
December  31,  1999  management  does not  believe  there is any  indication  of
impairment.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents and long-term debt reported on
the balance sheets  approximate their fair value. The Company estimated the fair
value of  long-term  debt by comparing  the  carrying  amount to the future cash
flows of the  instrument,  discounted  using the Company's  incremental  rate of
borrowing for a similar instrument.

Revenue Recognition

The Company recognizes revenue from product sales upon shipment to the customer.
A provision for estimated  future  returns and potential  warranty  liability is
recorded  at the time  revenue  is  recognized.  The  Company  has  recorded  an
allowance  for  doubtful  accounts of $627 and $489 as of December  31, 1999 and
1998,  respectively.  Service  revenue is recognized when services are performed
and billable.  Revenue from  maintenance  and extended  warranty  agreements are
deferred and recognized ratably over the term of the agreement.  The Company had
revenue from one customer  representing  15% of total  revenues in both 1999 and
1998 and 16% in 1997.

Concentration of Credit Risk

The  Company is  required  by SFAS No. 105,  "Disclosure  of  Information  about
Financial   Instruments  with   Concentrations  of  Credit  Risk,"  to  disclose
concentrations  of  credit  risk  regardless  of the  degree of such  risk.  The
Company's  financial  instruments that are exposed to  concentrations  of credit
risk  consist  primarily  of  cash  and  cash  equivalents  and  trade  accounts
receivable.  The  Company's  cash policy limits credit  exposure;  however,  for
limited  periods  of time  during  the year bank  balances  may  exceed the FDIC
insurance coverage. The Company routinely assesses the financial strength of its
customers and as a  consequence,  believes that its accounts  receivable  credit
risk exposure is limited. No collateral is required.  The Company extends credit
in the normal  course of business to a number of  distributors  and  value-added
resellers in the computer industry.

Advertising

Advertising  costs are expensed as incurred.  The amount  charged to advertising
expense was $2,140,  $2,476 and $1,826 for the years ended  December  31,  1999,
1998 and 1997.

Goodwill

Goodwill  represents  the excess of the purchase  price and related direct costs
over the fair value of net assets  acquired  as of the date of the  acquisition.
Goodwill is amortized on a  straight-line  basis over 10 years.  Amortization of
goodwill  amounted to $1,078 for the years ended  December  31,  1999,  1998 and
1997.

Net Income Per Common Share

Net income available for common  stockholders  includes the effects of preferred
stock dividends of a subsidiary.

SFAS No. 128,  "Earnings Per Share" requires a  reconciliation  of the numerator
and  denominator of the basic net income per share  computation to the numerator
and  denominator  of the diluted net income per share  computation,  which is as
follows:

                                      F-9
<PAGE>
                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                     (In thousands, except per share data)

<TABLE>
<CAPTION>

                                                              For the Year Ended December 31, 1999
                                                 --------------------------------------------------------
                                                      Income             Shares             Per Share
                                                    (Numerator)       (Denominator)          Amount
                                                 -----------------  -----------------   -----------------
<S>                                                      <C>               <C>                 <C>
Net income                                                 $3,239
Preferred stock dividends                                     (50)
                                                 -----------------

 Basic net income per share:
 Income available to common shareholders                    3,189              4,438               $0.72
                                                                                        =================
 Effect of dilutive securities:
 options and warrants                                           -                 52
 convertible notes                                              -                  -
                                                 -----------------  -----------------   -----------------


 Diluted net income per share:
 Income available to common shareholders
    plus assumed conversions                               $3,189              4,490               $0.71
                                                 =================  =================   =================

                                                              For the Year Ended December 31, 1998
                                                 --------------------------------------------------------
                                                      Income             Shares             Per Share
                                                    (Numerator)       (Denominator)          Amount
                                                 -----------------  -----------------   -----------------
Net income                                                 $4,908
Preferred stock dividends                                    (497)
                                                 -----------------

 Basic net income per share:
 Income available to common shareholders                    4,411              4,893               $0.90
                                                                                        =================
 Effect of dilutive securities:
 options and warrants                                           -                 33
                                                  ---------------    ---------------
 Diluted net income per share:
 Income available to common shareholders
    plus assumed conversions                               $4,411              4,926               $0.90
                                                 =================  =================   =================

                                                              For the Year Ended December 31, 1997
                                                 --------------------------------------------------------
                                                      Income             Shares             Per Share
                                                    (Numerator)       (Denominator)          Amount
                                                 -----------------  -----------------   -----------------
Net income                                                 $4,883
Preferred stock dividends                                    (497)
                                                 -----------------

 Basic net income per share:
 Income available to common shareholders                    4,386              4,925               $0.89
                                                                                        =================
 Effect of dilutive securities:
 options and warrants                                           -                101
 convertible notes                                             40                 77
                                                 -----------------  -----------------

 Diluted net income per share:
 Income available to common shareholders
    plus assumed conversions                               $4,426              5,103               $0.86
                                                 =================  =================   =================
</TABLE>

                                      F-10

<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                     (In thousands, except per share data)

Options to purchase 1,284,759 shares of common stock at a weighted average price
of $8.10 per share were not  included in the  computation  of diluted net income
per share in 1999  because the  options'  exercise  price was  greater  than the
average  market  price  of the  common  shares.  The  options,  which  range  in
expiration  date from January 2000 to December 2004,  were still  outstanding at
December 31, 1999.

Pervasiveness of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

Income Taxes

As more fully  discussed in Note 6, income taxes are provided in accordance with
the liability  method of accounting  for income taxes  pursuant to SFAS No. 109.
Accordingly,  deferred  income  taxes are  recorded  to  reflect  the future tax
consequences of differences  between the tax basis of assets and liabilities and
their financial amounts at year-end.

Stock Based Compensation

The Company  accounts  for stock  options and  warrants  issued to  employees in
accordance  with APB 25 "Accounting  for Stock Issued to Employees." The Company
follows SFAS No. 123  "Accounting  for Stock Based  Compensation"  for financial
statement   disclosure  purposes  and  issuances  of  options  and  warrants  to
non-employees for services rendered.

Comprehensive Income

The  Company  has no  material  components  of other  comprehensive  income  and
accordingly,  net  income  approximates  comprehensive  income  for all  periods
presented.

New  Accounting Standard

SFAS No.133,  "Accounting  for Derivative  Instruments  and Hedging  Activities"
establishes  accounting and reporting  standards for derivative  instruments and
hedging  activities.  SFAS  No.  133  requires  that  an  entity  recognize  all
derivatives  as either  assets or  liabilities  in the  statement  of  financial
position and measure those  instruments at fair value. SFAS No. 133 is effective
for all fiscal  quarters of fiscal  years  beginning  after June 15,  2000.  The
Company is assessing  the impact that the adoption of SFAS No. 133 will have, if
any, on its consolidated financial statements.

3.       GAI Partnership

On September 30, 1999,  the Company sold the entirety of its interest in the GAI
Partnership  to GA for  $1,500 in cash,  1,133,333  shares  of GA common  stock,
notes,  and warrants to purchase shares of GA common stock. GA was in default of
material obligations under the partnership agreement,  including payment of past
due royalties and other fees,  which totaled $2,468 as of December 31, 1998. The
Company  reserved  against all outstanding  receivables  during 1997, and, since
that time, has recorded revenue  attributable to the partnership on a cash basis
only. The Company  recorded  income of $2,324  relating to the sale after having
received a third-party  valuation  assessment of the value of the securities and
convertible  debt  components  of the  settlement.  The value of debt and equity
securities,  reported as a long-term  asset,  at December 1999 was $824. Had the
securities received from GA been unrestricted,  the market value, as of December
31, 1999 would have been $708.

4.       Inventories

Inventories  are stated at the lower of cost or market.  Cost is determined on a
first-in first-out basis.

The major components of inventories are as follows:

                                      F-11
<PAGE>
                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                     (In thousands, except per share data)

<TABLE>
<CAPTION>

                                                                                    December 31,
                                                                       --------------------------------------
                                                                              1999                1998
                                                                       ------------------  ------------------
<S>                                                                             <C>                 <C>
Raw materials and purchased components                                  $         11,620      $       10,264
Finished goods                                                                     1,719               1,915
Demonstration equipment                                                               51                  71
Service parts                                                                        361                 315
                                                                       ------------------  ------------------
                                                                        $         13,751      $       12,565
                                                                       ==================  ==================
</TABLE>
5.       Property and Equipment

Property and equipment consists of the following:
<TABLE>
<CAPTION>

                                                                                    December 31,
                                                                       --------------------------------------
                                                                              1999                1998
                                                                       ------------------  ------------------
<S>                                                                              <C>                 <C>
Land                                                                             $ 3,780             $ 3,780
Buildings and improvements                                                         6,338               6,271
Machinery and equipment                                                            6,239               5,470
                                                                       ------------------  ------------------
                                                                                  16,357              15,521
Less accumulated depreciation and amortization                                     5,370               5,270
                                                                       ------------------  ------------------
                                                                                $ 10,987            $ 10,251
                                                                       ==================  ==================
</TABLE>

6.       Income Taxes

The  provision  for income taxes  consisted of the following for the years ended
December 31:
<TABLE>
<CAPTION>

                               1999                 1998                1997
                         -----------------   ------------------  ------------------
<S>                            <C>                  <C>                  <C>
Current:
  Federal                           $ 221              $ 1,599              $ (347)
  State                               273                  618                 213
                         -----------------   ------------------  ------------------
                                      494                2,217                (134)
                         -----------------   ------------------  ------------------
Deferred:
  Federal                            (869)              (1,248)                  -
  State                                42                 (220)                  -
                         -----------------   ------------------  ------------------
                                     (827)              (1,468)                  -
                         -----------------   ------------------  ------------------
                                   $ (333)               $ 749              $ (134)
                         =================   ==================  ==================
</TABLE>

The provision for income taxes differs from the amount of income tax  determined
by applying the statutory  federal  income tax rate to operations  before income
taxes as a result of the following:

                                      F-12

<PAGE>
                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                     (In thousands, except per share data)
<TABLE>
<CAPTION>

                                                         1999                 1998                1997
                                                   -----------------   ------------------  ------------------
<S>                                                           <C>                <C>                 <C>
Federal income tax at statutory rate                          $ 988              $ 1,923             $ 1,615
Utilization of prior year net operating
  loss carryforwards                                              -                 (531)             (1,481)
State income taxes, net of federal income tax benefit           180                  379                 278
Reversal of prior year overaccruals                            (410)                   -                   -
Adjustment of deferred taxes as a result of tax
  examinations                                               (1,121)                   -                   -
Other, net                                                       30                   37                 754
Change in valuation allowance on deferred
  tax assets                                                      -               (1,059)             (1,300)
                                                   -----------------   ------------------  ------------------
     Income tax expense (benefit)                            $ (333)               $ 749              $ (134)
                                                   =================   ==================  ==================
</TABLE>

The components of the net deferred tax assets and liabilities were as follows:

<TABLE>
<CAPTION>

                                                                December 31,
                                                   --------------------------------------
                                                         1999                 1998
                                                   -----------------   ------------------
<S>                                                       <C>                 <C>
Current deferred tax assets:
  Inventory                                                 $ 1,701              $ 1,340
  Accounts receivable                                           238                  186
  Warranties                                                    637                  814
  Other                                                           -                  130
                                                   -----------------   ------------------
     Total current deferred tax assets                      $ 2,576              $ 2,470
                                                   =================   ==================
Noncurrent deferred tax assets - Goodwill
  and other                                                   $ 821                $ 448
Noncurrent deferred tax liabilities - Property
  and equipment                                              (1,102)              (1,450)
                                                   -----------------   ------------------
     Net noncurrent deferred tax liabilities                 $ (281)            $ (1,002)
                                                   =================   ==================
</TABLE>

7.       Debt

Notes Payable

Notes  payable  were  $5,500  at  December  31,  1999 and 1998, under a $15,000
revolving  credit  agreement with Chase  Manhattan Bank for loans and letters of
credit.  There was a letter of credit outstanding  totaling $2,957 and $1,000 at
December 31, 1999 and 1998  respectively.  Borrowing under the Revolving Loan is
based on a borrowing base formula of up to 80% of eligible receivables, plus 50%
of delineated eligible inventory, plus 30% of non-delineated eligible inventory.
The maximum amount of additional  credit  available  under the revolving loan at
December 31, 1999 and December 31, 1998 was $2,043 and $6,045.

At the option of the  Company,  the  interest  rate is prime plus 1.25% or LIBOR
plus 2.5% (8.7% at December 31, 1999).

At December 31, 1999, the Company had in place interest rate swap  agreements in
the amount of $7,000 at an effective average interest rate of 8.66%.

The  commitment  fee is 0.5%  per year on the  average  daily  unused  principal
balance  of the  revolving  loan and the  outstanding  letters  of  credit.  The
weighted  average  interest rate on  short-term  borrowings  was 9.1%,  9.1% and
10.25% for the years ended December 31, 1999, 1998 and 1997, respectively.

                                      F-13

<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                     (In thousands, except per share data)

Long-term Debt

Long-term debt at December 31, 1999 and 1998 consisted of the following:

<TABLE>
<CAPTION>

                                                                              1999                1998
                                                                       ------------------  ------------------
<S>                                                                            <C>                 <C>
Note payable to Independence Community Bank, bearing interest
  at 7.75% payable monthly, balloon payment of $5,417 due on
  or before July 1, 2009, collateralized by land and building                    $ 6,713                 $ -
Note payable to NCR, bearing interest at  8% payable
  quarterly, principal due on or before June 15, 1999,
  collateralized by land and building                                                  -               8,000
Term loan                                                                          3,000
Revolving loan                                                                     5,500               5,500
Capital lease obligation                                                             643                   -
                                                                       ------------------  ------------------
                                                                                  15,856              13,500
Less current maturities on long-term debt                                          1,650               8,000
                                                                       ------------------  ------------------
                                                                                $ 14,206             $ 5,500
                                                                       ==================  ==================
</TABLE>



Boundless is  prohibited  from  declaring or paying  dividends on its stock,  or
redeeming or otherwise  acquiring  any class of capital stock during the term of
the Chase  agreement  without  obtaining  bank approval.  The maximum  aggregate
amount  that  Boundless  may loan or advance to the  Company in a fiscal year is
$500 less the total cash  dividend  Boundless  paid to the Company in that year.
The term and revolving  loan agreement  requires the Company to make  contingent
payments on the term loan should the Company  obtain  financing  above a certain
level by issuing stock.

Aggregate debt scheduled maturities at December 31, 1999 were as follows:


2000                                                        $ 1,650
2001                                                          1,664
2002                                                          6,140
2003                                                            120
2004                                                            129
2005-2009                                                     6,153
                                                   -----------------
                                                           $ 15,856
                                                   =================

8.       Equity

At December 31, 1999 and 1998, stockholders' equity consisted of the following:

                                      F-14
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                     (In thousands, except per share data)
<TABLE>
<CAPTION>

                                                                              1999                1998
                                                                       ------------------  ------------------
<S>                                                                            <C>              <C>
Preferred stock, $0.01 par value, 1,000,000 shares
  authorized, none issued                                                            $ -                 $ -
Common stock, $0.01 par value, 25,000,000 shares
  authorized, 4,457,662 and 4,428,609 shares issued
  at December 31, 1999 and 1998, respectively                                         45                  44
Additional paid-in capital                                                        32,508              30,940
Accumulated deficit                                                              (11,138)            (14,327)
                                                                       ------------------  ------------------
     Total stockholders' equity                                                 $ 21,415            $ 16,657
                                                                       ==================  ==================
</TABLE>

9.       Options and Warrants

On March 6, 1998,  the Company  filed an  Information  Statement on Schedule 14C
with the Securities and Exchange  Commission in connection  with,  amongst other
items,  the Board of  Directors  of the Company  approving  the  Company's  1997
Incentive Plan permitting the grant of stock options, stock appreciation rights,
performance shares, stock awards, stock units and incentive awards to employees,
directors and others.

The Company had previously adopted its 1995 Incentive Plan which permitted up to
600,000  shares of Common Stock to be issued  thereunder.  As additional  shares
were no longer  available to be issued under the 1995 Incentive  Plan, the Board
adopted the 1997 Incentive Plan. The maximum number of shares to be issued under
the 1997 Incentive Plan is not to exceed  1,000,000.  The exercise price of each
option  granted  is to be  equal to or  greater  than  the  market  price of the
Company's  stock on the date of grant.  The terms of the options  are  generally
over five years with vesting  occurring  in 25%  increments  beginning  one year
after the grant date.

Prior to the 1995 Plan,  the Company had adopted the 1991  Employee and Director
Stock Option Plan (the "1991  Plan").  After the adoption of the 1995 Plan,  the
Company  amended the 1991 Plan,  eliminating any further grants of options under
the 1991 Plan.  As of December 31, 1999 there were 95,250  fully vested  options
under the 1991 Plan outstanding, expiring in June 2002.

The Company has  elected to  continue  to account  for stock  options  issued to
employees in accordance with APB 25, "Accounting for Stock Issued to Employees".
During the years ended  December 31, 1999,  1998 and 1997, all options issued to
officers  and  employees  were  granted at an exercise  price  which  equaled or
exceeded  the market  price per share at the date of grant and  accordingly,  no
compensation was recorded.

The  Company  follows  the  disclosure   requirements  of  FASB  Statement  123,
"Accounting for Stock-Based  Compensation".  This statement requires the Company
to provide  pro forma  information  regarding  net income  applicable  to common
stockholders and net income per share as if compensation  cost for the Company's
employee stock options  granted had been  determined in accordance with the fair
value based method  prescribed  in SFAS No. 123. The Company  estimates the fair
value of each stock option at the grant date by using the  Black-Scholes  option
pricing model with the following weighted average assumptions used for grants in
1999, 1998 and 1997 as follows:

        1.       Dividend yield of 0% for all years

        2.       Expected volatility ranging from 50% to 59%

        3.       Risk-free interest rates ranging from 4.58% to 6.72%

        4.       Expected terms ranging from 1 to 5 years.

Under the  accounting  provisions  of SFAS No.  123,  the  Company's  net income
applicable  to common  stockholders  and net  income  per share  would have been
increased to the pro forma amounts indicated below:

                                      F-15
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                     (In thousands, except per share data)


<TABLE>
<CAPTION>

                                                         1999                 1998                1997
                                                   -----------------   ------------------  ------------------
<S>                                                        <C>                 <C>                 <C>
Net income applicable to common shareholders
  As reported                                               $ 3,189              $ 4,411             $ 4,386
  Under SFAS No. 123                                          2,315                3,394               2,269

Net income per share
  As reported - basic                                        $ 0.72               $ 0.90              $ 0.89
  As reported - diluted                                        0.71                 0.90                0.86
  Under SFAS No. 123 - basic                                   0.52                 0.69                0.46
  Under SFAS No. 123 - diluted                                 0.51                 0.69                0.44
</TABLE>

A summary  of the status of the  Company's  stock  options  and  warrants  as of
December 31, 1999 and 1998,  and changes  during the years ending on those dates
is presented below:


                                      F-16
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                     (In thousands, except per share data)

<TABLE>
<CAPTION>

Options
--------                                                 1999                                  1998
                                           ----------------------------------  --------------------------------------
                                                                Weighted                               Weighted
                                                                Average                                Average
                                                                Exercise                               Exercise
                                                 Shares          Price               Shares             Price
                                           ------------------- ---------------  ------------------ ------------------
<S>                                                   <C>             <C>                 <C>                <C>
Outstanding at beginning of year                      923,716         $ 8.26              698,798            $ 11.98
  Granted                                             705,360           5.13              723,885               5.51
  Exercised                                           (29,053)         (5.60)                   -                  -
  Forfeited                                          (204,258)        (15.30)            (498,967)             (9.53)
                                           ------------------- --------------  ------------------- ------------------
Outstanding at end of year                          1,395,765         $ 5.70              923,716             $ 8.26
                                           =================== ==============  =================== ==================
Options exercisable at end of year                    661,563         $ 6.47              617,131             $ 9.80
                                           =================== ==============  =================== ==================
Weighted average fair value
  of options granted during the year                                  $ 2.47                                  $ 2.51
                                                               ==============                      ==================


Warrants                                                  1999                                  1998
--------
                                           ----------------------------------  --------------------------------------
                                                                Weighted                               Weighted
                                                                Average                                Average
                                                                Exercise                               Exercise
                                                 Shares          Price               Shares             Price
                                           ------------------- --------------  ------------------- ------------------
Outstanding at beginning of year                      534,492         $ 8.27              475,609            $ 14.56
  Granted                                             117,340           7.80              150,826               5.82
  Exercised                                                 -              -                    -                  -
  Forfeited                                           (11,774)        (26.08)             (91,943)            (36.75)
                                           ------------------- --------------  ------------------- ------------------
Outstanding at end of year                            640,058         $ 7.85              534,492             $ 8.27
                                           =================== ==============  =================== ==================
Warrants exercisable at end of year                   572,718         $ 7.64              534,492             $ 8.27
                                           =================== ==============  =================== ==================
                                                               ==============                      ==================
Weighted average fair value
  of warrants granted during the year                                 $ 2.32                                  $ 1.86
                                                               ==============                      ==================
</TABLE>


                                      F-17
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                     (In thousands, except per share data)

<TABLE>
<CAPTION>

The  following  table  summarizes  information  about  fixed  stock  options and
warrants outstanding at December 31, 1999:

                                                                          Weighted
                                   Number                                 Average              Number
                               Outstanding at                            Remaining         Exercisable at
                                December 31,         Exercise          Contractual Life      December 31,
     Options                        1999               Price              (Years)               1999
                            --------------------   ---------------   -------------------   --------------
<S>                                     <C>               <C>                  <C>                 <C>
                                        57,365            $ 3.00               3.81                52,058
                                       151,680              4.88               3.42                50,420
                                       385,197              5.63               2.26               354,058
                                        17,000              6.00               4.30                 5,000
                                         7,500             10.00               2.43                 5,625
                                       100,000             10.30               2.25               100,000
                                         8,870             13.50               0.33                 8,870
                                        25,000             15.70               2.97                25,000
                                        13,110              8.38               5.00                     -
                                           620              7.75               4.92                     -
                                         1,580              5.88               4.45                     -
                                        10,000              5.81               3.52                 2,083
                                        55,290              5.38               4.47                     -
                                         2,500              3.25               3.69                   781
                                        91,340              4.11               4.50                17,500
                                        16,418              4.21               1.34                16,418
                                        52,250              4.25               4.09                23,750
                                        27,820              4.50               4.28                     -
                                       282,225              5.00               4.14                     -
                                        90,000              5.18               4.31                     -
                            -------------------    --------------     --------------       ---------------
                                     1,395,765            $ 5.70               3.36               661,563
                            ===================    ==============     ==============      ===============


                                                                          Weighted
                                   Number                                 Average              Number
                               Outstanding at                            Remaining         Exercisable at
                                December 31,         Exercise          Contractual Life      December 31,
     Warrants                       1999               Price              (Years)               1999
                            -------------------    -------------     ------------------   ---------------
                                       150,000            $ 5.80               5.38               150,000
                                       307,502              7.50               4.95               307,502
                                           207              8.63               0.44                   207
                                        31,375             10.00               0.80                31,375
                                         1,134             13.75               0.44                 1,134
                                         2,500             18.40               4.95                 2,500
                                        30,000             18.60               2.39                30,000
                                        35,000              4.50               4.28                35,000
                                        15,000              7.00               4.28                15,000
                                        67,340              9.69               3.92                     -
                            -------------------    --------------     ----------------   ----------------
                                       640,058            $ 7.85               4.56               572,718
                            ===================    ==============     ================   ================
</TABLE>

                                      F-18

<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                     (In thousands, except per share data)

In accordance  with SFAS No. 123, the Company is required to account for options
issued to non-employees  for services  rendered using the fair value method over
their vesting period.

In connection with the February 1997 offerings of securities  under Regulation S
of the Securities Act of 1933, the Company issued warrants to financial advisors
to purchase  5,045  shares of Common  Stock at exercise  price $13.75 per share,
exercisable  through  February 1999. These warrants were valued at approximately
$19.

A  warrant  to  purchase  30,000  shares of Common  Stock of the  Company  at an
exercise  price of $18.70 per share,  exercisable  through  January 31, 2002 was
granted July 1997 in consideration  for ongoing services provided in the area of
financial consulting. The warrant is valued at approximately $63.

A warrant to purchase  150,000  shares of Common  Stock at an exercise  price of
$5.80 per share,  exercisable  through May 18, 2005 was granted to a stockholder
in May 1998 as an inducement  to allow the Company to purchase  shares of Common
Stock  from  the  stockholder  thereby  reducing  the  stockholder's  percentage
ownership in the Company below 50%. This warrant was valued at $300.

An option to purchase  35,000  shares of Common  Stock at an  exercise  price of
$3.00 per share,  exercisable  through  October  21, 2003 was granted in October
1998  in  consideration  for  consulting  services.  The  option  is  valued  at
approximately $39.

In February  1999 the Company  granted to its three  independent  members of its
Board of Directors  options to purchase  45,000  shares of Common Stock at $5.00
per share that expire  February  2004.  The Company  recorded an expense of $121
relating to the grant.

In March 1999, the Company  granted a member of the Company's Board of Advisors,
10,000  options  to  purchase  shares  of  Common  Stock at $4.25  per share for
consulting services and the Company recorded an expense of $20 for the grant.

In April 1999 the Company  granted 20,000  options to purchase  shares of Common
Stock at $4.25 per share to The Investor Relations Group for consulting services
and the Company recorded an expense of $37 for the grant.

In April 1999 the Company  granted 50, 000 options to purchase  shares of Common
Stock  at  $4.50  per  share  to  Chase  Manhattan  Bank as part of  their  debt
refinancing fees. The Company recorded an expense of $50 for the grant.

In May 1999 the Company  granted  16,418  options to  purchase  shares of Common
Stock at $4.213  per share to an  individual  for  consulting  services  and the
Company recorded an expense of $22 for the grant.

In July 1999 the Company  granted  10,000  options to purchase  shares of Common
Stock at $5.813  per share to an  individual  for  consulting  services  and the
Company recorded an expense of $21 for the grant.

In  September  1999 the Company  granted  35, 000 options to purchase  shares of
Common  Stock at $4.125  per  share  for  consulting  services  and the  Company
recorded an expense of $63 for the grant.

In November  1999 the Company  granted a warrant to  purchase  67,340  shares of
Common Stock at $9.69 per share to Stern Stewart, a consulting services firm and
the Company recorded an expense of $150 for the warrant.

The warrants issued to  non-employees  were recorded based on the fair values of
the warrants on the grant date, using the Black-Scholes option-pricing model.

                                      F-19
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                     (In thousands, except per share data)

10.       Related Party Transactions

During  April  1997,  the  Company  agreed  to pay  Morgan  Kent  Group an asset
utilization  fee of $17 per month,  or part thereof,  for each month that Common
Stock  owned by Morgan Kent Group  remained  pledged as  collateral  against the
Company's  indebtedness  to Chase.  Final fees in the amount of $52 were paid in
1999.

In April 1997, the Company signed a consulting  agreement with Morgan Kent Group
under which the Company agreed to pay Morgan Kent Group $20 per month to provide
financial  advisory  services.  In October 1997, the Company prepaid this fee in
the amount of $380 for services to be rendered in October  1997 and  thereafter.
Expenses for 1998 under this agreement were $240.

On July 18, 1997,  Morgan Kent Group issued to the Company a promissory  note in
the amount of $50,  bearing interest at the rate applicable to the Company under
its revolving credit line, in consideration for a loan made by the Company.  The
first  interest  payment is due one year following the execution of the note and
quarterly thereafter. The note matured July 18, 1999 and is still outstanding.

In May 1998  the  Company  repurchased  600,000  shares  of the  Company's  then
outstanding  Common  Stock  from  Morgan  Kent  Group at  $5.00  per  share,  or
approximately  14% below the closing market price on May 15, 1998 as reported on
the NASDAQ SmallCap Market.  The Company  repurchased these shares to reduce the
voting power of Morgan Kent Group from approximately 51% to 45% and to set aside
shares enabling the Company to issue up to 600,000 shares of its Common Stock in
acquisitive transactions without diluting public stockholders.  As an inducement
to the repurchase transaction, the Company issued a warrant to Morgan Kent Group
to purchase 150,000 shares of the Company's Common Stock at an exercise price of
$5.80 per common share. The warrant is exercisable immediately and has a term of
seven years. The Company recorded an expense of $300 relating to the issuance of
the warrant.

In December 1998 the Company  repurchased  110,620  shares of the Company's then
outstanding  Common  Stock  from  Morgan  Kent  Group at  $4.52  per  share,  or
approximately  20% below the average of the preceding  five day trading close as
reported on the NASDAQ SmallCap Market.

In October 1998 the Company  granted to Mr. Stephen  Maysonave,  a member of the
Board of Directors,  35,000 options to purchase  shares of Common Stock at $3.00
per share that expire October 2003.  These options were granted for services Mr.
Maysonave  provided as a consultant to the Company and vest December  1999.  The
Company  recorded an expense of $39 relating to the grant of the 35,000 options.
In addition,  the Company  paid Mr.  Maysonave  $64 during 1998  relating to Mr.
Maysonave's consulting efforts.

Mr.  Maysonave  was granted  options on February  18, 1999,  to purchase  15,000
shares of Common  Stock at $5.00 per share that  expire in  February  2004.  The
options  vest  over a  four-year  period as  follows-  25%  following  the first
anniversary  of the date of grant  and pro rata  over the  remaining  three-year
period.  The  options  granted to Mr.  Maysonave  were for  consulting  services
provided to the Company,  and the Company recorded an expense of $40,000 related
to the grant. On September 17, 1999, Mr. Maysonave was granted 15,000 options to
purchase shares of Common Stock at $4.125 per share that expire  September 2004.
The 15,000  options  were  granted  for  services  Mr.  Maysonave  provided as a
consultant  to the  Company  and vested  immediately  on the date of grant.  The
Company  recorded  an  expense of  $25,000  relating  to the grant of the 15,000
options.  In  addition,  the Company  recorded as expense  $150,000  paid to Mr.
Maysonave  relating  to Mr.  Maysonave's  consulting  services  to  the  Company
throughout 1999.

                                      F-20
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                     (In thousands, except per share data)


11.       Leases

The Company  leases  certain sales offices and  miscellaneous  office  equipment
under  operating  lease  agreements,  which expire at various  times through May
2003.  Total  rent  expense  was $825,  $680,  and $572 in 1999,  1998 and 1997,
respectively.

Future minimum rental commitments as of December 31, 1999 were as follows:

2000                    $       363
2001                            270
2002                            186
2003                            160
                        -----------
                        $       979
                        ===========

12.       Contingencies

The Company is subject to lawsuits and claims that arose in the normal course of
business.  Management is of the opinion that all such matters are without merit,
or are of such kind,  or involve such  amounts,  as would not have a significant
effect on the  financial  position,  results of  operations or cash flows of the
Company if disposed unfavorably.

13.       Segment Reporting and Geographic Information

The Company views its  operations  and manages its business in  principally  one
segment,  hardware  sales of computer  terminals and associated  services.  As a
result,  the  financial  information  disclosed  herein  represents  all  of the
material information related to the Company's principal operating segment.

Foreign sales were approximately $28,069, $29,544 and $30,911 for 1999, 1998 and
1997,  respectively.  The following  table shows the  approximate  percentage of
total revenue  attributable to export sales to the regions described for each of
the years ended December 31:

                                      F-21
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                     (In thousands, except per share data)

<TABLE>
<CAPTION>

                                           1999                 1998                1997
                                     -----------------   ------------------  ------------------
<S>                                               <C>                  <C>                 <C>
United Kingdom                                    14%                  11%                 12%
Other European countries                          16%                  17%                 15%
Other foreign countries                            5%                   5%                  5%
                                     -----------------   ------------------  ------------------
     Total                                        35%                  33%                 32%
                                     =================   ==================  ==================
</TABLE>

14.       Defined Contribution Plan

The Company  provides a 401(k)  retirement  savings plan (the "401(k) Plan") for
its  full-time  employees.  Under  the  provisions  of  the  401(k)  Plan,  each
participant  may elect to contribute up to 15% of his or her annual  salary.  At
its discretion,  the Company may make  contributions to the 401(k) Plan.  During
the years ended December 31, 1999, 1998 and 1997 the Company made  contributions
of $70, $69 and $33 to the plan.

15.       Selected Quarterly Financial Data - (unaudited)

Provided below is the selected unaudited  quarterly financial data from 1999 and
1998.  The  underlying  per share  information  is calculated  from the weighted
average shares outstanding each quarter, which may fluctuate. Therefore, the sum
of the quarters per share information may not equal the total year amounts.

Net income for the three months ended December 31, 1999 reflects tax benefits of
$1,531  relating to the reversal of a prior year  overaccrual and the adjustment
of deferred taxes as a result of tax examinations.

                                      F-22
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                     (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                               For the three months  ended
                                                  December 31,  September 30,     June 30,      March 31,
                                              ------------------------------------------------------------
                                                    1999            1999            1999          1999
                                              ---------------- --------------- -------------- ------------
<S>                                                  <C>             <C>              <C>          <C>
Net revenue                                          $ 19,254        $ 19,970       $ 20,230     $ 21,056
Cost of product sold and services                      13,088          14,011         14,709       14,890
Net income                                              1,245           1,243             62          689


Per share amounts:
Basic earnings per common share                        $ 0.28          $ 0.28         $ 0.01       $ 0.14
Diluted earnings per common share                      $ 0.27          $ 0.28         $ 0.01       $ 0.14


                                                               For the three months ended
                                                  December 31,  September 30,     June 30,      March 31,
                                              ------------------------------------------------------------
                                                    1998            1998            1998          1998
                                              ---------------- --------------- -------------- ------------

Net revenue                                          $ 21,853        $ 23,555       $ 21,930     $ 22,864
Cost of product sold and services                      15,019          16,754         15,827       16,603
Net income                                              2,333             825          1,005          745

Per share amounts:
Basic earnings per common share                        $ 0.49          $ 0.15         $ 0.18       $ 0.12
Diluted earnings per common share                      $ 0.49          $ 0.15         $ 0.18       $ 0.12
</TABLE>


16.       Event Subsequent to Auditors' Report

On March 6, 2000, Boundless Manufacturing closed on a transaction to acquire the
manufacturing  assets of Boca Research Inc.  ("Boca").  The transaction  extends
Boundless  Manufacturing's existing capabilities by adding printed circuit board
assemblies  ("PCBAs") to its expertise.  The transaction  included the immediate
employment of approximately 70 Boca Research manufacturing employees. As part of
the  agreement  Boundless   Manufacturing  will  manufacture  modems  and  other
electronic components for Boca.

                                      F-23
<PAGE>

           SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                (PARENT COMPANY)
                            CONDENSED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                         December 31,
                                                                               -------------------------------
                                    ASSETS                                          1999            1998
                                                                               -------------------------------
<S>                                                                                  <C>             <C>
Current assets:
  Cash and cash equivalents                                                             $ 500             $ -
  Accounts receivable                                                                      50              50
  Other current assets                                                                     12             130
                                                                               -------------------------------
    Total current assets                                                                  562             180
Investments in and advances to subsidiaries
    (eliminated in consolidation)                                                      21,461          17,300
  Other assets                                                                              6               6
                                                                               -------------------------------
                                                                                     $ 22,029        $ 17,486
                                                                               ===============================
                     LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued expenses                                                   614             829
                                                                               -------------------------------
    Total current liabilities                                                             614             829
                                                                               -------------------------------
    Total liabilities                                                                     614             829
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, 1,000,000 shares
  authorized, none issued                                                                   -               -
Common stock, $0.01 par value, 25,000,000 shares
  authorized, 4,457,662 and 4,428,609 shares issued
  at December 31, 1999 and 1998, respectively                                              45              44
Additional paid-in capital                                                             32,508          30,940
Accumulated deficit                                                                   (11,138)        (14,327)
                                                                               -------------------------------
    Total stockholders' equity                                                         21,415          16,657
                                                                               -------------------------------
                                                                                     $ 22,029        $ 17,486
                                                                               ===============================
</TABLE>



                                      S-1
<PAGE>

           SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                (PARENT COMPANY)
                       CONDENSED STATEMENTS OF OPERATIONS
                              FOR THE YEARS ENDED
                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                                December 31,
                                                                               ------------------------------------------------
                                                                                    1999            1998             1997
<S>                                                                                  <C>             <C>              <C>
                                                                               ----------------  -------------  ---------------
Expenses:
  General and administrative                                                            $ 775           $ 684            $ 234
  Interest                                                                                  5              32               98
  Other charges                                                                           153             510              250
                                                                               ----------------  -------------  ---------------
                                                                                          933           1,226              582
                                                                               ----------------  -------------  ---------------
Loss before income taxes and other items below                                           (933)         (1,226)            (582)
Income tax credit                                                                         317             162              198
                                                                               ----------------  -------------  ---------------
Loss before equity in income of consolidated subsidiaries                                (616)         (1,064)            (384)

Equity in income of consolidated subsidiaries, net of preferred stock
 dividend of $50, $497 and $497 in 1999, 1998 and 1997                                  3,805           5,475            4,770
                                                                               ----------------  -------------  ---------------
Net income available for common stockholders                                          $ 3,189         $ 4,411          $ 4,386
                                                                               ===============   =============  ===============
</TABLE>



                                      S-2
<PAGE>

           SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                (PARENT COMPANY)
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              For the Years Ended
                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                         December 31,
                                                                        -----------------------------------------------
                                                                            1999            1998             1997
                                                                        -------------- ---------------  ---------------
<S>                                                                          <C>             <C>              <C>
Net cash flows provided by operating activities                               $ 4,497         $ 5,050          $ 5,497
                                                                        -------------  --------------   ---------------
Cash flows from investing activities:
  Increase in investments in subsidiaries                                      (4,161)         (1,550)          (7,152)
                                                                        -------------- ---------------  ---------------
    Net cash used in investing activities                                      (4,161)         (1,550)          (7,152)
                                                                        -------------- ---------------  ---------------
Cash flows from financing activities:
  Proceeds from sale of convertible notes                                           -               -            1,700
  Costs associated with the issuance of debt                                        -               -             (187)
  Purchase and retirement of common stock                                           -          (3,500)               -
  Proceeds from issuance of common stock                                          164               -              136
                                                                        -------------- ---------------  ---------------
    Net cash provided by financing activities                                     164          (3,500)           1,649
                                                                        -------------- ---------------  ---------------
Net increase (decrease) in cash and cash equivalents                              500               -               (6)
Cash and cash equivalents at beginning of year                                      -               -                6
                                                                        -------------- ---------------  ---------------
Cash and cash equivalents at end of year                                        $ 500             $ -              $ -
                                                                        ============== ===============  ===============
Non-cash transactions:
  Conversion of convertible notes into common stock                               $ -             $ -              $ 1
  Compensatory value of options and warrants                                        -               -               63
  Options, warrants and common stock issued for services                          504             339                -
  Issuance of common stock for preferred dividend of subsibiary                     -            (497)               -
</TABLE>



                                      S-3
<PAGE>
                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                        For the Years Ended December 31,
                                 (In thousands)

<TABLE>
<CAPTION>

                                   Balance at
                                 Beginning of
       Description                  Period                Additions              Deductions          Balance at End of Period
-------------------------     -------------------     -------------------    ------------------     ------------------------
<S>                                  <C>                    <C>                     <C>                      <C>
Allowances:
 Doubtful accounts:
         1999                         $ 489               $ 380                $ 242  (A)               $ 627
         1998                           284                 209                    4  (A)                 489
         1997                         1,227                 (20)                 923  (A)                 284
 Inventory reserves:
         1999                         3,273                 340                  693  (B)               2,920
         1998                         3,996                 808                1,531  (B)               3,273
         1997                         5,853                (595)               1,262  (B)               3,996
</TABLE>


(A)     Includes accounts written off during the period.
(B)     Includes inventory written off during the period.



                                      S-4

<PAGE>


                              BOUNDLESS CORPORATION

                           INDEX OF EXHIBITS ATTACHED


Exhibit No.   Description of Exhibits

10(f)         Employment  Agreement,  dated  July  1,  1999,  among  Registrant,
              Boundless Manufacturing Services, Inc. and Joseph Joy.

10(g)         Employment  Agreement,  dated  July  1,  1999,  among  Registrant,
              Boundless Manufacturing Services, Inc. and Anthony Giovaniello.


10(m)         Agreement,  dated September 30, 1999, between General  Automation,
              Inc. and Boundless  Technologies,  Inc.  relating to settlement of
              obligations  and the transfer of  interests in General  Automation
              LLC.

10(n)         Promissory  Note,  dated  September  30,  1999,  in the  amount of
              $250,000 from General Automation,  Inc. to Boundless Technologies,
              Inc.

10(o)         Promissory  Note,  dated  September  30,  1999,  in the  amount of
              $500,000 from General Automation,  Inc. to Boundless Technologies,
              Inc.


10(p)         Form of Secured Convertible Promissory Note from General
              Automation,  Inc. to Boundless Technologies, Inc.

10(q)         Form  of  Warrant from  General  Automation,  Inc.  to  Boundless
              Technologies, Inc.

21            List of Subsidiaries

23            Consent of BDO Seidman, LLP

27            Financial Data Schedule