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, 2001

                         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: (631) 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. [_]

             The aggregate 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 11, 2002, is $4,852,363.

       As of March 11, 2002, the registrant had 5,688,037 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") and Boundless Manufacturing
Services, Inc. ("Boundless Manufacturing"), is a provider of text terminals and
manufacturing services.

     Boundless Technologies, a wholly-owned subsidiary, is engaged in supplying
computer terminals for commercial use. The Company's general strategy is to
provide fast, easy-to-use, and cost-effective products that enable access to
applications and data in commercial environments, as well as older "legacy"
applications, running on mainframes, mid-range, and Unix systems.

     Boundless Technologies principally designs, sells and supports (i) desktop
computer display terminals, which generally do not have graphics capabilities,
("General Display Terminals"), and (ii) other products that are used in
multi-user computing environments. Boundless Technologies also designed, sold
and supported thin client desktop display devices which enabled access to
Windows(R)computing environments ("Windows(R)-based Terminals" or "Thin
Clients") until it sold its Windows(R)-based Terminals business to Neoware
Systems, Inc. ("Neoware") in June 2001.

     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 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 thin clients and Windows(R)-based
Terminals were being marketed by Boundless primarily to manufacturing,
healthcare and social assistance, financial and insurance, wholesale trade,
educational services and public administration 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.

     Boundless Manufacturing is pursuing opportunities in the electronic
manufacturing services ("EMS") marketplace. As of December 31, 2001, the Company
owned approximately 55% of the outstanding shares of common stock of this
subsidiary. Boundless Manufacturing is utilizing the Company's state-of-the-art
ISO 9002 certified manufacturing facility in Hauppauge and will acquire
additional manufacturing facilities as may be required if its 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 and product development- to
significantly reduce time-to-market for original equipment manufacturers ("OEM")
customers. Boundless Manufacturing provides a complete supply chain that is
designed and built to each customer's specifications. Boundless Manufacturing
also has post-manufacturing support capability in Chicago, Atlanta, Los Angeles
and The Netherlands.

<PAGE>

     On March 6, 2000, Boundless Manufacturing acquired the manufacturing assets
of Boca Research Inc. ("Boca") and assumed the lease of a 77,000 sq.ft. facility
in Boca Raton, Florida. The transaction extended Boundless Manufacturing's
capabilities by adding printed circuit board assemblies ("PCBAs") to its
expertise. The transaction included the immediate employment by Boundless
Manufacturing of approximately 70 Boca manufacturing employees.

     The Company also owns a majority of the common stock of Merinta, Inc.
("Merinta"). Merinta created software and infrastructure to enable third parties
to deploy internet-based applications. Through tightly integrated Remote Device
Management and Services, professional services and Information Appliance ("IA")
Client Software solutions, Merinta offered OEM and Vertical Channel customers a
completely customizable user-experience, which enabled their customers to
differentiate themselves in the market and deliver tailored applications and
services to the end-user. Merinta's client solution, built upon the Linux
operating system, in combination with server based Remote Device Management and
Services products, supported a wide range of IAs, including Web Terminals and
Tablets, Set-Top Boxes, Residential Gateways and Wireless Handheld Devices.

     On November 8, 2000, Merinta received a $5,000,000 equity investment from
National Semiconductor Corporation ("National") in consideration for the
issuance of 1,733,102 shares of convertible preferred stock of Merinta. As part
of a non-exclusive agreement, Merinta agreed to develop and optimize its
solutions for hardware platforms based on National's Geode(TM) technologies,
while National agreed to bundle Merinta's technology into upcoming development
kits sold to design houses and OEMs. The two companies intended to co-market
their solutions creating deployment programs tailored to meet their customers'
specific needs. As of December 31, 2001, the Company owned approximately 84% of
the outstanding common stock of Merinta, and had the right to vote approximately
70% of the outstanding voting securities of Merinta.

     On May 11, 2001, the Board of Directors of the Company formally approved a
plan to discontinue the operations of Merinta. Since November 2000, following
the investment by National in Merinta, the Company was prohibited by its lender
from contributing cash to the subsidiary. As a result, Merinta was required to
fund its working capital needs from the proceeds of the National Semiconductor
investment, cash generated from operations, and proceeds from any additional
investments. However, the cash generated from operations was not sufficient to
cover its operating needs and the Company was not successful in raising
additional equity investments to supplement the proceeds from National
Semiconductor. The loss from discontinued operations of Merinta for the years
2001 and 2000 was $2,150,000 and $14,004,000, respectively.

     Reference is made to Notes 1, 4, and 17 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.

Products and Services

     General Display Terminals. The Company's General Display Terminals are
ANSI/ASCII desktop text terminals, which generally do not have 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, as well as
under OEM customers' trademarks. The ADDS, Dorio and VT brands are complementary
products, providing slightly different features to various user segments.

     Thin client terminals. The Company's thin clients had no applications
storage, utilized network servers for processing and were significantly smaller
than general purpose PCs. They used Intel and Intel-compatible processors, and
could support a wide variety of operating systems, including Microsoft Windows
CE and Linux.

     Target users for the Company's thin client terminals included
manufacturing, healthcare and social assistance, financial and insurance,
wholesale trade, educational services and public administration customers with
light processing requirements and the need to provide concurrent information to
end users on a variety of topics, such as billing and current and historical
product and service information.


                                       2
<PAGE>

     Windows(R)-based Terminals. Windows(R)-based Terminals ("WBTs") are thin
client terminals based solely on the Microsoft Windows CE operating system, and
as such, are authorized by Microsoft to carry the Windows-based Terminal
designation. They were generally based upon the same hardware platforms as the
Company's other thin client terminals. On June 29, 2001 the Company completed
the sale of its thin client business to Neoware. The sale included the Company's
Capio(R) product line, SAM Remote Administrator Software, associated
intellectual properties and access to the existing thin client distribution and
customer databases. The sale also included an outsourcing arrangement to
continue to produce, service, and support the Capio family of products for
Neoware. Proceeds from the sale amounted to $1,600,000 and a gain on the sale of
$1,500,000 is included in other credits in the statement of operations. In
connection with the sale and outsourcing arrangement, Neoware made a direct
equity investment in the Company of $300,000 and received 333,334 shares of the
Company's common stock as well as warrants to purchase an additional 50,001
shares of the Company's common stock at an exercise price of $1.10 per share.
The warrants expire five years from the date of original issuance.

     Professional Services. Up to September 30, 1999, Boundless Technologies was
a limited partner with GA eXpress ("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. 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. Depot service during
normal business hours is also provided within the United States by the Company
for its desktop terminals.

     Electronic Manufacturing Services. Boundless Manufacturing Services
participates in the EMS market space and provides services that include printed
circuit board assembly, 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 provides a complete supply chain that is
designed and built to each customer's specifications.

     Boundless Manufacturing is focused on delivering a level of service and
commitment, to both middle-market OEMs and start-up companies, that is currently
only available to top tier customers from the larger EMS companies. In addition,
it pursues smaller programs with larger OEM customers typically serviced by
larger competitors. Boundless Manufacturing will develop relationships with
those OEMs and ODMs whose supply chains can be completed or complemented by the
company's unique capabilities, and diversify revenue risk by winning customers
in several vertical markets including data storage, public and private
telecommunications systems, office technology products, industrial controls and
custom or embedded "PC" applications.

     Internet Appliance Software and Services. Merinta created the software and
infrastructure to enhance Internet browsing. Through tightly integrated Remote
Device Management and Services, professional services and Information Appliance
("IA") Client Software solutions, Merinta offered OEM and Vertical Channel
customers a completely customizable user-experience, which enabled their
customers to differentiate themselves in the market and deliver tailored
applications and services to the customer. Merinta's client solution, built upon
the Linux operating system, in combination with their server based Remote Device
Management and Services products, supported a wide range of IAs, including web
terminals and tablets, set-top boxes, residential gateways and wireless handheld
devices.


                                       3
<PAGE>

     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. Material inter-company
revenue has been eliminated.

            General Display      Windows(R)-Based      Electronic Manufacturing
Period        Terminals           Terminals                 Services
------        ---------           ---------                 --------
2001            49.6%                5.4%                    45.0%
2000            69.5%               16.7%                    13.8%
1999            80.0%               16.8%                      --


                                       4
<PAGE>

     Foreign Sales. Net foreign sales were approximately $13,047,000,
$18,280,000 and $28,069,000 for 2001, 2000 and 1999, 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
------                        -----                     ------

2001                          21.9%                     19.5%

2000                          25.7%                     19.5%

1999                          34.9%                     29.6%

Manufacturing

     Assembly Operations. The Company's manufacturing operations are located in
Boca Raton, Florida, and Hauppauge, New York, and include procurement of
components and the assembly and testing of its products. In connection with the
acquisition of the manufacturing assets of Boca Research, Inc., the Company
acquired $1,800,000 of surface mount technology ("SMT") equipment. However,
investment in production equipment has not been material to the Company's
manufacturing operations. Semi-skilled and skilled workers assemble products
using a cell-based manufacturing process in the Hauppauge, NY, facility and a
continuous flow line process in the Boca Raton, FL, facility that allows the
Company to assemble various products 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 and test equipment. The Company has earned and maintained
ISO 9002 certification for both of its manufacturing facilities.

     The Hauppauge facility 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 Boca Raton facility has multiple assembly lines with sophisticated PCBA
assembly and test equipment that operate utilizing a continuous flow process.
The facility operates in a contract, build-to-order mode with a cycle time,
including inventory leadtimes, of approximately twelve weeks from customer
purchase order receipt to product shipment.

     The Company is using approximately 100,000 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 desktop display devices per year. The
Company utilizes approximately 60,000 square feet of its 77,000 square feet of
space in the Boca Raton, FL, facility for manufacturing and has the capacity to
assemble approximately 800,000 mixed size and technology PCBAs annually.

     Suppliers. The Company purchases subassemblies and components for its
products almost entirely from more than 40 domestic and Far East suppliers.
Purchases from Goldtron (HK) Limited and Comdial Corporation, accounted for
approximately 9% and 8%, respectively, of the dollar amount of the Company's
total purchases in 2001 of subassemblies and components. Purchases from Comdial
Corporation relate to an asset purchase and supply agreement entered into
between the Company and Comdial Corporation in February 2001which required the
Company to purchase certain inventory of Comdial Corporation. The transition of
production of certain Comdial Corporation products to the Company's Boca Raton,
Florida, facility is complete; and the Company does not believe that purchases
of inventory from Comdial Corporation in future periods will be material to its
results of operations.


                                       5
<PAGE>

     During February 2001 the Company was advised that a majority ownership
interest in its primary supplier of plug-in logic boards, Tongkah, was being
sold and that new management desired to change the manufacturing profile of the
company, requiring that Tongkah eliminate the services provided to the Company.
As a result, the Company was required to move the production of its plug-in
logic boards to a new supplier, Goldtron (HK) Limited, located in mainland
China. The Company was subject to supply disruption due to the production
transition; however, as of April 17, 2001, Goldtron had successfully
transitioned production to its manufacturing facility and had achieved
mass-production capability.

     While there are at least two qualified suppliers for the subassemblies and
components that are made to the Company's specifications, the Company generally
sources such items from a single supplier so that it can 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 was subject to limited supply interruptions due to its slowness in
paying vendors. In the event of a prolonged interruption in the supply chain,
the Company's cash flow and working capital position would be adversely
affected.


                                       6
<PAGE>

     Warranties. 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 1999, 2000 and 2001, the Company's cost of
warranty repairs was approximately 2.0%, 1.4%, and 0.1%, respectively, 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.

     A provision for potential warranty liability is recorded at the time
revenue is recognized.

     Research and Development. During 2001, 2000 and 1999, the Company expended
approximately $1,381,000, $1,691,000 and $5,908,000, respectively, on research
and development activities. Boundless' research and development activities have
historically related primarily to General Display Terminals and Windows-based
terminals. Because General Display Terminals are mature products, development
activities over the past year have only included enhancements to the existing
product family. Additionally, with the sale of the Windows-based terminal
product line to Neoware, the resources required for product development
activities has been further reduced. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Results of Operations."

Sales and Marketing

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

     In selling its General Display Terminals, Boundless Technologies emphasizes
customization, reliability and compatibility with a broad range of UNIX, Pick
and other operating systems. In selling Boundless Technologies' thin clients and
Windows(R)-based Terminals, the company emphasized total cost of ownership, ease
of administration, security and the ability to access numerous applications. The
company's Windows(R)-based Terminals could access the more than 100,000
applications that run under Microsoft Windows, including Windows NT, Windows 95,
Windows 98, and Windows 2000. The company's Windows(R)-based Terminals also
provided access to UNIX and legacy applications.

     Boundless Technologies uses direct mail, telemarketing and cooperative
marketing to promote its products. The company believes the most effective way
to reach this market is via cooperative marketing with its channel partners.

     Boundless Technologies' 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.

     Boundless Manufacturing utilizes a direct sales force in selling EMS
services. Boundless Manufacturing services include supply chain optimization,
global supply base management, printed circuit board and systems assembly, 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 provides a complete supply chain that is
designed and built to each customer's specifications.


                                       7
<PAGE>

     The Company has effectively implemented an outsourcing strategy and cut
manufacturing costs for many prominent OEMs. Boundless Manufacturing is also
focused on delivering a level of service and commitment to middle-market OEMs
and start-up companies that is currently only available to top tier customers
from the larger EMS companies. Boundless Manufacturing's strategy, the
implementation of which is dependent on its ability to raise working capital,
includes aggressively expanding our geographic footprint, service offering,
technology base, and information technology infrastructure.

     For 30 years, Boundless Technologies has manufactured high quality products
and offered a full suite of supporting services. In the last decade, Boundless
Technologies has specialized in build-to-order mass-customized manufacturing, a
capability that has evolved into a key core competency that we believe offers a
significant competitive advantage in its key markets. Boundless Manufacturing
intends to leverage the expertise and capabilities resident within the Boundless
family and seek synergistic opportunities to further develop its business and
maximize shareholder value.

     Comdial Corporation and IBM were the Company's most significant customers
in 2001, accounting for approximately 24% and 11%, respectively, of the
Company's total revenue. The Company believes a decline in the level of sales to
these customers, without growth in other areas of its business, could adversely
affect the Company's results of operations and liquidity.

Competition

     The General Display Terminal market has undergone consolidation throughout
the years, and the Company's single largest competitor is Wyse Technology, Inc.
("Wyse"). General Display Terminal customer purchase criteria are based on
quality, availability, customization, compatibility with other terminals, and
price. The Company holds the leadership position in this market.

     The EMS market in 2001 was estimated by industry analysts to be in excess
of $120 billion and was served by over 2,500 competitors in the U.S. alone. The
number of competitors in this market has declined due to lack of capital,
process expertise, or breadth of service offering. Among the industry leaders,
("Tier 1" EMS providers) although they have continued to grow this year, the
rate has fallen below the five year average annual growth rate of 40%. The
market continues to be characterized by merger activity, including Solectron's
acquisition of C-MAC and Sanmina's merger with SCI. Overall, the industry is
still projected to grow at least at a 20% annual rate for at least the next five
years. Industry leaders Solectron Corporation, Sanmina/SCI, Celestica Inc.,
Flextronics, and Jabil Circuit, Inc., still represent a substantial portion of
the industry's revenue, at approximately 40% in 2000. Success rests on
capitalizing on the opportunity to build partnerships with technology product
developers and marketers to provide a full range of design, engineering,
manufacturing and customer care services in a fully integrated solution
business. Boundless Manufacturing is focused on delivering a level of service
and commitment, to both middle-market OEMs, and start-up companies, and for
smaller programs with top tier OEM customers.


                                    8

<PAGE>

Patents, Trademarks and Licensing

     The Company owns approximately 25 patents relating to General Display
Terminals issued in the United States and various foreign countries, none of
which is believed to be material to its business. The patents expire during the
next 11 years, with expiration dates ranging from October 2003 through August
2013. 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. Our manufacturing facility in Boca Raton, Florida,
produces plug-in circuit board assemblies using solder and other substances
regulated under various federal and state laws governing the environment. It is
our policy to apply strict standards for environmental protection to sites
inside and outside the U.S., even when not subject to local government
regulations. State and local agencies, as well as federal lawmakers, may impose
new laws and regulations that could have a significant impact on our business.

Employees

     At December 31, 2001, the Company had approximately 287 full-time employees
engaged as follows: 12 in product design and engineering, 226 in manufacturing
and repair services, 18 in sales, systems services and marketing and 31 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.

Risk Factors

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

     Going Concern Modification. The report of the Company's independent public
accountants on the financial statements of the Company included in this Report
on Form 10-K contains a going concern modification. (See "Financial Statements"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations.")

     Recent Operating Losses: The Company has incurred operating losses in its
last two fiscal years. There can be no assurance that the Company will be able
to achieve or sustain profitable operations in the future. (See "Financial
Statements" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations.")

     Debt Structure and Liquidity. As of December 31, 2001, the Company had a
tangible net worth deficit of $7,587,000 and total liabilities of $37,358,000.
In addition, as of December 31, 2001, the Company had a working capital deficit
of $16,473,000 as compared to working capital of $3,435,000 as of December 31,
2000.

     On May 25, 2000, the Company signed an agreement with JP Morgan Chase Bank
("Chase"), acting as the agent for a bank syndicate participating in the
agreement, amending and restating the existing credit line to add as
co-borrowers Boundless Manufacturing and Merinta. Terms of the credit line (the
"Chase Credit Line") were 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
credit line expires April 14, 2003.


                                       9
<PAGE>

     On November 16, 2000, in connection with the equity investment secured for
Merinta, the Company amended the revolving credit line entered into May 25,
2000. The amendment, amongst other things, excluded Merinta's accounts
receivable and inventory from the borrowing base formula and prohibited the
Company from contributing cash toward Merinta's operating expenses. On April 17,
2001, the Chase Credit Line was further amended, including a reduction in the
overall amount of the line from $15,000,000 to $12,000,000 as well as an
immediate reduction in the amount of the line which could be collateralized by
inventory from $5,000,000 to $3,800,000, to be reduced further by $100,000 per
month beginning August 1, 2001.

     As of December 31, 2001, the Company was in violation of certain covenants
of the Chase Credit Line. As of March 25, 2002, the covenant violations had not
been waived by the participating banks. Additionally, during the first quarter
of 2002, certain collateral against which the Company had secured borrowings was
declared ineligible by Chase. The elimination of the collateral from the
borrowing base formula caused the Company to be in an over-advanced position
with respect to the Chase Credit Line. Under the terms of the Chase Credit Line,
the Company is allowed an over-advance amount of only $750,000 and for no more
than a 30-day period. On March 27, 2002, the Company signed an amendment to the
Chase Credit Line wherein the Company agreed to limit the amount of the
over-advance to $500,000 by April 5, 2002 and to $400,000 by April 12, 2002. As
part of the agreement the Company also agreed to a reduction in the overall
amount of the line from $12,000,000 to $6,500,000. As of March 27, 2002, the
Company had $5,720,000 outstanding under the Chase Credit Line.

     The Company believes it will be successful in limiting the amount of the
over-advance to the prescribed amounts in the timeframe allotted. However, there
can be no assurance the Company will be successful. Should the Company be
unsuccessful, Chase may rely on remedies defined in the Chase Credit Line,
including calling the loan for immediate repayment.

     The Company is currently able to secure funds under the Chase Credit Line;
however, there can be no assurance that, in light of the covenant violations and
over-advanced position, the Company will continue to be able to borrow funds to
meet its working capital needs. The Company's ability to pay vendors and secure
material to satisfy customer orders for the Company's products would be
materially impaired should the participating banks either call the loan or
institute other restrictive conditions for further advances under the Chase
Credit Line.

     The Company's cash requirements at December 31, 2001 included repayment of
$8,507,000, plus interest, outstanding under the revolving credit portion of the
Chase Credit Line and payment of a $5,946,000 mortgage note, plus interest, on
the Company's Hauppauge, NY, facility. Due to the covenant violations under the
loan agreements, these obligations have been reclassified to short-term debt in
the Company's consolidated balance sheet as of December 31, 2001.

     In connection with the creation of Merinta, the Company assigned certain
contracts, to which it was a party, to Merinta. In some instances the Company,
to accomplish the assignment, guaranteed Merinta's performance of the contract,
in other cases, although the contract was assigned the Company was not relieved
of liabilities under the contract. Particularly, the Company is a guarantor of a
software license contract requiring monthly payments by Merinta of approximately
$148,000 throughout 2001. The Company reached an agreement with the software
vendor to pay this liability over an extended period and had met its payment
obligations through December 2001. Due to the Company's financial position,
payments required under the agreement during the first three months of 2002 have
not been made.

     In the event there is a decline in the Company's sales and further
deterioration in earnings and/or an inability to borrow in accordance with
availability under the Chase Credit Line, the Company's cash flow would be
further 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."

     Strategy. Industry-wide sales of General Display Terminals have been
declining over the past years. Approximately 50% of the Company's sales for the
year ended December 31, 2001 were of General Display Terminals as compared to
approximately 70% and 80% for the years ended December 31, 2000 and 1999,
respectively. Recognizing the


                                       10
<PAGE>

impact of this decline on the Company's profitability and liquidity, the Company
began a diversification program in 1999 that resulted in the creation of
Boundless Manufacturing and Merinta. The Company's strategy has been to increase
its share of the General Display Terminals market as other manufacturers
abandoned the market, thereby generating gross margin to fund the
diversification program. Merinta's operations were discontinued in May 2001.

     Boundless Manufacturing is building upon Boundless Technologies' 30-year
OEM design, manufacturing and customer history to bring these services to the
EMS market and is attempting to capitalize on the growth prospects of this
industry. However, this market is intensely competitive and there can be no
assurance the Company will be successful in its diversification effort.

     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. Comdial Corporation and IBM were the
Company's most significant customers in 2001, accounting for approximately 24%
and 11%, respectively, of the Company's total revenue. The Company believes a
decline in the level of sales to these customers, without growth in other areas
of its business, could adversely affect the Company's results of operations. As
of December 31, 2001, Comdial Corporation owed the Company $2,601,300 for
products and services sold to it in 2001. Of this amount, $1,935,000 was past
due. The Company has negotiated a pay-down schedule with Comdial to eliminate
the past due amount by May 2002. As of March 8, 2002, the total balance due from
Comdial was $2,091,500, and $1,150,800 was no longer eligible under the
Company's borrowing base formula due to the aging of certain outstanding
invoices. Should Comdial fail to meet its obligations under the pay-down
schedule the Company's liquidity and financial position could be materially
adversely affected.

     Dependence Upon Key Personnel. The Company's success will depend upon its
key management, sales and technical personnel. The Company, through Boundless
Manufacturing, has an employment contract with Mr. Joseph Joy, its Chief
Executive Officer and President, and Mr. Anthony Giovaniello, its 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. 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 Goldtron (HK)
Limited and Comdial Corporation, accounted for approximately 9% and 8%,
respectively, of the dollar amount of the Company's total purchases in 2001 of
subassemblies and components. Purchases from Comdial Corporation relate to an
asset purchase and supply agreement entered into between the Company and Comdial
Corporation in February 2001which required the Company to purchase certain
inventory of Comdial Corporation. The transition of production of certain
Comdial Corporation products to the Company's Boca Raton, Florida, facility is
complete; and the Company does not believe that purchases from Comdial
Corporation in future periods will be material to its results of operations.


                                       11
<PAGE>

     During February 2001 the Company was advised that a majority ownership
interest in its primary supplier of plug-in logic boards, Tongkah, was being
sold and that new management desired to change the manufacturing profile of the
company; requiring that Tongkah eliminate the services provided to the Company.
As a result, the Company was required to move the production of its plug-in
logic boards to a new supplier, Goldtron (HK) Limited, located in mainland
China. The Company was subject to supply disruption due to the production
transition; however, as of April 17, 2001, Goldtron had successfully
transitioned production to its manufacturing facility and had achieved
mass-production capability.

     While there are at least two qualified suppliers for the subassemblies and
components that are made to the Company's specifications, the Company generally
sources such items from a single supplier so that it can 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. However, to date, such shortages
have not had a material adverse effect on the Company's business.

     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."

     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
EMS 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.
See "Market for Registrant's Common Equity and Related Stockholder Matters."


                                       12
<PAGE>

     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.

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. Boundless Manufacturing leases approximately 77,000
square feet of manufacturing and office space in Boca Raton, Florida. The lease
expires September 14, 2005, and calls for an annual base rent of $6.75 per
square foot in the first year of the agreement, escalating to $7.60 per square
foot in the fifth year. The Company also leases approximately 3,200 square feet
of office space in New York, NY. The annual lease payment for the facility is
approximately $160,000, and the lease expires November 2004. 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

     An action was commenced by Kareem Mangaroo, employed by Boundless
Technologies between February 1994 and April 1999 as a material handler
("Plaintiff"), on February 5, 2001, against Boundless Technologies, Boundless
Corporation, and four employees of the Company (Joseph Gardner, its CFO,
Michelle Flaherty, formerly manager of Human Resources, Thomas Iavarone,
director of Logistics, and Anthony San Martin, manager of Shipping), seeking
damages for the unlawful termination of Plaintiff's employment in violation of
Plaintiff's rights under Title VII of the Civil Rights Act of 1964, as amended;
the Equal Protection Clause and Due Process Clause, pursuant to the Civil Rights
Act of 1886, as amended, 42 U.S.C. ss. 1981; and for damages as a result of the
conspiratory actions of defendants to deprive Plaintiff of his equal protection
and due process rights pursuant to 42 U.S.C. ss. 1985 and for violation of
Plaintiff's rights under the Employee Retirement Income Security Act 29 U.S. C.
ss.1001. Plaintiff further alleges claims under State law for breach of
contract. The verified complaint was filed in the United States District Court,
Eastern District of New York. Plaintiff seeks (i) compensatory damages of $1
million from each of Boundless Technologies and four employees of the company
(jointly and severally), (ii) punitive damages of $2 million from each of
Boundless Technologies, the Company, and four employees of the Company (jointly
and severally), (iii) $1 million against Boundless Technologies for breach of
contract, and (iv) the value of forfeited options, attorney's fees, costs of the
action and other relief as the court deems necessary.

     The Company intends to vigorously defend this suit since it believes that
it has meritorious defenses to the action. On March 5, 2002 a deposition of the
Plaintiff took place. No depositions of the defendants have occurred and no
trial date has been established.

     An action was commenced by Donald W. Lytle ("Plaintiff") on February 8,
2001, against Boundless Technologies, Inc., GN Netcom, Inc., Portal Connect,
Inc., and Wholesale Audio Video, Inc. in the Iowa District Court, Johnson
County; Law No. LACV061503 alleging negligence and products defects resulting in
injuries to Plaintiff's hearing as a result of the use of one model of the
Company's General Display Terminals. Plaintiff is suing for unspecified damages.
Document requests have been served on Plaintiff. On November 15, 2001, the
attorneys representing the Company took the deposition of the Plaintiff. The
Company has submitted answers to interrogatories of the Plaintiff. No trial date
has been established.


                                       13
<PAGE>

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

     No matter was submitted during the fourth quarter of 2001 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 11, 2002, there were approximately
588 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, 2001:                      High                Low
                                                  -----               -----

     First quarter ................               $3.50               $1.19
     Second quarter ...............               $1.90               $1.00
     Third quarter ................               $1.40               $0.90
     Fourth quarter ...............               $1.52               $0.85



Year Ended December 31, 2000:

     First quarter ...............               $20.75               $8.38
     Second quarter ..............               $16.19               $4.50
     Third quarter ...............               $ 9.50               $4.38
     Fourth quarter ..............               $ 7.75               $1.00

The last sale price of the Company's Common Stock on March 11, 2002 was $ 1.07.

     On May 25, 2000, the Company granted warrants to purchase 50,000 shares of
the Company's Common Stock to its bank syndicate in connection with amendments
to its revolving credit agreement. The warrant is exercisable at $6.88 per share
of Common Stock, vested 100% at the date of grant, and expires May 24, 2005.

     On November 30, 1999 the Company issued warrants to purchase 67,340 shares
of the Company's Common Stock to an independent consultant for services rendered
in connection with the Company's implementation of a financial management and
incentive compensation system. The warrant is exercisable at $9.69 per share of
Common Stock and vests one year following the date of grant. The warrant expires
November 30, 2003. On June 26, 2000, the Company issued additional warrants to
purchase 20,000 shares of the Company's Common Stock to this consultant for work
performed during 2000 on the implementation of the program noted above. The
warrant is exercisable at $7.97 per share of Common Stock and vests one year
following the date of grant. The warrant expires June 25, 2004.


                                       14
<PAGE>

     On February 23, 2001, the Company sold 110,000 shares of its Common Stock
to three individuals for total proceeds of $225,200. In connection with the
sale, the Company issued warrants to purchase 27,500 shares of its Common Stock
at an exercise price of $2.40 per share of Common Stock. The warrants expire
four years from the date of grant. Mr. Joseph V. Joy, Jr. and Mr. Jack Ryan,
then the President and Vice President, Supply Chain Services, of Boundless
Manufacturing, respectively, purchased securities in this offering. Mr. Frank
Stephens, currently a member of the Company's Board of Directors, but who was
not associated with the Company at the time of the sale, also purchased
securities in the offering. Proceeds from this sale were used for general
working capital purposes.

     From May 29, 2001, through June 29, 2001, the Company sold 947,877 shares
of its Common Stock in a private placement offering, raising gross proceeds of
$963,500. In connection with this sale, the Company issued warrants to purchase
142,190 shares of its Common Stock at exercise prices ranging from $1.10 to
$1.36 per share of Common Stock. The warrants expire five years following the
date of grant. Fourteen individuals or legal entities participated in the
private placement, including four executive officers of the Company and a member
of the Company's Board of Directors.

     The shares of Common Stock sold in the June private placement, and the
shares of Common Stock underlying the warrants, are required by the Company to
be registered for sale in accordance with the Securities Act of 1933. The
Company is currently preparing an amended registration statement on Form S-3 and
anticipates filing such registration statement in April 2002.

     The Company believes that the issuances of the securities described above
were exempt from registration under Section 4 (2) of the Securities Act of 1933
as amended.

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, 2001, 2000, 1999, 1998 and
1997 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.


                                       15
<PAGE>


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

<TABLE>
<CAPTION>
                                                           2001           2000           1999           1998          1997
                                                       --------       --------       --------       --------      --------

<S>                                                         <C>            <C>            <C>            <C>           <C>
     Total revenues                                    $ 59,581       $ 64,544       $ 80,510       $ 90,202      $ 98,271
     Gross margin                                         6,283         15,500         23,812         25,999        24,766

     Operating expenses:
       Sales and marketing                                5,459          7,442         10,292          8,308         7,417
       General and administrative                         7,690          8,279          6,979          5,845         6,213
       Research and development                           1,381          1,691          5,908          3,666         2,912
       Other charges (credits)                           (2,437)           177         (3,711)           (16)         (255)
                                                       --------       --------       --------       --------      --------

          Total operating expenses                       12,093         17,589         19,468         17,803        16,287
                                                       --------       --------       --------       --------      --------
     Operating income (loss)                             (5,810)        (2,089)         4,344          8,196         8,479
     Interest expense                                     1,599          1,455          1,438          2,539         3,730
                                                       --------       --------       --------       --------      --------

     Income (loss) before income tax                     (7,409)        (3,544)         2,906          5,657         4,749
                                                          1,383           (289)          (333)           749          (134)
                                                       --------       --------       --------       --------      --------
     Income tax (credit) expense
     Income (loss) from continuing operations            (8,792)        (3,255)         3,239          4,908         4,883
     Loss from discontinued operations                   (2,150)       (14,004)            --             --            --

     Net income (loss)                                 $(10,942)      $(17,259)      $  3,239       $  4,908      $  4,883
                                                       ========       ========       ========       ========      ========
     Income (loss) per common share from
        continuing operations:

     Basic                                             $  (1.74)      $  (0.72)      $    .72       $    .90      $    .89
                                                       ========       ========       ========       ========      ========
     Diluted                                           $  (1.74)      $  (0.72)      $    .71       $    .90      $    .86
                                                       ========       ========       ========       ========      ========

     Net income (loss) per common share:

     Basic                                             $  (2.17)      $  (3.81)      $    .72       $    .90      $    .89
                                                       ========       ========       ========       ========      ========
     Diluted                                           $  (2.17)      $  (3.81)      $    .71       $    .90      $    .86
                                                       ========       ========       ========       ========      ========

     Consolidated Balance Sheet Data
     At December 31:
     (in thousands)

     Working capital (deficit)                         $(16,473)      $  3,435       $ 17,942       $  9,401      $  8,780
     Total assets                                        33,215         39,604         50,460         49,348        54,548
     Revolving credit loan (short-term)                   8,507             --             --             --         7,650
     Current maturities of long-term debt in
     default                                              6,855             --             --             --            --
     Long-term obligations                                  833         13,442         14,206          7,129        10,288
     Minority interest                                       --             --             --             --            --
     Mandatorily redeemable preferred
     stock                                                   --             --             --          3,555         3,555

     Stockholders' equity (deficit)                    $ (4,143)      $  5,751       $ 21,415       $ 16,657      $ 15,407
</TABLE>


                                       16
<PAGE>

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

General

     Reference is made to Notes 1,4, and 17 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. The numbers and percentages contained in this Item 7 are
approximate. Dollar amounts are stated in thousands.

     We have identified the policies below as critical to our business
operations and the understanding of our results of operations. The impact and
any associated risks related to these policies on our business operations is
discussed throughout Management's Discussion and Analysis of Financial Condition
and Results of Operations where such policies affect our reported and expected
financial results. For a detailed discussion on the application of these and
other accounting policies, see Note 3 in the Notes to the Consolidated Financial
Statements in Item 14 of this Annual Report on Form 10-K, beginning on page
F-10. Note that our preparation of this Annual Report on Form 10-K requires us
to make estimates and assumptions that affect the reported amount of assets and
liabilities, disclosure of contingent assets and liabilities at the date of our
financial statements, and the reported amounts of revenue and expenses during
the reporting period. There can be no assurance that actual results will not
differ from those estimates.

Impairment of goodwill and valuation of deferred tax assets.

     We periodically evaluate acquired businesses for potential impairment
indicators. Our judgments regarding the existence of impairment indicators are
based on legal factors, market conditions and operational performance of our
acquired businesses. Future events could cause us to conclude that impairment
indicators exist and that goodwill associated with our acquired businesses is
impaired. Any resulting impairment loss could have a material adverse impact on
our financial condition and results of operations. At December 31, 2001, the
carrying value of goodwill was $3.2 million.

     The carrying value of the Company's net deferred tax assets assumes that
the Company will be able to generate sufficient future taxable income in certain
tax jurisdictions, based on estimates and assumptions. If these estimates and
related assumptions change in the future, the Company may be required to record
adjustments to the valuation allowances against its deferred tax assets
resulting in additional income tax expense or credits in the Company's
consolidated statement of operations. Management evaluates the realizability of
the deferred tax assets quarterly and assesses the need for changes in the
valuation allowances quarterly. During the year ended December 31, 2001, the
Company recorded $2.3 million of valuation allowances related to its net
deferred tax assets, resulting in a 100% valuation allowance at the balance
sheet date.

Sales returns and other allowances, allowance for doubtful accounts.

     The preparation of financial statements requires our management to make
estimates and assumptions that affect the reported amount of assets at the date
of the financial statements and the reported amounts of revenues and expenses
during the reported period. Specifically, our management must make estimates of
potential future product returns related to current period product revenue.
Management analyzes historical returns, current economic trends, and changes in
customer demand and acceptance of our products when evaluating the adequacy of
the sales returns and other allowances. Significant management judgments and
estimates must be made and used in connection with establishing the sales
returns and other allowances in any accounting period. Material differences may
result in the amount and timing of our revenue for any period if management made
different judgments or utilized different estimates. Historically the Company
has not experienced material levels of product returns.


                                       17
<PAGE>

     Similarly, our management must make estimates of the uncollectibility of
our accounts receivable. Management specifically analyzes accounts receivable
and analyzes historical bad debts, customer concentrations, customer
credit-worthiness, current economic trends and changes in our customer payment
terms when evaluating the adequacy of the allowance for doubtful accounts.

Warranty and product guaranties.

     We provide for the estimated cost of product warranties at the time revenue
is recognized. While the Company engages in extensive product quality programs
and processes, including actively monitoring and evaluating the quality of its
component suppliers, our warranty obligation is affected by product failure
rates, material usage and service delivery costs incurred in correcting a
product failure. Should actual product failure rates, material usage or service
delivery costs differ from our estimates, revisions to the estimated warranty
liability may be required.

Inventory obsolescence.

     We record inventory valuation allowances for estimated obsolescence or
unmarketable inventory equal to the difference between the cost of inventory and
the estimated market value based upon assumptions about future demand and market
conditions. If actual future demand or market conditions are less favorable than
those projected by management, additional inventory valuation allowances may be
required.

Results of Operations

Years Ended December 31, 2001 and 2000

     Revenues: Revenues for the year ended December 31, 2001 were $59,581, as
compared to $64,544 for the year ended December 31, 2000.

     Sales of the Company's General Display Terminals declined by 34.2% to
$29,531 for the year ended December 31, 2001 from $44,873 for the year ended
December 31, 2000. The decline is attributable to a reduction in sales of the
Company's VT/Dorio product line and sales to Digital and IBM, which, in
combination, accounted for a decline of approximately $10,391, or 49%, from
sales in 2000. 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 decreased 70.2% to $3,218
versus $10,792 for the years 2001 and 2000, respectively. The decline is
attributable to the sale of the Capio product line to Neoware Systems, Inc. in
June 2001.


                                       18
<PAGE>

     Boundless Manufacturing recognized revenue of $ 26,709 for the year ended
December 31, 2001 and $8,879 for the year ended December 31, 2000, its first
year of operation. On March 6, 2000, Boundless Manufacturing acquired the
manufacturing assets of Boca Research Inc. ("Boca") and assumed the lease of a
77,000 sq.ft. facility in Boca Raton, Florida. The transaction extended
Boundless Manufacturing's existing capabilities by adding printed circuit board
assemblies ("PCBAs") to its expertise. The transaction included the immediate
employment by Boundless Manufacturing of approximately 70 Boca Research
manufacturing employees. In connection with the transaction Boundless
Manufacturing executed a supply agreement under which Boundless Manufacturing
would supply product for sale in Boca's modem business, and Boca committed to
minimum quarterly payments. For the year ended December 31, 2000, Boundless
Manufacturing recognized $998 of these minimum commitments. The commitment
guarantee under the supply agreement expired in March 2001.

     Net sales from the Company's repairs and spare parts business were
approximately $2,108 for the year ended December 31, 2001 compared to $1,902 for
the year ended December 31, 2000. The Company anticipates that repairs and spare
parts revenues for general display terminals will decline in the future due to
the decline in industry sales of this product.

     Comdial and IBM were the Company's most significant customers in 2001,
accounting for approximately 24% and 11%, respectively, of the Company's total
revenue. The Company believes a decline in the level of sales to these
customers, without growth in other areas of its business, could adversely affect
the Company's results of operations and liquidity.

     Gross Margin. Gross margin for the year ended December 31, 2001 was $6,283
(10.5% of revenue), as compared to gross margin for the year ended December 31,
2000 of $15,500 (24.0% of revenue). The decline in sales of General Display
Terminals, which generate margins substantially larger than the Company's other
business segment, Boundless Manufacturing Services, resulted in the decline in
margin.

     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 2001 or 2000. 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, 2001, operating
expenses were $12,093 (20.3% of revenue), compared to expenses for 2000 of
$17,589 (27.3 % of revenue).

     Sales and Marketing Expenses. Sales and marketing expenses decreased 26.6%
from $7,442 (11.5% of revenue) for the year ended 2000 to $5,459 (9.2% of
revenue) for the year ended December 31, 2001. The decrease is attributable to
the sale, in June 2001, of the Company's Windows-based terminal product line to
Neoware.

     Boundless Technologies promotes its products by means of a balanced mix of
direct mail, telemarketing and cooperative channel marketing programs. Boundless
Manufacturing promotes its services through its direct sales force.

     General and Administrative Expenses. General and administrative expenses
decreased 7.1%, or $589, to $7,690 (12.9% of revenue), from $8,279 (12.8% of
revenue) for the periods ending December 31, 2001 and 2000, respectively. The
decrease stems from reductions in personnel costs, travel and professional
services. During the fourth quarter of 2001, the Company recorded a $1,274
charge to earnings to recognize the settlement of employment contracts with two
executives of the Company.

     Research and Development Expenses. Research and development expenses
decreased to $1,381 in 2001 from $1,691 in 2000. The decline is due to the sale
of the Company's Windows-based terminal product line to Neoware. Because General
Display Terminals are mature products, development activities over the past year
have only included enhancements to the existing product family.

     Other Charges (Credits). During the second quarter of 2001 the Company
recorded a gain of $1,500 on the sale of the Windows-based terminal product line
to Neoware and it reduced warranty liabilities amounting to $300 due to


                                       19
<PAGE>

expiration of the warranty period. On an ongoing basis, the company refines the
method of accruing for various expenses, including warranty and co-op expense.
The company considers past experience as well as changes in the underlying
programs in determining changes to the estimate. With respect to both the
warranty and co-op programs, certain programs require that the customer not only
meet the specifications of the program, but file a claim with the company in a
timely fashion. Due to industry consolidation and other disruptions,
particularly Compaq's purchase of Digital Equipment Corporation, a few large
customers did not timely file for a credit, resulting in our ultimate release of
the accruals. During the fourth quarter of 2001, the Company released prior year
excess liabilities for marketing programs and bonus awards in the aggregate
amount of $365.

     Interest Expense(net). Interest expense (net of interest income) amounted
to $1,599 for the year ended December 31, 2001 compared to $1,455 for 2000. This
increase is related to higher levels of debt carried by the Company during 2001.

     Income Tax Expense/Credit. The Company recorded an income tax expense of
$1,383 for the year ended December 31, 2001 compared to an income tax credit of
$289 for the year ended December 31, 2000. The 2001 charge resulted from income
tax credits of $898, which represented changes in estimates of previously
provided income taxes, and the recording of a valuation allowance of $2,281
against the remaining portion of the net deferred tax assets, including net
operating loss carryforwards, that the Company currently estimates may not be
realized.

     Discontinued Operations. On May 11, 2001, the Board of Directors of the
Company formally approved a plan to discontinue the operations of Merinta. Since
November 2000, following an investment by National Semiconductor in Merinta, the
Company was prohibited by its lender from contributing cash to the subsidiary.
As a result, Merinta was required to fund its working capital needs from the
proceeds of the National Semiconductor investment, cash generated from
operations, and proceeds from any additional investments. However, the cash
generated from operations was not sufficient to cover its operating needs and
the Company was not successful in raising additional equity investments to
supplement the proceeds from National Semiconductor. The loss from discontinued
operations for the years ended December 31, 2001 and 2000 was $2,150 and
$14,004, respectively.

     Net Loss. For the year ended December 31, 2001, net loss was $10,942 (18.4%
of revenue), compared to a net loss of $17,259 (26.7% of revenue) for the year
ended December 31, 2000.

Years Ended December 31, 2000 and 1999

     Revenues: Revenues for the year ended December 31, 2000 were $64,544, as
compared to $80,510 for the year ended December 31, 1999.

     Sales of the Company's General Display Terminals declined by 30.4% to
$44,873 for the year ended December 31, 2000 from $64,486 for the year ended
December 31, 1999. The decline is attributable to a reduction in sales of the
Company's VT/Dorio product line and sales to Digital and IBM, which, in
combination, accounted for a decline of approximately $15,005, or 35%, from
sales in 1999. In addition, sales of the Company's ADDS(TM) General Display
Terminal declined $3,764 from sales in 1999 due to the general decline in the
market for General Display Terminals.

     Sales of the Company's Windows(R)-based Terminals decreased 20.2% to
$10,792 versus $13,533 for the years 2000 and 1999, respectively. The decline is
attributable to delays in new / enhanced product introduction, as well as the
Company's inability to secure a large volume OEM customer.

     Boundless Manufacturing recognized revenue of $8,879 for the year ended
December 31, 2000, its first year of operation. On March 6, 2000, Boundless
Manufacturing acquired the manufacturing assets of Boca Research Inc. ("Boca")


                                       20
<PAGE>

and assumed the lease of a 77,000 sq.ft. facility in Boca Raton, Florida. In
connection with the transaction Boundless Manufacturing executed a supply
agreement under which Boundless Manufacturing would supply product for sale in
Boca's modem business, and Boca committed to minimum quarterly payments. For the
year ended December 31, 2000, Boundless Manufacturing recognized $998 in minimum
commitments. The commitment guarantee under the supply agreement expired in
March 2001.

     Net sales from the Company's repairs and spare parts business were
approximately $1,902 for the year ended December 31, 2000 compared 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.

     IBM and Boca Research were the Company's most significant customers in
2000, accounting for approximately 9%, respectively, of the Company's total
revenue.

     Gross Margin. Gross margin for the year ended December 31, 2000 was $15,500
(24% of revenue), as compared to gross margin for the year ended December 31,
1999 of $23,812 (29.6% of revenue). The decline in sales of General Display
Terminals, which generate margins substantially larger than the Company's other
business segments, resulted in a decline in gross margin of $8,312 compared to
1999.

     Changes in retail pricing did not have a material adverse effect on the
Company's gross margin in 2000 or 1999.

     Total Operating Expenses. For the year ended December 31, 2000, operating
expenses were $17,589 (27.3% of revenue), compared to expenses for 1999 of
$19,468 (24.2 % of revenue).

     Sales and Marketing Expenses. Sales and marketing expenses decreased 27.7%
from $10,292 (12.8% of revenue) for the year ended 1999 to $7,442 (11.5% of
revenue) for the year ended December 31, 2000.

     General and Administrative Expenses. General and administrative expenses
increased 18.6%, or $1,300, to $8,279 (12.8% of revenue), from $6,979 (8.7% of
revenue) for the periods ending December 31, 2000 and 1999, respectively. The
increase is related to accruals for the Company's employee bonus program earned
in 2000 of $853, and expenses of $375 relating to the implementation of the
Company's new enterprise resource planning ("ERP") software. During the fourth
quarter of 2000, the Company recorded additional goodwill amortization of $185.
While in management's opinion there is currently no impairment in the carrying
value of goodwill, it was determined that the useful life of goodwill should be
shortened to be more reflective of the current rate of decline in the General
Display Terminal product family. Accordingly, management changed the remaining
useful life of five years to a remaining useful life of three years, commencing
in the fourth quarter of 2000.

     Research and Development Expenses. Research and development expenses
decreased to $1,691 in 2000 from $5,908 in 1999.

     Other Charges (Credits). During the third quarter of 2000 the Company
reduced DEC warranty liabilities amounting to $326 due to expiration of the
warranty period and $206 of unused 1999 accrued cooperative marketing programs.
On an ongoing basis, the company refines the method of accruing for various
expenses, including warranty and co-op expense. The company considers past
experience as well as changes in the underlying programs in determining changes
to the estimate. With respect to both the warranty and co-op programs, certain
programs require that the customer not only meet the specifications of the
program, but file a claim with the company in a timely fashion. Due to industry
consolidation and other disruptions, particularly Compaq's purchase of Digital
Equipment Corporation, a few large customers did not timely file for a credit,
resulting in our ultimate release of the accruals.


                                       21
<PAGE>

     On September 30, 1999, Boundless Technologies sold its interest in the GAI
Partnership to GA for $1,500 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 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. During the fourth quarter of 2000 the
Company wrote off 100%, or $824, of the carrying value of the common stock and
convertible debt which it had received in consideration for the sale of its
interest in the GAI Partnership to GA in 1999. The write-off was recorded as a
result of the deterioration in GA's economic position, its reporting of
significant continuing losses and its announcement during the first quarter of
2001 that it had sold its hardware and services business and would restructure
the company.

     Interest Expense(net). Interest expense (net of interest income) amounted
to $1,455 for the year ended December 31, 2000 compared to $1,438 for 1999.

     Income Tax Credit. The Company recorded an income tax credit of $333 for
the year ended December 31, 1999 compared to an income tax credit of $289 for
the year ended December 31, 2000. In 2000, the Company established a valuation
allowance of $5,950 against the portion of the net deferred tax assets,
including net operating loss carryforwards, that it currently estimates may not
be realized. 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. No refunds or taxes due resulted from these
examinations.

     Discontinued Operations. On May 11, 2001, the Board of Directors of the
Company formally approved a plan to discontinue the operations of Merinta. Since
November 2000, following an investment by National Semiconductor in Merinta, the
Company was prohibited from contributing cash to the subsidiary. As a result,
Merinta was required to fund its working capital needs from the proceeds of the
National Semiconductor investment, cash generated from operations, and proceeds
from any additional investments. However, the cash generated from operations was
not sufficient to cover its operating needs and the Company was not successful
in raising additional equity investments to supplement the proceeds from
National Semiconductor. The loss from discontinued operations for the period
January 1 through December 31, 2000 was $14,004.

     Net Income/loss. For the year ended December 31, 1999, net income was
$3,239 (4.0% of revenue), compared to a net loss of $17,259 for the year ended
December 31, 2000.

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.

Liquidity and Capital Resources

     The discussion below regarding liquidity and capital resources should be
read together with the information included under Notes 2, 8, 12 and 13 of Notes
to Consolidated Financial Statements.

     The Company had a working capital deficit of approximately $16,473 as of
December 31, 2001, compared to working capital of $3,435 as of December 31,
2000. Historically, the Company has relied on cash flow from operations,


                                       22
<PAGE>

bank borrowings and sales of its common stock to finance its working capital,
capital expenditures and acquisitions.

     The Company is highly leveraged. As of December 31, 2001, the Company had a
tangible net worth deficit of $7,587 and total liabilities of $37,358. The
Company's cash requirements at December 31, 2001 included repayment of a
revolving loan of $8,507 plus interest and a ten-year promissory note in the
amount of $5,946 which requires monthly principal and interest payments through
July 1, 2009. Both the revolving loan and promissory note have been reclassed to
current liabilities in the Company's financial statements due to covenant
violations.

     Borrowing under the revolving loan is based on a borrowing base formula of
up to 75% of eligible receivables, plus 50% of delineated eligible inventory,
plus 30% of non-delineated eligible inventory. Up to $5,000 is available under
the revolving loan for letters of credit. As of December 31, 2001, the Company
had the ability to borrow $1,570 from its bank syndicate based on the borrowing
formula. 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 increases in orders may not be able to be financed under the
Company's revolving credit line.

     In connection with the equity investment secured for Merinta, the Company
amended, in November 2000, its revolving credit loan entered into May 25, 2000.
The amendment, amongst other things, excluded Merinta's accounts receivable and
inventory from the borrowing base formula and prohibited the Company from
contributing cash toward Merinta's operating expenses. On April 17, 2001, the
Chase Credit Line was further amended, including a reduction in the overall
amount of the line from $15,000 to $12,000 as well as an immediate reduction in
the amount of the line which could be collateralized by inventory from $5,000 to
$3,800, to be reduced further by $100 per month beginning August 1, 2001.

     As of December 31, 2001, the Company was in violation of certain covenants
of the Chase Credit Line. As of March 25, 2002, the covenant violations had not
been waived by the participating banks. Additionally, during the first quarter
of 2002, certain collateral against which the Company had secured borrowings was
declared ineligible by Chase. The elimination of the collateral from the
borrowing base formula caused the Company to be in an over-advanced position
with respect to the Chase Credit Line. Under the terms of the Chase Credit Line,
the Company is allowed an over-advance amount of only $750 and for no more than
a 30-day period. On March 27, 2002, the Company signed an amendment to the Chase
Credit Line wherein the Company agreed to limit the amount of the over-advance
to $500 by April 5, 2002 and to $400 by April 12, 2002. As part of the agreement
the Company also agreed to a reduction in the overall amount of the line from
$12,000 to $6,500. As of March 27, 2002, the Company had $5,720 outstanding
under the Chase Credit Line.

     The Company believes it will be successful in limiting the amount of the
over-advance to the prescribed amounts in the timeframe allotted. However, there
can be no assurance the Company will be successful. Should the Company be
unsuccessful, Chase may rely on remedies defined in the Chase Credit Line,
including calling the loan for immediate repayment.

     The Company is currently able to secure funds under the Chase Credit Line;
however, there can be no assurance that, in light of the covenant violations and
over-advanced position, the Company will continue to be able to borrow funds to
meet its working capital needs. The Company's ability to pay vendors and secure
material to satisfy customer orders for the Company's products would be
materially impaired should the participating banks either call the loan or
institute other restrictive conditions for further advances under the Chase
Credit Line.

     Boundless Technologies has an agreement with a commercial lender for a loan
secured by a mortgage on the Boundless facility located in Hauppauge, NY. The
loan, which is in the principal amount of $5,946 and carries a fixed interest
rate of 7.75%, is being amortized over a 25-year period with a balloon payment
due on July 1, 2009. The monthly payments are approximately $50. To induce the
lender to make the loan, the Company executed and delivered a guaranty of
Boundless Technologies' obligations to the lender.

     In connection with the creation of Merinta, the Company assigned certain
contracts, to which it was a party, to


                                       23
<PAGE>

Merinta. In some instances the Company, to accomplish the assignment, guaranteed
Merinta's performance of the contract. Particularly, the Company is a guarantor
of a software license contract requiring monthly payments by Merinta of
approximately $148 throughout 2001. The Company reached an agreement with the
software vendor to pay this liability over an extended period and had met its
payment obligations through December 2001. Due to the Company's financial
position, payments required under such agreement during the first three months
of 2002 have not been made.

     As of December 31, 2001, Comdial Corporation owed the Company $2,601 for
products and services which the Company sold to it in 2001. Of this amount,
$1,935 was past due. The Company has negotiated a pay-down schedule with Comdial
to eliminate the past due amount by May 2002. As of March 8, 2002, the total
balance due from Comdial was $2,092, and $1,151 was no longer eligible under the
Company's borrowing base formula due to the aging of certain outstanding
invoices. Should Comdial fail to meet its obligations under the pay-down
schedule the Company's liquidity and financial position could be materially
adversely affected.

     Our liquidity is affected by many factors, some of which are based on the
normal ongoing operations of our businesses and some of which arise from
uncertainties related to global economies. 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 further adversely affected.
Accordingly, the Company may not have the necessary cash to fund all of its
obligations. The Company is seeking equity funding to improve its working
capital position. However, the Company's ability to obtain equity financing to
reduce its debt and increase its stockholders' equity is adversely affected by
its current leverage. There can be no assurance that additional financing will
be available on favorable terms, if at all.

     Net cash used in operating activities during the year ended December 31,
2001 was $1,646, principally related to a net loss of $10,942. This amount was
offset by non-cash expenses, principally depreciation and amortization of
$3,670, decreases in inventory of $798 and increases in accounts payable and
other accrued expenses of $2,783. Net cash provided by investing activities was
comprised of $1,600 stemming from the sale of the Company's Windows-based
terminal product line to Neoware, offset by capital expenditures of $401. Net
cash provided by financing activities was principally comprised of the proceeds
from the sale of the Company's Common Stock in the amount of $1,189 and proceeds
of $1,733 from the issuance of debt. These amounts were offset by repayments of
$2,602 due under the Company's mortgage note and revolving line of credit.

     In addition to obligations previously discussed, long-term capital
requirements at December 31, 2001 included: (i) a mortgage note payable to
Independence Community Bank in the amount of $5,946, 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; (ii) a lease commitment of $359 for the calendar year 2001, escalating to
$406 for the calendar year 2005, for Merinta's Austin, Texas facility; (iii)
monthly capitalized lease payments of $36 through October 2002, and declining to
$17 per month through April 2003, relating to expenditures associated with the
Company's new computer system; and (iv) an annual lease commitment of $160 for
office space in New York, NY, such lease expiring November 2004.

     At December 31, 2001, the Company's total long-term liabilities were
approximately $2,141 and its current portion of long-term debt was approximately
$15,362. The Company believes that additional financing will be required to grow
its business and to pay the Company's current and long-term debts, when due.

Going Concern Comment and Management's Plan of Action

     The Company's independent auditors' report for the year ended December 31,
2001 contains a special emphasis paragraph relating to a "going concern" matter.
The primary issues management will focus on in the immediate future to address
this matter include:

     o    The continual negotiation of material contracts for the sale of its
          manufacturing services to customers which management believes will
          provide additional liquidity for operations. There can be no
          assurances that these contracts will materialize.


                                       24
<PAGE>

     o    Initiating negotiations to secure short term financing of working
          capital of approximately $3-5 million under terms and conditions to be
          agreed upon. There can be no assurance that this funding will
          materialize.

     o    Working with its secured lender on a restructuring of the terms of the
          debt which it holds to allow for the raising of additional capital.
          While management is hopeful an arrangement can be achieved, it can
          give no assurance an agreement will be reached.

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 3.8 times in 1999, 4.0 times in 2000, and 5.0 times
in 2001. The Company's decision to accelerate receipt of material ahead of
December 31, 1999 in order to minimize any potential Year 2000 disruption
resulted in the lower inventory turnover for 1999. Inventory reserves at
December 31, 2001 were $3,451 and were $4,308 for the year ended December 31,
2000. The higher reserve in 2000 is attributable to the termination of the
business relationship with Internet Appliance Networks, Inc.

     Accounts Receivable. The Company sells its products on prepayment and net
30-day terms. Receivable turnover was 6.0 in 1999, 6.4 in 2000 and 6.0 in 2001.
The decline in receivable turnover in 2001 is due to the fact that Comdial
Corporation had not been timely in making payments to the Company in 2001.

New Accounting Pronouncements

     In June 2001, the Financial Accounting Standards Board finalized FASB
Statements No. 141, Business Combinations (SFAS 141), and No. 142, Goodwill and
Other Intangible Assets (SFAS 142). SFAS 141 requires the use of the purchase
method of accounting and prohibits the use of the pooling-of-interests method of
accounting for business combinations initiated after June 30, 2001. SFAS 141
also requires that the Company recognize acquired intangible assets apart from
goodwill if the acquired intangible assets meet certain criteria. SFAS 141
applies to all business combinations initiated after June 30, 2001 and for
purchase business combinations completed on or after July 1, 2001. It also
requires, upon adoption of SFAS 142, that the Company reclassify the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141. The
Financial Accounting Standards Board also issued SFAS No. 143, "Accounting for
Obligations Associated with the Retirement of Long-Lived Assets" in August 2001
and SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" in October 2001.


                                       25
<PAGE>

     SFAS 142 requires, among other things, that companies no longer amortize
goodwill, but instead test goodwill for impairment at least annually. In
addition, SFAS 142 requires that the Company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized at that date, regardless of when those assets were
initially recognized. SFAS 142 requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption. The Company is
also required to reassess the useful lives of other intangible assets within the
first interim quarter after adoption of SFAS 142. The Company is assessing, but
has not yet determined, how the adoption of SFAS 142 will impact its financial
position and results of operations.

     The Company's previous business combinations were accounted for using the
purchase method. As of December 31, 2001, the net carrying amount of goodwill is
$3,187,000 and other intangible assets is $257,000. Amortization expense for the
year ended December 31, 2001 was $2,129,000. The Company has previously reported
that the industry demand for General Display Terminals has been declining; and
that the Company anticipates the decline to continue in future periods. The
Company anticipates that such decline in sales of General Display Terminals, and
the resultant decline in gross margin and fair value, will necessitate a
write-off of the remaining balance of goodwill in future periods. The Company
will review the prospects of the General Display Terminal business on a
semi-annual basis and record any adjustments to the carrying value of goodwill.

     SFAS 143 establishes standards for the reporting of obligations associated
with the retirement of tangible long-lived assets and the associated asset
retirement costs. It also provides accounting guidance for legal obligations
associated with the retirement of tangible long-lived assets. SFAS 143 is
effective for fiscal years beginning after June 15, 2002 with early adoption
permitted. The Company expects that the provisions of SFAS 143 will not have a
material effect on its consolidated results of operations.

     SFAS 144 establishes a single accounting model for the impairment or
disposal of long-lived assets and new standards for reporting discontinued
operations. The provisions of SFAS 144 are effective in fiscal years beginning
after December 15, 2001 and in general, are to be applied prospectively.

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, 2001 the Company had in place interest rate swap
agreements in the amount of $5,528,000 at an effective average interest rate of
8.5%. 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. At December 31, 2001 the deferred loss resulting from the swap
agreements, as calculated using the mark-to market method, was not material.

     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, 2001 the Company's investments consisted of cash balances
maintained in its corporate account with the Chase Manhattan Bank.


                                       26
<PAGE>

     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.


                                       27
<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:

Name                                Age      Positions and Offices
----                                ---      ---------------------

John J. McGovern(1)                 46       Chairman of the Board of Directors

Joseph V. Joy, Jr.(1)               48       Chief Executive Officer and
                                             President, Director

Richard Bowman(1)                   41       Director

Gary Brooks(1)                      67       Director

J. Gerald Combs                     52       Director

Joseph Gardner                      42       Vice President - Finance, Chief
                                             Financial Officer

Anthony Giovaniello(1)              46       Executive Vice President- Boundless
                                             Manufacturing Services, Inc.,
                                             Director

Safwan Masri(1)                     39       Director

Daniel Matheson(2)                  52       Director

Jeffrey K. Moore(2)                 32       Director

Jack Murphy(2)                      73       Director

Oscar Smith                         65       Director

Frank Stephens                      50       Director

Gary Wood(2)                        58      Director


(1)  Elected to the Board of Directors February 28, 2002.

(2)  Did not stand for re-election to the Board of Directors at the annual
     meeting held February 28, 2002.

     John J. McGovern is currently forming his own firm specializing in working
with troubled companies. Mr. McGovern previously has served as the Senior Vice
President & Chief Financial Officer of Multex.Com, Inc., from November 1999
until December 2001. Mr. McGovern was responsible for finance, legal, human
resources, strategic development, investor relations and administration of this
NASDAQ listed, industry leading internet based investment information and
technology provider to the financial services industry. Prior to this, from
August 1997 until November 1997, as Chief financial Officer, and from December
1997 until April 1999, as President & Chief Executive Officer, Mr. McGovern was
employed by Northsound Music Group, Inc., a producer and marketer of C.D. and
cassette audio products


                                       28
<PAGE>

to retailers, where he was responsible for the executive management of the
company reporting to the Board of Directors. From December 1995 until August
1997 Mr. McGovern was the Managing Director and founding member of JJM Group,
L.L.C., an investment banking firm specializing in corporate financial advisory
services in capital formation, financing and crisis management to public and
private emerging growth companies. Prior to JJM Group, L.L.C., Mr. McGovern was
President and Chief Executive Officer of Axel Electronics Inc./Sigmapower, Inc.
subsidiaries of FPBSM Industries Inc., a defense electronics design and
manufacturing firm. Mr. McGovern has also worked for Merrill Lynch & Co. Inc.
and Coopers & Lybrand. Mr. McGovern has served on the Board of Directors of 15
companies and has extensive experience in turnaround and crisis management, as
well as experience in raising debt and equity financing. He received his MBA
from Columbia University and BS from Monmouth College.

     Joseph V. Joy, Jr. was named CEO of Boundless Corporation effective January
7, 2002. Previously he has served as President and Chief Operating Officer,
Boundless Manufacturing Services, Inc. since September 1999; and, since March 9,
2001, as President and Chief Operating Officer of the Company. Mr. Joy has over
twenty-five years experience in the computer and computer peripherals
industries. Mr. Joy's experience includes general management, supply-base
management, marketing, quality assurance and engineering. He has extensive
experience in contract manufacturing from both the OEM customer and EMS provider
perspective. From March 1998 to September 1999 Mr. Joy was Vice President
Business and Supplier Development, Systems and Services Division, Solectron
Corp. Prior to that he served as the Vice President of Supplier Management and
Logistics for NCR's Computer Systems Group from March 1995 to March 1998. He
received his MBA from Columbia University and BA from Georgetown University.

         Mr. Bowman is an executive consultant with extensive experience in
agribusiness, technology development and the financing of commercial
agri-processing projects in lesser developed countries. He presently serves as
an adviser to select agribusiness and environmental firms in North America,
consulting in the areas of production management, environmental compliance, and
options for environmentally based financing. He has traveled and worked
extensively outside of North America, primarily in South America, Africa and
Asia. From November 1998 to March 2000, Mr. Bowman served as the President,
Chief Executive Officer, and Corporate Director of the Global Livestock Group,
Inc. ("GLG"). The GLG is a world leader in the design, implementation and
marketing of carbon offset projects. Building on experience as a livestock
development program within its parent company, the GLG offers carbon offset
capabilities with pioneering feed and genetics technology. From May 1993 through
October 1998 Mr. Bowman served as the Director of the Livestock Division of
Appropriate Technology International ("ATI"), now known as EnterpriseWorks
Worldwide, Inc. ATI is a Washington D.C. based, non-governmental organization
which promotes commercially viable and environmentally sound applications of
innovative technology. The organization focuses on small scale producer
technology applications in lesser developed countries. Mr. Bowman graduated with
a Bachelor of Science degree in Animal Science/Agribusiness from the University
of Idaho in 1982.

     Since 1998, Gary Brooks has served as the Chairman and Chief Executive
Officer of Allomet Partners, Ltd. Mr. Brooks is a Co-founder of Allomet
Partners, Ltd., a professional services firm providing consulting and interim
management services to under-performing businesses. From 1985 until 1998, Mr.
Brooks served as the President of Allomet Partners, Ltd. Nationally recognized
as one of the most experienced practitioners in the field, he has recently
served as interim Chief Operating Officer at Ampco Metals, Inc., where he
facilitated the analysis and implemented the program that served as the basis
for the company's financial and strategic direction. He has over 35 years of
diversified executive management and consulting experience. He served as the
National Chair of the Institute of Management Consultants (IMC). He is a
founding member of the Turnaround Management Association (TMA) and served as a
member of its Board of Directors for 8 years. His career affiliations include
the General Electric Company, Eastman Kodak, and as a Division Executive
managing a subsidiary of Scott Paper Company. Prior to the formation of Allomet
Partners, he managed the New York office of an international firm specializing
in strategic planning and technological forecasting, and served for 8 years as
Managing Principal of a major New England based turnaround consulting firm. He
lectures often on the many aspects of turnaround management and crisis
intervention. Gary Brooks has an MS in Chemical Engineering and Operations
Research from the University of Rochester and a BS in Biochemical Engineering
and Industrial Management from MIT.


                                       29
<PAGE>

     J. Gerald Combs has served as Chairman of the Company since May 9, 1997 and
as Chief Executive Officer of the Company and its subsidiaries from such date
and until January 2002. From April 1997 to December 1999 Mr. Combs had been the
Chairman and CEO of Morgan Kent Group, which had been the largest shareholder of
the Company until approximately December 2000 or January 2001. 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 Gardner has served as Vice President of Finance and Chief Financial
Officer of the Company since October 31, 1997. Mr. Gardner has been employed by
Boundless Technologies, Inc. since April of 1990. Prior to 1997, Mr. Gardner
served as the Controller and Vice President of Quality Assurance for Boundless
Technologies. Before joining Boundless, Joe served in various executive
financial positions with NCR Corporation including Business Planning for the
Financial Systems Division and Cash Management/Foreign Exchange Exposure
Management. Joe is also a Certified Public Accountant as well as a Certified
Management Accountant and received his MBA from Bowling Green State University.

     Anthony Giovaniello has served as Executive Vice President, Business
Development, for Boundless Manufacturing Services, Inc. since August 1999; and,
since May 2001 as Vice President, Business Development, for the Company. Prior
to this, from April 1998 until August 1999, Mr. Giovaniello served as the
Director, Business Development, for Solectron Corporation. From February 1998
through April 1998 he was an independent consultant for the NCR Corporation and
Solectron Corporation. From February 1986 until February 1998, Mr. Giovaniello
held numerous executive and sales management positions at Boundless
Technologies, Inc. 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.

     Professor Safwan M. Masri joined the Management Science and Operations
Management Faculty at Columbia Business School in July 1988, and was appointed
Vice Dean of Columbia Business School in January 1993. He has served as a
Professor and Vice Dean of Columbia Business School since that time. Professor
Masri earned his Bachelor of Science degree in Industrial Engineering from
Purdue University in 1982; his Master of Science in Industrial Engineering also
from Purdue in 1984; and his Ph.D. in Industrial Engineering and Engineering
Management from Stanford University in 1988. Professor Masri was honored with
the Singhvi Professor of the Year for Scholarship in the Classroom Award in
1990. He has recently been awarded the Robert W. Lear Service Award in 1998 and
the Dean's Award for Teaching Excellence in a Core Course in 2000. Professor
Masri was a Visiting Professor at INSEAD in 1990 and in 1991. In addition, he
has held teaching positions at Stanford University and Santa Clara University.
Professor Masri is active in consulting and executive education in the U.S.,
Latin America, Europe, and the Middle East. His consulting and executive
training clients have included Merrill Lynch, PaineWebber, Bristol-Myers Squibb,
Salomon Brothers, Deutsche Bank, Thomson Publishing, Bankers Trust, Citibank,
Ford Motor Company, NCR, Pfizer, IBM, Bahrain Institute of Banking and Finance,
and the United Nations. Professor Masri advises, and is a director of, a number
of international corporations, start-up ventures, and charitable foundations
that include ARAMEX International, the Nuqul Group, Aregon, Sage Global
Ventures, the Arab Bankers Association of North America, the Colbert Foundation,
and Friends for Life. He is Advisor to Her Majesty Queen Rania Al-Abdullah of
Jordan on education and information technology, and serves on the e-Government
and on the Human Resources Development Committees of His Majesty King Abdullah's
Economic Consultative Council. He is also a member of the Advisory Board for the
United Nations Development Programme Project for the Assessment of Arab
Universities. His most recent research interests concern the impact of the
Internet on the structure and efficiency of supply chains, focussing on the
emergence of e-commerce business-to-business trade relationships and industry
and market exchanges. Professor Masri has conducted extensive research in
technological change management and reengineering in the financial services
industry. His other research activities have included the study of manufacturing
flexibility and its impact on firm performance.

     Oscar L. Smith is the sole director and shareholder of Unique Co-Operative
Solutions, Inc. ("UCSI"). Founded in 1988 by Mr. Smith, President & CEO, UCSI is
a value-added distributor of technology solutions addressing the needs of the
enterprise server-based computing environment. Mr. Smith has over 43 years of
various educational and work experiences


                                       30
<PAGE>

in the electronics industry, beginning in 1959, when Mr. Smith managed an
engineering and consulting group that worked on government contracts for the
Atlas Missile and Gemini Space programs. Following his experiences with working
on government military contracts, in the early 1970's, Mr. Smith founded two
companies, Datamation and Circuit Analyzer Test System, that provided programs
and electronic systems to the aircraft and aerospace industries. These products
were sold to such companies as General Dynamics, Lockheed, Grumman, Boeing, and
McDonnell-Douglas as well as others in the electronic industry. In 1976, Mr.
Smith sold his interest in these companies and joined the Savin Corporation, a
leader in word processing equipment as the director for their Kansas City
operation. When the Savin division was sold, Mr. Smith became a partner for a
Kansas City company that specialized in selling office automation systems. In
1987, he sold his partnership and started UCSI.

     J. Frank Stephens has been a member of the Board since July 2001. Mr.
Stephens has over 28 years domestic and international experience in the
consumer, food service, and industrial ingredients channels. Since April 1997
Mr. Stephens has held the office of President, Capital Sigma Investments
("CSI"), a privately funded equity group focused in the health and soyfoods
category. Since April 1998, concurrent with CSI's acquisition of Quong Hop &
Co., a regional soy foods company, Mr. Stephens has served as the Chief
Executive Officer of Quong Hop & Co. Prior to this, and from August 1996 until
March 1997, Mr. Stephens served as the Director of Strategic Planning for Global
Consumer Products, Inc., a company specializing in new product development and
branding for consumer-oriented companies.

     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:

     John Ryan ("Jack") is a supply chain and operations executive with over 25
years experience in Supply Base Management, Manufacturing Operations, Quality
Assurance and Product Reliability within the Computer, Computer Peripheral,
Microelectronics, and Communications industries. He is currently the Vice
President for Supply Chain Innovation and Services for Boundless Manufacturing
Services, Inc., and General Manager for the BMS Hauppauge Operation.

     Previously, Jack has held a variety of senior management positions in
Supply Chain Management, Outsourcing, Manufacturing Operations and Quality
Assurance for companies including Solectron, NCR and AT&T. Jack has worked at
the SUNY Stony Brook Harriman School of Management and Policy as a lecturer on
topics including High Velocity Flexible Manufacturing, Supply Chain Management
and Strategic Planning for Manufacturing Operations.

     Prior to February 28, 2002, non-employee members of the Company's Board of
Directors received $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 received $6,500 annually for services provided as a member of
either the Audit or Compensation Committees. Due to the significant increase in
time devoted to the Company Messrs. Matheson and Wood also were entitled to
payments of approximately $4,500 per month during the first six months of 2001.

     Due to cash constraints, the Company reached agreement to defer payments
due to the non-employee members of the Board of Directors for services rendered
to the company in 2001. On February 21, 2002, the Company issued to each of
Messrs. Matheson and Wood a promissory note in the principal amount of
$38,666.76, bearing interest thereon at the rate of 7% per annum. The Company
issued to Mr. Murphy a promissory note in the principal amount of $18,666.72,
also bearing interest thereon at a rate of 7% per annum. The promissory notes
are payable in equal installments over 52 weeks beginning March 15, 2002.


                                       31
<PAGE>

     On February 21, 2002 the Company also negotiated a settlement of its
obligations to Mr. Stephens, for his services as a Director to the Company
during 2001, with the delivery to him of its convertible promissory note in the
principal amount of $18,666.72. The promissory note carries interest at a rate
of 8% per annum, and matures August 21, 2003. The note may be converted into
shares of the Company's common stock at any time from the date of the note at a
conversion rate of $1.05 per share of common stock. The Company is obligated to
register the shares available upon conversion if, at any time, the Company
determines to register any of its securities under the Securities Act of 1933
for sale to the public.

     On February 21, 2002, the Company granted to each of its non-employee
members of the Company's Board of Directors non-qualified stock options to
purchase shares of the Company's common stock. The options vest immediately,
have a strike price per share of common stock of $1.05, and expire five years
following the date of grant. The number of shares of common stock which may be
purchased under the option granted are as follows: Mr. Matheson, 44,000; Mr.
Wood, 34,000; Mr. Murphy, 27,000; and Mr. Stephens, 28,000.

     On February 28, 2002, the Company granted to certain of its non-employee
members of the Company's Board of Directors, each of Messrs. Bowman, Brooks,
Masri, McGovern and Smith, two non-qualified stock options to purchase a total
of 40,000 shares of the Company's Common Stock. The first option, to purchase
25,000 shares of Common Stock, vests immediately, has a strike price per share
of common stock of $1.03, and expires five years following the date of grant.
The second option, covering the purchase of up to 15,000 shares of Common Stock,
vests pro rata over a 24-month period, has a strike price of $1.03 per share of
Common Stock, and expires five years following the date of grant. In addition
the Company granted to Mr. Stephens, a non-employee member of the Company's
Board of Directors, an option to purchase 15,000 shares of the Company's Common
Stock. Of the 15,000 shares which may be purchased under the option, 5,000 vest
immediately, and 10,000 vest pro rata over an 16-month period. The option has a
strike price per share of Common Stock of $1.03 and expire five years from the
date of grant.

     The stock options granted on February 28, 2002, contain such forfeiture
provisions as are normally contained in options granted by the Company to its
employees, except that such options will immediately vest in the event there is
a change of control of the Company or if such Director ceases to serve as a
Director of the Corporation for any reason, except due to his own initiative.

Section 16(a) Beneficial Ownership Reporting Compliance

     A review of the Forms 3, 4 and 5 filed or due with the Commission in 2001
indicates that each of J. Gerald Combs, Joseph Gardner, Anthony Giovaniello,
Daniel Matheson, Jeffrey Moore and Gary Wood was late in filing either a Form 4
or a Form 5 with respect to one transaction, that Joseph Joy was late in filing
Form 4 reports with respect to two transactions and that Jack Murphy was late in
filing a Form 3 following his appointment to the Company's Board of Directors.
The late reports by Messrs. Combs, Gardner, Matheson, Moore and Wood related to
stock option grants, made to each of them effective as of the end of 2000, about
which those persons were not notified by the Company until after the respective
Section 16(b) reports were due.


                                       32
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

     The table below discloses all cash compensation awarded to, earned by or
paid to our Chief Executive Officer and our four most highly compensated
executive officers who earned more than $100,000 for services rendered in all
capacities to us during the fiscal year ended December 31, 2001 (collectively,
the "named executive officers"). In addition, it provides information with
respect to the compensation paid by us to the named executive officers during
2000 and 1999.

<TABLE>
<CAPTION>
                                                        Annual Compensation            Long-Term
                                                --------------------------------      Compensation
Name and Principal                                                   Other Annual     --------------      All Other
Position                           Year       Salary       Bonus     Compensation     Options(#) (2)    Compensation
--------                           ----       ------       -----     ------------     --------------    ------------

<S>                            <C>          <C>         <C>               <C>              <C>                <C>
J. Gerald Combs(1)             12/31/01     $316,250          --               --               --            --
Former CEO and                 12/31/00     $325,000    $150,000               --          125,000
Chairman                       12/31/99     $325,000    $ 50,000               --           50,000            --

Joseph V. Joy(3)(4)            12/31/01     $154,431          --               --            2,000            --
President, and current Chief   12/31/00     $158,702          --               --               --            --
Executive Officer              12/31/99     $ 61,039    $ 10,000

Anthony Giovaniello(4)         12/31/01     $147,041          --               --            2,000            --
Executive VP Boundless         12/31/00     $151,075    $ 29,167
Manufacturing                  12/31/99     $ 57,731

Joseph Gardner                 12/31/01     $162,846          --               --            2,000            --
Vice President-Finance         12/31/00     $155,196    $ 62,500               --           40,000            --
Chief Financial Officer        12/31/99     $140,193    $ 40,000               --           20,000            --

Jeffrey K. Moore(1)            12/31/01     $145,971          --          $11,400               --            --
Vice President-Corporate       12/31/00     $145,198    $ 70,000          $ 9,500          105,000
Development                    12/31/99     $112,500    $ 25,000               --           50,000
</TABLE>

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

     (2)  Options granted in February 2001 to the named executive officers have
          a strike price of $2.60 per share of Common Stock. Options granted in
          July 2000 to Mr. Combs for the purchase of 65,000 shares of Common
          Stock have a exercise price of $4.50 per share of Common Stock. All
          other grants to the named executive officers in 2000 have a strike
          price of $1.50 per share of Common Stock. All options granted in 1999
          to the named executive officers have a strike price of $5.00 per share
          of Common Stock.


                                       33
<PAGE>

     (3)  Promoted to Chief Executive Officer and President January 2002.

     (4)  In accordance with their employment agreements discussed below, each
          of Messrs. Joy and Giovaniello was granted an option in 1999 to
          purchase for $2,000 shares of Boundless Manufacturing common stock
          representing 12.5% of the outstanding shares of Boundless
          Manufacturing. Such options were exercised. See "Employment Agreements
          and Change-in-Control Arrangements" for additional information
          concerning the option of either Mr. Joy or Giovaniello to convert
          shares of Boundless Manufacturing into Common Stock of the Company.

Employment Agreements and Change-in-Control Arrangements

     The Company had entered into employment agreements with Mr. Combs, then the
Company's Chairman of the Board and Chief Executive Officer, and Mr. Jeffrey K.
Moore, then the Company's Vice President, Corporate Development on March 1,
2000. The employment agreements were originally scheduled to expire February 27,
2003. On January 17, 2002, the Company filed a report on Form 8-K with the
Securities and Exchange Commission reporting that it had reached agreement with
each of Messrs. Combs and Moore to the termination of their respective
employment agreements with the Company. The Company had reached agreement on the
substantive details of the agreements during December 2001 and finalized the
details of the separation agreements involving Mr. Combs and Mr. Moore on
January 17, 2002; but the documents were made effective as of January 1, 2002.

     Pursuant to the separation arrangements described below, the Board of
Directors of the Company accepted the resignations, effective as of January 1,
2002, of J. Gerald Combs, its Chairman and Chief Executive Officer, and Jeffrey
K. Moore, its Vice President of Corporate Development, from all of their
positions with the Company and its subsidiaries. However, Mr. Combs and Mr.
Moore were to remain as members of the Company's Board of Directors (with Mr.
Combs also remaining as Chairman of the Board) until the February 28, 2002,
meeting of the Company's stockholders, at which Mr. Combs, but not Mr. Moore,
was to stand for re-election to the Board.

     The Company entered into a Separation Agreement and General Release (the
"Separation Agreement") with each of Mr. Combs and Mr. Moore and issued a 6%
Convertible Promissory Note (the "Note") to each of them, with a principal
amount of $475,000 for Mr. Combs and $382,600 for Mr. Moore, representing the
separation payments. The principal amount of the notes include a bonus
previously awarded by the Company for the year 2000 ($75,000 for Mr. Combs and
$25,000 for Mr. Moore), which had not been paid by the Company. Simultaneously,
the Company entered into a Consulting Agreement with Mr. Combs and an Employment
and Consulting Agreement with Mr. Moore (together, the "Consulting Agreements").
Mr. Combs is to serve as a consultant to the Company until March 31, 2003, and
Mr. Moore is to remain as an employee of the Company at a reduced salary and in
a non-officer capacity until March 31, 2002 and thereafter serve as a consultant
to the Company until February 27, 2003. Under the Consulting Agreements the
Company agreed to pay a total of $241,056 to Mr. Combs and $137,500 to Mr.
Moore. The Company agreed that, to the extent not already vested, all stock
options held by Mr. Combs (480,000) and Mr. Moore (205,000) would be fully
vested immediately and such options would be exercisable for five years from
January 1, 2002. The exercise prices of such stock options were not changed. The
Company (including its subsidiaries) granted releases to Mr. Combs and Mr.
Moore, each of whom granted reciprocal releases to the Company (and its
subsidiaries).

     Each Note is payable on February 27, 2003 and entitles the holder to
convert it at the price of $1.25 per share into restricted shares of the
Company's common stock at any time prior to such maturity date. However, if the
Notes are not converted and the Company has not raised equity financing of at
least $2,500,000 prior to such maturity date, the Company has the option to
extend the Notes for two years and to pay the Notes in 24 monthly installments.
The Company's obligations to make payments under the Notes are subordinated to
its current or future obligations to repay all other indebtedness for borrowed
money. The shares into which the Notes may be converted are accompanied by
"piggyback" registration rights.


                                       34
<PAGE>

     Under the Consulting Agreements, if Mr. Combs or Mr. Moore introduces the
Company to a party with which the Company completes a financing, merger or
acquisition transaction between June 1, 2002 and December 31, 2003, he will be
entitled to certain commissions of either 2% or 4% of the transaction or
financing amount. In addition to advising the Company on financings, mergers and
acquisitions and business development, the duties of Mr. Combs and Mr. Moore
under these agreements include cooperation in the transfer of his duties to his
successor at the Company and providing testimony in any future proceeding
involving the Company.

     Under the Separation Agreements, each of Mr. Combs and Mr. Moore agreed to
transfer to the Company his 2,000,000 shares of the outstanding common stock of
Boundless Manufacturing Services, Inc., resulting in the Company's holding 75%
of the 20,000,000 outstanding shares of Boundless Manufacturing. In addition,
Mr. Combs and Mr. Moore each agreed to the termination of his Employment
Agreement with the Company, surrendering his rights to early termination
payments, which would have exceeded the amount each of them is receiving under
the Notes and Consulting Agreements, and agreed to certain covenants including,
among others, those relating to confidentiality, non-competition and
notification to the Company of business opportunities.

     The Company and Mr. Kenneth East, Chief Technology Officer of Merinta, had
entered into an employment agreement. Mr. East's employment agreement was
entered into October 11, 2000 and was originally scheduled to expire October 10,
2002. The agreement called for an annual salary of $180,000, subject to an
annual review by the Company's President and CEO; as well as a performance bonus
ranging from 0%-66% of the employee's base salary. In connection with the
purchase of preferred stock in Merinta by National Semiconductor, the agreement
was assigned by the Company to Merinta on November 15, 2000.

     The Company and Boundless Manufacturing Services, Inc. have entered into
employment agreements with Messrs. Joseph Joy and Anthony Giovaniello,
respectively then 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. Pursuant to their employment agreements, Mr. Joy and Mr.
Giovaniello will have the option, upon 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.

     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 2001, were also members

                                       35
<PAGE>

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. Moore was also member of the Board and an officer of Morgan
Kent Group during 2000 which had certain relationships, and entered into certain
transactions, with the Company during 2000 as described below under "Item 13-
Certain Relationships and Related Transactions."

1995/ 1997/ 2000 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. In
December 2000 the Board created the 2000 Incentive Plan which covers up to
1,000,000 shares of Common Stock. The number of shares granted on a calendar
year basis under the 2000 Incentive Plan is limited to 5% of the total number of
shares of Common Stock outstanding, or 10% of the outstanding Common Stock in
any five-year period.

                        Option Grants in Last Fiscal Year

     The following table sets forth information, as of December 31, 2001,
regarding the outstanding options to purchase the Company's Common Stock granted
in 2001 under either the Company's 1995, 1997, or 2000 Incentive Plans to the
named executive officers:

<TABLE>
<CAPTION>
                             Number of      Percent of Total                                Potential Realizable
                             Securities       Options/SARs                                    Value at Assumed
                             Underlying      Granted under     Exercise or                  Annual Rates of Stock
                            Options/SARs        Incentive      Base Price    Expiration    Price Appreciation for
          Name               Granted(#)          Plans            ($/Sh)        Date             Option Term
          ----              -----------          ------         ---------    ----------          -----------
                                                                                                5%($)       10%($)
                                                                                               ------      -------
<S>                            <C>                <C>            <C>         <C>                <C>          <C>
Joseph V. Joy, Jr. (1)         2,000              0.8%           $ 2.60      2/23/06            1,437        3,175
Anthony Giovaniello(1)         2,000              0.8%           $ 2.60      2/23/06            1,437        3,175
Joseph Gardner(1)              2,000              0.8%           $ 2.60      2/23/06            1,437        3,175
</TABLE>

----------

     (1)  Options were granted 2/23/01 and vest over a two-year period at a rate
          of 25% every six months.


                                       36
<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, 2001.

<TABLE>
<CAPTION>
                                                                                  Value of Unexercised
                                                  Number of Unexercised Options  In-the-Money Options at
                                                     at December 31, 2001 (#)    December 31, 2001 ($)(1)
                                                     -------------------------   -----------------------
                          Shares
                       Acquired on      Value
         Name          Exercise(#)    Realized    Exercisable    Unexercisable   Exercisable   Unexercisable
         ----          -----------    --------    -----------    -------------   -----------   -------------
<S>                          <C>        <C>         <C>              <C>             <C>           <C>
J. Gerald Combs              0          $0          435,000          45,000          $-            $-

Joseph V. Joy, Jr            0           0              500           1,500           -             --

Anthony Giovaniello          0           0              500           1,500           -             --

Joseph Gardner               0           0           75,082          16,918           -             --

Jeffrey K. Moore             0           0          160,000          45,000           -             --
</TABLE>


     (1)  The last sale price of the Company's Common Stock on December 31,
          2001, as reported by The American Stock Exchange, was $ 1.01.

                                       37
<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 11, 2002, 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 Goldplate
Holdings, LTD. is 241 Fifth Avenue, Suite 302, New York, NY. The address of
Unique Co-Operative Solutions Inc./ Oscar L. Smith is 9185 Bond, Overland Park,
KS 66214. The address of Neoware Systems, Inc. is 400 Feheley Dr., King of
Prussia, PA 19406.

                                        Number of Shares        Percentage of
Name of Beneficial Owner               Beneficially Owned     Outstanding Shares
------------------------               ------------------     ------------------

Unique Co-Operative Solutions,
Inc./ Oscar L. Smith                     1,003,639(1)(3)             17.4%
J. Gerald Combs                          905,923(2)(3)(6)            13.8%
Neoware Systems, Inc.                       383,335(4)                6.7%
Goldplate Holdings, LTD.                    307,502(5)                5.1%
Joseph Gardner                              99,158(3)                 1.7%
Joseph V. Joy, Jr.                          66,393(3)                 1.2%
Richard Bowman                              61,250(3)                 1.1%
Frank Stephens                             82,374(3)(7)               1.4%
Anthony Giovaniello                         39,022(3)                  *
Gary Brooks                                 26,250(3)                  *
Safwan Masri                                26,250(3)                  *
John McGovern                               26,250(3)                  *
All current directors and executive
officers as a group                        2,336,509(3)              34.0%
 (ten individuals)
----------
     *    Less than 1%.

     (1)  Includes 41,667 shares issuable upon the exercise of a warrant. The
          warrant was granted June 4, 2001, in connection with a sale of our
          common stock. The common shares underlying the warrant vest
          immediately, have an exercise price per share of common stock of
          $1.30, and expire five years following the date of grant. Prior to our
          sale of the Windows-based terminal product line in June 2001, Unique
          Co-operative Solutions, Inc. had been a reseller of our products.
          Sales of products to Unique Co-operative Solutions, Inc. during the
          past three years were not material to the results of our operations.

     (2)  Resigned as the Chief Executive Officer of the Company effective
          January 2002.

     (3)  Includes or consists of shares of Common Stock issuable upon exercise
          of options as follows: Mr. Smith: 26,250; Mr. Combs: 480,000; Mr.
          Gardner: 79,750; Mr. Joy: 1,000; Mr. Bowman: 26,250, Mr. Stephens:
          34,111; Mr. Giovaniello: 1,000; Mr. Brooks: 26,250; Prof. Masri:
          26,250; and Mr. McGovern: 26,250. Includes or consists of shares of
          Common Stock issuable upon exercise of warrants as follows: Mr. Combs:
          5,834; Mr. Gardner: 1,945; Mr. Joy: 8,042; Mr. Ryan: 19,195; Mr.
          Stephens: 6,097; and Mr. Giovaniello: 2,917.

     (4)  Includes 50,001 shares issuable upon the exercise of a warrant. The
          warrant was issued June 29, 2001, in connection with a sale of our
          common stock. The common shares underlying the warrant, have an
          exercise


                                       38
<PAGE>

          price per share of common stock of $1.10, and the warrant expires five
          years following the date of grant. In June 2001 Neoware Systems Inc.
          purchased our Windows-based terminal product line for $1,600,000. As
          part of the transaction, we secured an agreement to manufacture
          certain products for Neoware Systems, Inc.

     (5)  Includes 307,502 shares underlying the warrants held by Goldplate
          Holdings, LTD. to purchase shares of Common Stock at an exercise price
          of $7.50 per share.

     (6)  Includes 380,000 shares of Common Stock issuable upon the conversion
          of a convertible promissory note. The principal amount of the note is
          $475,000 and may be converted into shares of Common Stock of the
          Company, at the option of Mr. Combs, at a conversion price of $1.25
          per share of Common Stock. See Item 11- "Employment Agreements and
          Change-in-Control Arrangements" for additional information concerning
          the issuance of the promissory note to Mr. Combs.

     (7)  Includes 17,778 shares of Common Stock issuable upon the conversion of
          a convertible promissory note. The principal amount of the note is
          $18,667 and may be converted into shares of Common Stock of the
          Company, at the option of Mr. Stephens, at a conversion price of $1.05
          per share of Common Stock. See Item 10- "Directors and Executive
          Officers of the Registrant" for additional information concerning the
          issuance of the promissory note to Mr. Stephens.


                                       39
<PAGE>

ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     During April 1999 the Company entered into a one-year consulting agreement
with CrossRoads Capital Corporation ("Cross Roads") to receive from Cross Roads
financial advisory and investment banking services. Cross Roads is headed by Mr.
Fred Schulman, President, who also is President of the Morgan Kent Group. Fees
associated with this contract for the services provided by CrossRoads amounted
to $10,000 per month. During March 2000 the consulting agreement was extended
for an additional one-year period. In June 2000 the Company retained Cross Roads
for the purpose of providing investor relations services. The agreement, which
terminated December 31, 2000, called for fees of $150,000 plus expenses. The
Company paid to Cross Roads $120,000 in 2000 under the financial advisory and
investment banking services agreement and $133,500 in 2000 under the investor
relations services agreement.

     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 such loan was
entered into July 18, 1997 and was originally due and payable July 1999 but was
extended to July 2001. As of March 25, 2002, the loan and accrued interest
thereon had not been paid. The Company has contacted Morgan Kent to secure
payment of the loan, but has been unsuccessful to date.

     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
outstanding) to the Company. Pursuant to their employment agreements, Mr. Joy
and Mr. Giovaniello will have the option, upon 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.

     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 common stock.
Boundless Manufacturing and Merinta received third party fairness opinions
before granting options to Messrs. Combs and Moore.

     On February 23, 2001, the Company sold 110,000 shares of its Common Stock
to three individuals for total proceeds of $225,500. In connection with the
sale, the Company issued warrants to purchase 27,500 shares of its Common Stock
at an exercise price of $2.40 per share of Common Stock. The warrants expire
four years from the date of grant. Mr. Joseph V. Joy, Jr. and Mr. Jack Ryan,
then the President and Vice President, Supply Chain Services, of Boundless
Manufacturing, respectively, participated in this offering. Mr. Frank Stephens,
currently a member of the Company's Board of Directors, but who was not
associated with the Company at the time of the sale, also participated in the
offering. Proceeds from this sale were used for general working capital
purposes.

     On March 6, 2001, Unique Co-Operative Solutions, Inc., an entity entirely
owned by Oscar L. Smith, who became a member of our Board of Directors in
January 2002, filed a Schedule 13D with the Securities and Exchange Commission
in connection with its acquisition, over a period of time ending March 6, 2001,
of 233,200 shares of Common Stock of the Company. This company has since
acquired additional shares of Boundless. During the past years Unique
Co-Operative Solutions, Inc. has acted as a reseller of the Company's thin
client products. For the year ended December 31, 2000, the Company recorded
sales of approximately $128,000 to Unique Co-Operative Solutions, Inc. on terms
substantially identical to those of other sellers of the Company's products.

     From May 29, 2001, through June 29, 2001, the Company sold 947,877 shares
of its Common Stock in a private placement offering, raising gross proceeds of
$963,500. In connection with this sale, the Company issued warrants to purchase
142,190 shares of its Common Stock at exercise prices ranging from $1.10 to
$1.36 per share of Common Stock. The warrants


                                       40
<PAGE>

expire five years following the date of grant. Fourteen individuals or legal
entities participated in the private placement, including four executive
officers of the Company and a then member of the Company's Board of Directors
(Messrs. Combs, Joy, Giovaniello, Gardner, and Wood).

     The shares of Common Stock sold in the private placement, and the shares of
Common Stock underlying the warrants, are required by the Company to be
registered for sale in accordance with the Securities Act of 1933. The Company
is currently preparing an amended registration statement on Form S-3 and
anticipates filing such registration statement in April 2002.

                                     PART IV

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

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

            Index to Financial Statements                                  F-1

     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, 2001 or is not applicable or
     required.

(b)  Reports on Form 8-K

     The Company did not file any reports on Form 8-K during the fourth quarter
     of 2001


                                       41
<PAGE>

                                  EXHIBIT INDEX

Exhibit No.*   Description of Exhibit

3.1[2]         Certificate of Incorporation of Registrant and Certificates of
               Amendment thereto.

3.2[1]         By-Laws of Registrant.

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

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

10(c)[6]       Registrant's 2000 Incentive Plan.

10(d)[4]       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(e)[4]       Restated Business Installment Promissory Note, dated June 24,
               1999, from Boundless Technologies, Inc. to Independence Community
               Bank (Originally filed as Exhibit 10(b)).

10(f)[4]       Restated Mortgage and Security Agreement, dated June 24, 1999,
               between Boundless Technologies, Inc. and Independence Community
               Bank (Originally filed as Exhibit 10(c)).

10(g)[5]       Promissory Note, dated September 30, 1999, in the amount of
               $500,000 from General Automation, Inc. to Boundless Technologies,
               Inc. (Originally filed as Exhibit 10(p)).

10(h)[5]       Secured Convertible Promissory Note from General Automation, Inc.
               to Boundless Technologies, Inc (Originally filed as Exhibit
               10(o)).

10(i)[5]       Warrant issued by General Automation, Inc. to Boundless
               Technologies, Inc (Originally filed as Exhibit 10(q)).

10(j)[5]       Employment Agreement, dated July 1, 1999, among Registrant,
               Boundless Manufacturing Services, Inc. and Joseph Joy (Originally
               filed as Exhibit 10(f)).

10(k)[5]       Employment Agreement, dated July 1, 1999, among Registrant,
               Boundless Manufacturing Services, Inc. and Anthony Giovaniello
               (Originally filed as Exhibit 10(g)).


                                       42
<PAGE>

10(l)[6]       Employment Agreement, dated March 1, 2000, among Registrant,
               Boundless Technologies, Inc. and James Gerald Combs.

10(m)[6]       Employment Agreement, dated March 1, 2000, among Registrant,
               Boundless Technologies, Inc. and Jeffrey K. Moore.

10(n)[6]       Second Amended and Restated Credit Agreement and Guaranty (plus
               exhibits thereto) dated as of May 25, 2000 among Boundless
               Technologies, Inc., Boundless Manufacturing Services, Inc. and
               Merinta as co-borrowers, Boundless Acquisition Corp. and
               Boundless Corporation, as guarantors, and The Chase Manhattan
               Bank, Silicon Valley Bank and National Bank of Canada as the
               Banks and The Chase Manhattan Bank, as Administrative Agent for
               the Banks.

10(o)[6]       First Amendment, dated as of July 31, 2000, to Second Amended and
               Restated Credit Agreement and Guaranty with Chase.

10(p)[6]       Second Amendment, dated as of November 7, 2000, to Second Amended
               and Restated Credit Agreement and Guaranty with Chase.

10(q)[6]       Third Amendment, dated as of November 16, 2000, to Second Amended
               and Restated Credit Agreement and Guaranty with Chase.

10(r)[6]       Form of Warrant issued by Merinta Inc. to the Chase Manhattan
               Bank, Silicon Valley Bank and National Bank of Canada for the
               purchase of a total of 100,000 shares of Merinta common stock
               (40,000 shares on May 25, 2000, 25,000 shares on July 31, 2000
               and 35,000 shares on November 7, 2000).

10(s)[3]       Common Stock Purchase Warrant dated as of April 14, 1999 issued
               to Chase Manhattan Bank for the purchase of Registrant's common
               stock (Originally filed as Exhibit 10(b)).

10(t)[6]       Common Stock Purchase Warrant, dated as of May 25, 2000, issued
               to Chase Manhattan Bank for the purchase of Registrant's common
               stock.

10(u)[6]       Merinta Inc.'s Amended and Restated Certificate of Incorporation,
               effective November 6, 2000, including the terms of Merinta's
               Series A Convertible Preferred Stock issued to National
               Semiconductor Corporation.

10(v)[7]       Registrant's 2001 Incentive Plan. (Incorporated by reference to
               and filed as Appendix B to Definitive Proxy Statement, dated
               January 31, 2002).

10(w)[8]       Separation Agreement and General Release, effective as of January
               1, 2002, with Mr. J. Gerald Combs.

10(x)[8]       Consulting Agreement, effective as of January 1, 2002, with Mr.
               J. Gerald Combs.

10(y)[8]       Non-negotiable Convertible Note by and between the Registrant and
               Mr. J. Gerald Combs.


                                       43
<PAGE>

10(z)[8]       List of Stock Options held by Jeffrey K. Moore and list of
               additional consideration or benefits to be provided to him
               pursuant to the Separation Agreement and General Release, dated
               as of January 1, 2002, by and between him and the Registrant
               (including the Registrant's subsidiaries) (constituting Exhibits
               B and E to such Agreement).

10(aa)**       Seventh Amendment, dated as of March 27, 2002, to Second Amended
               and Restated Credit Agreement and Guaranty with Chase.

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

21[5]          List of Subsidiaries

23**           Consent of BDO Seidman, LLP.

----------

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

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

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

     [4]  Incorporated by reference to the Registrant's Quarterly Report on Form
          10-Q for the quarter ended June 30, 1999.

     [5]  Incorporated by reference to the Registrant's Annual Report on Form
          10-K for the year ended December 31, 1999.

     [6]  Incorporated by reference to the Registrant's Annual Report on Form
          10-K for the year ended December 31, 2000.

     [7]  Incorporated by reference to the Registrant's Definitive Proxy
          Statement on Form DEF 14A, filed January 31, 2002.

     [8]  Incorporated by reference to the Registrant's Report on Form 8-K filed
          January 23, 2002.

     *    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

                                       44

<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, 2002

                              BOUNDLESS CORPORATION


                                       By:  /s/
                                           -------------------------------------
                                           Joseph V. Joy, Jr.
                                           Chief Executive Officer and President

     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.



/s/                        Chief Executive Officer and          March 29, 2002
-------------------------   President, Director
Joseph V. Joy, Jr.

/s/                        Vice President - Finance, l          March 29, 2002
-------------------------  Chief Financia Officer
Joseph Gardner             (Principal Accounting Officer)

/s/                        Chairman of the Board of Directors   March 29, 2002
-------------------------
John J. McGovern

/s/                        Director                             March 29, 2002
-------------------------
Richard Bowman

/s/                        Director                             March 29, 2002
-------------------------
Gary Brooks

/s/                        Director                             March 29, 2002
-------------------------
J. Gerald Combs

/s/                        Vice President and Director          March 29, 2002
-------------------------
Anthony Giovaniello

/s/                        Director                             March 29, 2002
-------------------------
Safwan Masri

/s/                        Director                             March 29, 2002
-------------------------
Oscar Smith

/s/                        Director                             March 29, 2002
-------------------------
Frank Stephens

                                       45
<PAGE>


                     BOUNDLESS CORPORATION AND SUBSIDIARIES

                          INDEX TO FINANCIAL STATEMENTS

Report of Independent Certified Public Accountants                          F-2

Consolidated Balance Sheets as of December 31, 2001 and 2000                F-3

Consolidated Statements of Operations
  for the years ended December 31, 2001, 2000 and 1999                      F-4

Consolidated Statements of Comprehensive Income (Loss)
  for the years ended December 31, 2001, 2000 and 1999                      F-5

Consolidated Statements of Changes in Stockholders' Equity (Deficit)
  for the years ended December 31, 2001, 2000 and 1999                      F-6

Consolidated Statements of Cash Flows
  for the years ended December 31, 2001, 2000 and 1999                      F-7

Notes to Consolidated Financial Statements                                  F-9

Schedule I - Condensed Financial Information of Registrant                  S-1

Schedule II - Valuation and Qualifying Accounts                             S-4


                                      F-1


<PAGE>


                     BOUNDLESS CORPORATION AND SUBSIDIARIES

               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, 2001 and 2000 and the related
consolidated statements of operations, comprehensive income (loss), changes in
stockholders' equity (deficit) and cash flows for each of the three years in the
period ended December 31, 2001. 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 auditing standards generally accepted
in the United States of America. 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, 2001 and 2000 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, the schedules present fairly, in all material respects, the information
set forth therein.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered substantial losses from
operations in 2001 and 2000. In addition, as of December 31, 2001, the Company
has a stockholders' deficit of $4,143,000 and has a working capital deficit
totaling $16,473,000, resulting primarily from the reclassification of debt
under the Company's loan and mortgage agreements to current liabilities as a
result of loan covenant violations. These factors raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

                                                              BDO Seidman, LLP

Melville, New York
March 14, 2002


                                      F-2


<PAGE>


                     BOUNDLESS CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)


                                                                December 31,
                                                          ----------------------
                                                              2001         2000
                                                          --------     --------
Current assets:
  Cash and cash equivalents                               $     25     $    152
  Trade accounts receivable, net                            10,053        9,286
  Income tax refunds                                            13          303
  Inventories (Note 5)                                       8,073        9,925
  Deferred income taxes (Note 7)                                --        2,281
  Prepaid software license fees                                 37          357
  Prepaid expenses and other current assets                    543          209
  Net assets of discontinued operations (Note 17)               --          666
                                                          --------     --------
     Total current assets                                   18,744       23,179
Property and equipment, net (Note 6)                        10,993       10,824
Goodwill, net                                                3,187        5,009
Other assets                                                   291          592
                                                          --------     --------
                                                          $ 33,215     $ 39,604
                                                          ========     ========
LIABILITIES  AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Current portion of long-term debt (Note 8)              $ 15,362     $  2,273
  Accounts payable                                          15,355        9,616
  Accrued salaries                                           1,430        1,540
  Accrued  taxes payable                                        13          843
  Accrued warranty                                             645          825
  Accrued marketing programs                                   100          800
  Other accrued liabilities (Note 11)                        2,002        3,539
  Deferred revenue                                             310          308
                                                          --------     --------
     Total current liabilities                              35,217       19,744
                                                          --------     --------
Long-term liabilities:
  Long-term debt, less current maturities (Note 8)             833       13,442
  Other  (Note 11)                                           1,308          667
                                                          --------     --------
     Total long-term liabilities                             2,141       14,109
                                                          --------     --------

         Total liabilities                                  37,358       33,853
                                                          --------     --------
Commitments and contingencies (Notes 12 and 13)
Stockholders' equity  (deficit) (Note 9):
  Preferred stock                                               --           --
  Common stock                                                  57           46
  Additional paid-in capital                                35,280       34,102
  Accumulated deficit                                      (39,339)     (28,397)
  Accumulated other comprehensive loss                        (141)          --
                                                          --------     --------
     Total stockholders' equity (deficit)                   (4,143)       5,751
                                                          --------     --------
                                                          $ 33,215     $ 39,604
                                                          ========     ========


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

                                       F-3

<PAGE>


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

<TABLE>
<CAPTION>
                                                       December 31,   December 31,   December 31,
                                                       ------------   ------------   ------------
                                                           2001           2000          1999
                                                         --------       --------      --------
<S>                                                      <C>          <C>             <C>
Revenue:
  Product sales                                         $ 57,473      $ 62,642        $ 78,027
  Services                                                 2,108         1,902           2,483
                                                        --------      --------        --------
     Total revenue                                        59,581        64,544          80,510
                                                        --------      --------        --------
Cost of revenue:
  Product sales                                           51,608        47,326          55,126
  Services                                                 1,690         1,718           1,572
                                                        --------      --------        --------
     Total cost of revenue                                53,298        49,044          56,698
                                                        --------      --------        --------
       Gross margin                                        6,283        15,500          23,812
                                                        --------      --------        --------
Operating expenses:
  Sales and marketing                                      5,459         7,442          10,292
  General and administrative                               7,690         8,279           6,979
  Research and development                                 1,381         1,691           5,908
  Other charges (credits) (Notes 3, 4 and 11)             (2,437)          177          (3,711)
                                                        --------      --------        --------
     Total operating expenses                             12,093        17,589          19,468
                                                        --------      --------        --------
       Operating income (loss)                            (5,810)       (2,089)          4,344
  Interest expense, net                                    1,599         1,455           1,438
                                                        --------      --------        --------
Income (loss) before income taxes                         (7,409)       (3,544)          2,906
Income tax (credit) expense (Note 7)                       1,383          (289)           (333)
                                                        --------      --------        --------
Income  (loss) from continuing operations                 (8,792)       (3,255)          3,239
Loss from discontinued operations (Note 17)               (2,150)      (14,004)             --
                                                        --------      --------        --------
Net income (loss)                                       $(10,942)     $(17,259)       $  3,239
                                                        ========      ========        ========
Dividend on preferred stock of subsidiary                     --            --              50
                                                        --------      --------        --------
Net income (loss) applicable to common stockholders     $(10,942)     $(17,259)       $  3,189
                                                        ========      ========        ========
Weighted average common shares outstanding                 5,048         4,535           4,438
                                                        ========      ========        ========
Basic net income (loss) per common share:
  Continuing operations                                    (1.74)        (0.72)           0.72
  Discontinued operations                                  (0.43)        (3.09)             --
                                                        --------      --------        --------
Basic net income (loss) per common share                $  (2.17)     $  (3.81)       $   0.72
                                                        ========      ========        ========
Weighted average dilutive shares outstanding               5,048         4,535           4,490
                                                        ========      ========        ========
Diluted net income (loss) per common share              $  (2.17)     $  (3.81)       $   0.71
                                                        ========      ========        ========
</TABLE>


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

                                      F-4

<PAGE>


                     BOUNDLESS CORPORATION AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                        For the Years Ended December 31,
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                              December 31,   December 31,   December 31,
                                              ------------   ------------   ------------
                                                  2001            2000         1999
                                                --------       --------       ------
<S>                                             <C>            <C>            <C>
Net income (loss)                               $(10,942)      $(17,259)      $3,239
Other comprehensive  loss:
  Cumulative effect of adoption of FAS 133           (30)            --           --
  Cash flow hedges, net of taxes                    (111)            --           --
                                                --------       --------       ------
   Other comprehensive loss                         (141)            --           --
                                                --------       --------       ------
Total comprehensive income (loss)               $(11,083)      $(17,259)      $3,239
                                                ========       ========       ======
</TABLE>


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

                                      F-5

<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                                 (in thousands)


<TABLE>
<CAPTION>
                                                                                                       Accumulated
                                                     Common Stock          Additional                    other
                                                  ---------------------      Paid-in     Accumulated  comprehensive
                                                  Shares        Amount       Capital       Deficit       (loss)         Total
                                                  -------      --------      --------      --------      -------      --------
<S>                                                 <C>        <C>           <C>           <C>           <C>          <C>
Balance, January 1, 1999                            4,429      $     44      $ 30,940      $(14,327)     $    --      $ 16,657
Stock options exercised                                28             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                          4,457            45        32,508       (11,138)          --        21,415
Stock options exercised                               121             1         1,001                                    1,002
Options and warrants issued for
  services to non-employees                                                       197                                      197
Warrants exercised                                     52                         396                                      396
Net loss                                                                                    (17,259)                    (17,259)
                                                  -------      --------      --------      --------      -------      --------
Balance, December 31, 2000                          4,630            46        34,102       (28,397)          --         5,751
Common stock sold                                   1,058            11         1,178                                    1,189
Net loss                                                                                    (10,942)                   (10,942)
Other comprehensive loss                                                                         --         (141)         (141)
                                                  -------      --------      --------      --------      -------      --------
Balance, December 31, 2001                          5,688      $     57      $ 35,280      $(39,339)     $  (141)     $ (4,143)
                                                  =======      ========      ========      ========      =======      ========
</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
                               For the Years Ended
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                                 December 31,
                                                                                  ------------------------------------------
                                                                                      2001          2000           1999
                                                                                  ------------- -------------  -------------
Cash flows from operating activities:
<S>                                                                                <C>            <C>            <C>
  Net income  (loss)                                                               $(10,942)      $(17,259)      $  3,239
  Adjustments to reconcile net income (loss)to net cash provided by (used in)
       operating activities:
    Loss from discontinued operations                                                 2,150         14,004             --
    Depreciation and amortization                                                     3,670          2,968          2,111
    (Gain) loss on the disposition of assets                                         (1,461)          (223)            59
    Credit from sale of partnership                                                      --             --         (2,324)
    Change in deferred revenues                                                           2           (249)           441
    Provision for doubtful accounts                                                     450            221            380
    Provision for excess and obsolete inventory                                       1,055            844            340
    Provision for long-term asset impairment                                             --            824             --
    Options and warrants issued for services                                             --            197            504
    Deferred taxes                                                                    2,281             14           (827)
Changes in assets and liabilities:
  Trade accounts receivable                                                          (1,218)         2,872            516
  Income tax refunds                                                                    290            530          1,072
  Inventories                                                                           798          2,982         (1,526)
  Other assets                                                                          (20)        (1,178)          (539)
  Accounts payable and accrued expenses                                               2,783          5,478         (1,266)
  Net change in assets and liabilities of discontinued operations                       666           (666)            --
                                                                                   --------       --------       --------
Net cash:
  Provided by continuing operations                                                     504         11,359          2,180
  Used in discontinued operations                                                    (2,150)       (12,513)            --
                                                                                   --------       --------       --------

Net cash provided by (used in) operating activities                                  (1,646)        (1,154)         2,180
                                                                                   --------       --------       --------
Cash flows from investing activities:
  Capital expenditures                                                                 (401)        (1,136)        (1,023)
  Proceeds from sale of partnership                                                      --             --          1,500
  Proceeds from sale of assets                                                        1,600          1,538             --
                                                                                   --------       --------       --------
Net cash provided by investing activities                                             1,199            402            477
                                                                                   --------       --------       --------
Cash flows from financing activities:
  Payment of mandatorily redeemable preferred stock                                      --             --         (3,555)
  Proceeds from exercise of warrants and employee stock options                          --          1,398            164
  Net proceeds from issuance of debt                                                  1,733          4,400         10,412
  Proceeds from issuance of common stock                                              1,189             --             --
  Payments on loans payable and capital leases                                       (2,602)        (6,179)        (9,075)
  Payment of preferred stock dividend                                                    --             --            (50)
                                                                                   --------       --------       --------
Net cash provided by (used in) financing activities                                     320           (381)        (2,104)
                                                                                   --------       --------       --------
Net increase (decrease) in cash and cash equivalents                                   (127)        (1,133)           553
Cash and cash equivalents at beginning of year                                          152          1,285            732
                                                                                   --------       --------       --------
Cash and cash equivalents at end of year                                           $     25       $    152       $  1,285
                                                                                   ========       ========       ========
</TABLE>

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


                                      F-7
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
                               For the Years Ended
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                                 December 31,
                                                                                  ------------------------------------------
                                                                                      2001          2000           1999
                                                                                  ------------- -------------  -------------
<S>                                                                                <C>            <C>            <C>
Non-cash transactions:
  Options and warrants  issued for services                                        $     --       $    197       $    504
  Equipment acquisitions funded through capital leases                                1,348          1,635            681
Cash paid for:
  Interest                                                                            1,309          1,426          1,442
  Taxes                                                                                  21            329            501
</TABLE>




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


                                      F-8
<PAGE>

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

Boundless Manufacturing Services, Inc. ("Boundless Manufacturing"), which
commenced operations in 2000, is pursuing opportunities in the electronic
manufacturing services ("EMS") marketplace. As of December 31, 2001, the Company
owned approximately 55% of the shares of common stock of this subsidiary.
Boundless Manufacturing is utilizing the Company's state-of-the-art ISO 9002
certified manufacturing facility in Hauppauge and may 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
original equipment manufacturers ("OEM") customers. Boundless Manufacturing
provides a complete supply chain that is designed and built to each customer's
specifications. Boundless Manufacturing also has post-manufacturing support
capability in Chicago, Atlanta, Los Angeles and The Netherlands.

Merinta Inc. ("Merinta"), which commenced operations in 2000, created the
software and infrastructure for a more enjoyable Internet experience. Through
tightly integrated Remote Device Management and Services, professional services
and Information Appliance ("IA") Client Software solutions, Merinta offered OEM
and Vertical Channel customers a completely customizable user-experience, which
enabled their customers to differentiate themselves in the market and deliver
tailored applications and services to the customer. Merinta's client solution,
built upon the Linux operating system, in combination with server based Remote
Device Management and Services products, supported a wide range of IAs,
including Web Terminals and Tablets, Set-Top Boxes, Residential Gateways and
Wireless Handheld Devices. As of December 31, 2001, the Company owned
approximately 84% of the common stock of Merinta, and had the right to vote
approximately 70% of the voting securities of Merinta. On a fully-diluted basis,
assuming conversion of the preferred stock, warrants and options to purchase the
common stock of Merinta, the Company owns approximately 58% of the common stock
of Merinta. On May 11, 2001, management decided to discontinue Merinta.
Merinta's results are presented as discontinued operations in the accompanying
consolidated financial statements (See Note 17).

2.   Going Concern Considerations and Management's Plans

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. The Company has incurred
significant losses from operations, has a working capital deficit totaling
approximately $16 million, resulting primarily from the classification of debt
under the Company's loan and mortgage agreements to current liabilities as a
result of loan covenant violations and it requires new financing to meet its
current cash requirements. These factors raise substantial doubt about the
Company's ability to continue as a going concern, unless management's plans are
effected in a timely manner. Management believes that the following actions, in
addition to the continued profitable growth of the Company's operating
subsidiaries, will afford the Company the ability to fund its daily operations
and service its remaining debt obligations. No adjustments have been made to the
carrying value of assets or liabilities as a result of the uncertainty about
obtaining cash required to pay obligations as they become due.

o    Management plans to re-negotiate with current vendors and holders of the
     existing subordinated debt, totaling approximately $13 million, terms and
     conditions which the Company can better meet in the future. Management is
     in discussions with the vendors and debt holders attempting to secure more
     favorable terms.

o    Management is working with its secured lender on a restructuring of the
     terms of the debt they hold to allow for the raising of additional capital.
     While management is hopeful an arrangement can be achieved, it can give no
     assurance an agreement will be reached.


                                      F-9
<PAGE>

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

o    Management entered into negotiations to secure equity financing of $3-5
     million under terms and conditions to be agreed upon.

o    Management entered into negotiations to secure an asset-based revolving
     line of credit to replace the Chase Credit Line.

o    The Company is currently negotiating material contracts for the sale of its
     manufacturing services to customers which management believes will provide
     additional liquidity for operations. There can be no assurances these
     contracts will ultimately materialize.

     There are no assurances that management will be successful in negotiating
with its remaining creditors or raising sufficient capital to continue as a
going concern.

3.   Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, after
elimination of intercompany accounts and transactions. As of December 31, 2001
the Company owned 100%, 84%, and 55% of the outstanding common stock of
Boundless Technologies, Merinta and Boundless Manufacturing, respectively.
Certain reclassifications have been made to prior years' financial statements to
conform to the current year's presentation.

Cash and Cash Equivalents

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

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 the statements of operations.

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. When
impairments are identified, the related assets are written down to fair value
using discounted cash flows or other measures of fair value. No impairments
occurred in 2001.

On September 30, 1999, the Company sold the entirety of its interest in the
General Automation Inc. ("GAI") Partnership to General Automation ("GA") for a
combination of cash, restricted securities of GA, convertible notes, and
warrants. The value of debt and equity securities, reported as a long-term asset
was $824 in 1999. During the fourth quarter of 2000, the Company wrote off 100%
of the common stock and convertible debt which it had received in consideration
for the sale of its interest in the GAI Partnership to GA in 1999. The write-off
was recorded as a result of the deterioration in GA's economic position, its
reporting of significant continuing losses and its announcement during the first
quarter of 2001 that it had sold its hardware and services business and would
restructure the company.

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. During 2000, in
view of a declining market in the text terminals business, with which the
Company's goodwill is associated, management reassessed its useful life. It was
determined that the useful life of goodwill should be shortened to be more
reflective of the rate of decline in this segment of the business. Accordingly,
management changed the remaining useful life of 5 years to a remaining useful
life of 3 years, commencing in the fourth quarter of 2000. This change in
accounting estimate increased amortization expense in 2000 by approximately
$185. The Company did not record any impairment charges in 2001. Amortization of
goodwill amounted to $1,822 for the year ended December 31, 2001, $1,263 for the
year ended December 31, 2000 and $1,078 for the year ended December 31, 1999.
Accumulated amortization of goodwill as of December 31, 2001 and 2000 was $7,604
and $5,782. The Company's previous business combinations were accounted for
using the purchase method. Currently, the Company is assessing, but has not yet
determined how the adoption of SFAS 142 will impact its financial position and
results of operations. See New Accounting Standards.


                                      F-10
<PAGE>

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

Minority Interest

The net loss applicable to minority interest pertaining to common shareholders
of subsidiaries was immaterial.

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
or passage of title and assumption of risk. The Company monitors product
returns, generally which are for stock rotation with a coinciding replacement
order, and records provisions for estimated future returns and potential
warranty liability at the time revenue is recorded. The Company recorded an
allowance for doubtful accounts of $1,348 and $ 723 as of December 31, 2001 and
2000, respectively. Service revenue is recognized when services are performed
and billable. Revenue from maintenance and extended warranty agreements is
deferred and recognized ratably over the term of the agreement. Software revenue
is recognized upon delivery of the software to the customer and there is
reasonable assurance of collection of the receivable. The Company had two
customers representing 24% and 11% of revenues respectively in 2001, no single
customer representing more than 10% of revenue in 2000 with one customer
representing 15% of total revenues in 1999. As of December 31, 2001, the balance
due from one single customer amounted to 26% of net trade accounts receivable,
for which the Company has negotiated a pay down schedule to eliminate the past
due amount by May 2002.

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.

Shipping and Handling

The Company records as revenue all amounts billed to customers for shipping and
handling. All costs associated with shipping and handling are included in cost
of revenue.

Advertising

Advertising costs are expensed as incurred. The amount charged to advertising
expense was $920, $2,183 and $2,140 for the years ended December 31, 2001, 2000
and 1999.

Net Income (Loss) Per Common Share

Net income (loss) 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 (loss) per share computation to the
numerator and denominator of the diluted net income (loss) per share
computation. There were no dilutive instruments for 2001 and 2000. The
reconciliation for 1999 is as follows:


                                      F-11
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                 (In thousands, except share and 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 applicable to common shareholders             3,189            4,438            $0.72
Effect of dilutive securities:
Options and warrants                                    --               52
                                                  --------         --------
Diluted net income per share:
Income applicable to common shareholders
 plus assumed conversions                           $3,189            4,490            $0.71
                                                  ========         ========          =======
</TABLE>

Options to purchase 2,206,957 shares of common stock at a weighted average price
of $4.20 per share were not included in the computation of diluted net loss per
share in 2001 because the options' exercise price was either greater than the
average market price of the common shares or the effect of exercise would be
antidilutive.

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 7, 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. Deferred tax assets are reduced by an
estimated valuation allowance.

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 (Loss)

The adoption of FAS 133, "Accounting for Derivative Instruments and Hedging
Activities," at January 1, 2001, resulted in recording $30 in accumulated other
comprehensive loss for the cumulative effect of the accounting change. As of
December 31, 2001, the Company had interest rate swap contracts to pay fixed
rates of interest (ranging from 7.59% to 8.76%) and receive variable rates of
interest based on LIBOR on an aggregate of $5,528 notional amount of
indebtedness with maturity dates ranging from March 2002 through March 2003. The
aggregate fair market value of all interest rate swap contracts was ($141) on
December 31, 2001 and is included in accrued expenses and other current
liabilities on the Consolidated Balance Sheet.

New  Accounting Standards

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations"
and SFAS No. 142, "Goodwill and Other Intangible Assets" effective for fiscal
years beginning after December 15, 2001. The FASB also issued SFAS No. 143,
"Accounting for Obligations Associated with the Retirement of Long-Lived Assets"
in August 2001 and SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" in October 2001.

SFAS 141 requires the use of the purchase method of accounting and prohibits the
use of the pooling-of-interests method of accounting for business combinations
initiated after June 30, 2001. SFAS 141 also requires that the Company recognize
acquired intangible assets


                                      F-12
<PAGE>

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

apart from goodwill if the acquired intangible assets meet certain criteria.
SFAS 141 applies to all business combinations initiated after June 30, 2001 and
for purchase business combinations completed on or after July 1, 2001. It also
requires, upon adoption of SFAS 142, that the Company reclassify the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141.

SFAS 142 requires, among other things, that companies no longer amortize
goodwill, but instead, test goodwill for impairment at least annually. In
addition, SFAS 142 requires that the Company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized at that date, regardless of when those assets were
initially recognized. SFAS 142 requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption. The Company is
also required to reassess the useful lives of other intangible assets within the
first interim quarter after adoption of SFAS 142. The Company's previous
business combinations were accounted for using the purchase method. As of
December 31, 2001, the net carrying amount of goodwill is $3,187. Currently, the
Company is assessing, but has not yet determined how the adoption of SFAS 141
and SFAS 142 will impact its financial position and results of operations.

SFAS 143 establishes standards for the reporting of obligations associated with
the retirement of tangible long-lived assets and the associated asset retirement
costs. It also provides accounting guidance for legal obligations associated
with the retirement of tangible long-lived assets. SFAS 143 is effective for
fiscal years beginning after June 15, 2002 with early adoption permitted. The
Company expects that the provisions of SFAS 143 will not have a material effect
on its consolidated results of operations.

SFAS 144 establishes a single accounting model for the impairment or disposal of
long-lived assets and new standards for reporting discontinued operations. The
provisions of SFAS 144 are effective in fiscal years beginning after December
15, 2001 and in general, are to be applied prospectively.

4    GAI Partnership

On September 30, 1999, the Company sold the entirety of its interest in the GAI
Partnership to GA for a combination of cash, restricted securities of GA,
convertible notes, and warrants. 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. During the fourth quarter of 2000 the Company
reserved 100% of the common stock and convertible debt which it had received in
consideration for the sale of its interest in the GAI Partnership to GA in 1999.
The reserve was recorded as a result of the deterioration in GA's economic
position, its reporting of significant continuing losses and its announcement
during the first quarter of 2001 that it had sold its hardware and services
business and would restructure the company.

5.   Inventories

Inventories are stated at the lower of cost or market with costs determined on a
first-in first-out basis. On a quarterly basis the Company reviews quantities on
hand and on order and records a provision for excess and obsolete inventory
based on forecasted demand. For the year ended December 31, 2001 and 2000, the
Company recorded provisions of $1,055 and $844 for excess and obsolete
inventory.

The major components of inventories are as follows:

                                      F-13
<PAGE>

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

<TABLE>
<CAPTION>
                                                                  December 31,
                                                          --------------------------
                                                            2001               2000
                                                          -------            -------
<S>                                                       <C>                <C>
Raw materials and purchased components                    $ 6,329            $ 8,006
Finished goods                                                952              1,233
Service parts                                                 792                686
                                                          -------            -------
                                                          $ 8,073            $ 9,925
                                                          =======            =======

6.   Property and Equipment

Property and equipment consists of the following:

                                                                  December 31,
                                                          --------------------------
                                                            2001               2000
                                                          -------            -------
Land                                                      $ 2,502            $ 2,502
Buildings and improvements                                  6,503              6,544
Machinery and equipment                                     9,856              8,264
                                                          -------            -------
                                                           18,861             17,310
Less accumulated depreciation and amortization              7,868              6,486
                                                          -------            -------
                                                          $10,993            $10,824
                                                          =======            =======
</TABLE>

7.   Income Taxes

The provision for income taxes consisted of the following for the years ended
December 31:

                       2001               2000             1999
                     -------             -----             -----
Current:
  Federal            $  (898)            $(303)            $ 221
  State                   --                --               273
                     -------             -----             -----
                        (898)             (303)              494
                     -------             -----             -----
Deferred:
  Federal              2,281                14              (869)
  State                   --                --                42
                     -------             -----             -----
                       2,281                14              (827)
                     -------             -----             -----
                     $ 1,383             $(289)            $(333)
                     =======             =====             =====

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

                                      F-14
<PAGE>

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

<TABLE>
<CAPTION>
                                                             2001         2000          1999
                                                           --------     --------      --------
<S>                                                        <C>           <C>           <C>
Federal income tax at statutory rate                       $(2,519)      $(1,205)      $   988
Utilization of prior year net operating
  loss carryforwards                                          (195)           --            --
State income taxes, net of federal income tax benefit           --            --           180
Reversal of prior year overaccruals                           (898)           --          (410)
Adjustment of deferred taxes as a result of tax
  examinations                                                  --            --        (1,121)
Other, net                                                      38          (273)           30
Change in valuation allowance on deferred
  tax assets                                                 4,957         1,189            --
                                                           -------       -------       -------
     Income tax expense (benefit)                          $ 1,383       $  (289)      $  (333)
                                                           =======       =======       =======
</TABLE>

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

                                                             December 31,
                                                      ------------------------
                                                        2001            2000
                                                      -------         -------
Current deferred tax assets:
  Inventory                                           $ 1,666         $ 1,623
  Accounts receivable                                     538             603
  Warranties                                              363             434
  Other                                                 1,003             479
  Less valuation allowance                             (3,570)           (858)
                                                      -------         -------
     Total current deferred tax assets                $    --         $ 2,281
                                                      =======         =======
Noncurrent deferred tax assets - Goodwill
  and other                                           $ 1,713         $ 1,414
Noncurrent deferred tax liabilities - Property
  and equipment                                          (783)           (746)
Net operating loss carryforwards                        8,238           5,524
Less valuation allowance                               (9,168)         (6,192)
                                                      -------         -------
     Net noncurrent deferred tax liabilities          $    --         $    --
                                                      =======         =======

The Company, Boundless Manufacturing and Merinta have available Federal net
operating loss carryforwards of approximately $2 million, $12 million and $10
million, respectively, at December 31, 2001 which may be carried forward as an
offset to taxable income, if any, in future years through their expiration in
2020 to 2021. If certain substantial changes in the Company ownership should
occur, there would potentially be an annual limitation on the amount of the
carryforwards which can be utilized in a tax year.

The Company has provided a valuation allowance against the total amount of the
net deferred tax assets due to the uncertainty of future realization.

8.   Debt

Long-term debt at December 31, 2001 and 2000 consisted of the following:


                                      F-15
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                 (In thousands, except share and per share data)
<TABLE>
<CAPTION>
                                                                          2001             2000
                                                                        -------           -------
<S>                                                                     <C>               <C>
Note payable to Independence Community Bank, bearing interest
 at 7.75% payable monthly, balloon payment of $4,439 due on
  or before July 1, 2009, collateralized by land and building           $ 5,946           $ 6,118
Note payable to Boca Research,bearing interest  at 6% payable
  quarterly, principal due on or before  March 6, 2002
  collateralized by equipment                                                --               625
Term loan                                                                    --             1,267
Revolving loan                                                            8,507             6,773
Capital lease obligations                                                 1,742               932
                                                                        -------           -------
                                                                         16,195            15,715
Less current maturities on long-term debt                                15,362             2,273
                                                                        -------           -------
                                                                        $   833           $13,442
                                                                        =======           =======
</TABLE>

a) Notes payable were $8,507 and $6,773 at December 31, 2001 and 2000,
respectively, under a $12,000 revolving credit agreement with a bank syndicate
for loans and letters of credit. The revolving credit agreement expires April
14, 2003. There was a letter of credit outstanding totaling $18 at December 31,
2001. Borrowing under the Revolving Loan is based on a borrowing base formula of
up to 75% of eligible receivables, plus 50% of delineated eligible inventory,
plus 30% of non-delineated eligible inventory. On April 17, 2001, the revolving
line of credit was reduced from a maximum amount of $15,000 to $12,000. The
maximum amount of additional credit available under the revolving loan at
December 31, 2001 and December 31, 2000 was $1,570 and $1,848.

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 9.2%, 9.4% and 9.1%
for the years ended December 31, 2001, 2000 and 1999, respectively.

As of December 31, 2001, the Company was in violation of certain covenants of
the Chase Credit Line. As of March 25, 2002, the covenant violations had not
been waived by the participating banks. Additionally, during the first quarter
of 2002, certain collateral against which the Company had secured borrowings was
declared ineligible by Chase. The elimination of the collateral from the
borrowing base formula caused the Company to be in an over-advanced position
with respect to the Chase Credit Line. Under the terms of the Chase Credit Line,
the Company is allowed an over-advance amount of only $750 and for no more than
a 30-day period. On March 27, 2002. The Company signed an amendment to the
Chase Credit Line wherein the Company agreed to limit the amount of the
over-advance to $500 by April 5, 2002 and to $400 by April 12, 2002. As part of
the agreement the Company also agreed to a reduction in the overall amount to
the line from $12,000 to $6,500. As of March 27, 2002, the Company had $5,720
outstanding under the Chase Credit Line. The Company believes it will be
successful in limiting the amount of the over-advance to the prescribed amounts
in the timeframe allotted. However, there can be no assurance the Company will
be successful. Should the Company be unsuccessful, Chase may rely on remedies
defined in the Chase Credit Line, including calling the loan for immediate
repayment.

Due to cross-default provisions within the mortgage agreement, the Company is
also in default with respect to the note payable with Independence Community
Bank. Accordingly, as the lender has the right to demand immediate payment, the
note has been reclassified to current liabilities. The Company has met its
payment obligations under this note for the three months subsequent to December
31, 2001.

b) In October of 2001, the Company paid off the remainder of its outstanding
term loan with Chase Manhattan Bank.

With respect to the revolving loan:

At the option of the Company, the interest rate is prime plus 1.25% or LIBOR
plus 2.5%, the latter of which was the lower rate at 8.8% at December 31, 2000.
At December 31, 2001, the Company had in place interest rate swap agreements in
the amount of $5,528 at an effective average interest rate of 8.4%.

The Company 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 agreements without obtaining bank approval.

With the exception of the Company's manufacturing facility in Hauppauge, NY,
which is pledged as collateral against the note payable to Independence
Community Bank, substantially all other assets of the Company are pledged as
collateral against the revolving and term loans, including the common stock of
Merinta held by the Company.

Aggregate debt scheduled maturities at December 31, 2001 were as follows:


                                      F-16
<PAGE>

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


2002                         $ 1,105
2003                           9,164
2004                             368
2005                             314
2006                             213
2007-2009                      5,031
                             -------
                             $16,195
                             =======

9.   Equity

At December 31, 2001 and 2000, stockholders' equity (deficit) consisted of the
following:

<TABLE>
<CAPTION>
                                                                   December 31,
                                                           --------------------------
                                                             2001               2000
                                                           --------          --------
<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,5,688,037 and 4,630,160 shares issued
  at December 31, 2001 and 2000, respectively                    57                46
Additional paid-in capital                                   35,280            34,102
Accumulated deficit                                         (39,339)          (28,397)
Accumulated other comprehensive loss                           (141)               --
                                                           --------          --------
     Total stockholders' equity (deficit)                  $ (4,143)         $  5,751
                                                           ========          ========
</TABLE>

10.  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. In December 2000 the Board created the 2000 Incentive Plan
that covers up to 1,000,000 shares of Common Stock. The number of shares granted
on a calendar year basis under the 2000 Incentive Plan is limited to 5% of the
total number of shares of Common Stock outstanding, or 10% in any five-year
period.

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, 2001 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, 2001, 2000 and 1999, 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.


                                      F-17
<PAGE>

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

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
2001, 2000 and 1999 as follows:

     1.   Dividend yield of 0% for all years

     2.   Expected volatility of 137% in 2001, 50% in 2000, and 50% in 1999

     3.   Risk-free interest rates ranging from 4.7% in 2001, 5.07% to 5.48% in
          2000 and 5.65% to 6.72% in 1999

     4.   Expected term of 3 years in 2001, 3 years in 2000 and 3 to 4 years in
          1999.

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

<TABLE>
<CAPTION>
                                                                2001           2000            1999
                                                             ---------      ----------       -------
<S>                                                         <C>             <C>              <C>
Net income (loss) applicable to common shareholders
  As reported                                               $ (10,942)      $ (17,259)       $ 3,189
  Under SFAS No. 123                                          (11,236)        (18,005)         2,315

Net income (loss) per share
  As reported - basic                                       $   (2.17)      $   (3.81)       $  0.72
  As reported - diluted                                         (2.17)          (3.81)          0.71
  Under SFAS No. 123 - basic                                    (2.23)          (3.97)          0.52
  Under SFAS No. 123 - diluted                                  (2.23)          (3.97)          0.51
</TABLE>

A summary of the status of the Company's stock options and warrants as of
December 31, 2001, 2000 and 1999 and changes during the years ending on those
dates is as follows:


                                      F-18
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                 (In thousands, except share and per share data)
<TABLE>
<CAPTION>
Options -Boundless Corporation                               2001                               2000
------------------------------                ----------------------------------    -----------------------------
                                                                       Weighted                        Weighted
                                                                       Average                         Average
                                                                       Exercise                        Exercise
                                                  Shares                 Price         Shares            Price
                                              -----------            -----------    ----------       -----------
<S>                                             <C>                  <C>             <C>             <C>
Outstanding at beginning of year                1,546,178            $     4.61      1,395,765       $     5.70
  Granted                                         200,938                  2.04        417,000             2.76
  Exercised                                            --                    --       (161,539)            8.67
  Forfeited                                      (270,657)                 5.13       (105,048)            5.90
                                               ----------            ----------     ----------       ----------
Outstanding at end of year                      1,476,459            $     3.97      1,546,178       $     4.61
                                               ==========            ----------     ==========       ----------
Options exercisable at end of year              1,175,301            $     4.10      1,052,441       $     4.49
                                               ==========            ==========     ==========       ==========
Weighted average fair value
  of options granted during the year                                 $     0.91                      $     1.22
                                                                     ==========                      ==========

                                                             1999
                                              ---------------------------------
                                                                       Weighted
                                                                       Average
                                                                       Exercise
                                                  Shares                 Price
                                              -----------            ----------
Outstanding at beginning of year                  923,716            $     8.26
  Granted                                         705,360                  5.13
  Exercised                                       (29,053)                 5.60
  Forfeited                                      (204,258)                15.30
                                              -----------            ----------
Outstanding at end of year                      1,395,765            $     5.70
                                              ===========            ----------
Options exercisable at end of year                661,563            $     6.47
                                              ===========            ==========
Weighted average fair value
  of options granted during the year                                 $     2.47
                                                                     ==========
</TABLE>


                                      F-19
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                 (In thousands, except share and per share data)
<TABLE>
<CAPTION>
Warrants- Boundless Corporation                               2001                               2000
-------------------------------               -------------------------------         ----------------------------
                                                                    Weighted                            Weighted
                                                                    Average                             Average
                                                                    Exercise                            Exercise
                                                 Shares              Price              Shares            Price
                                              -----------         -----------         ----------       -----------
<S>                                              <C>                <C>                 <C>               <C>
Outstanding at beginning of year                 677,342            $   7.67            640,058           $   7.85
  Granted                                        216,190                2.20             70,000               7.19
  Exercised                                           --                  --            (31,375)             10.00
  Forfeited                                           --                  --             (1,341)             12.96
                                                --------            --------           --------           --------
Outstanding at end of year                       893,532            $   6.35            677,342           $   7.67
                                                ========            --------           ========           --------
Warrants exercisable at end of year              847,032            $   6.42            657,342           $   7.67
                                                ========            ========           ========           ========
Weighted average fair value
  of warrants granted during the year                               $   1.06                              $   2.60
                                                                    ========                              ========

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

The following table summarizes information about fixed stock options and
warrants outstanding at December 31, 2001:


                                      F-20
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                 (In thousands, except share and per share data)
<TABLE>
<CAPTION>
                                                                      Weighted
                               Number             Weighted             Average               Number
                           Outstanding at          Average            Remaining         Exercisable at
                            December 31,          Exercise         Contractual Life      December 31,
                                2001                Price              (Years)               2001
                            ---------              ------              ------              ---------
<S>                         <C>                    <C>                   <C>               <C>
Options - Boundless Corp.     100,000              $ 1.25                3.50                 50,000
                              220,000                1.50                3.99                220,000
                              180,289                2.71                3.48                 84,058
                              173,020                3.95                2.49                147,051
                              132,240                4.50                3.51                 66,488
                              150,142                4.88                1.42                150,092
                              201,884                5.00                2.13                147,219
                               18,956                5.38                2.44                 16,213
                              269,068                5.63                0.50                268,956
                               30,860                9.07                1.76                 25,224
                            ---------              ------              ------              ---------
                            1,476,459              $ 3.97                3.11              1,175,301
                            =========              ======              ======              =========

                               Number             Weighted              Average              Number
                           Outstanding at          Average             Remaining          Exercisable at
                            December 31,          Exercise           Contractual Life      December 31,
                                2001                Price                (Years)               2001
                            ---------              ------              ------              ---------
Warrants - Boundless Corp.    114,410              $ 1.21                4.45                114,410
                               90,280                2.89                3.20                 90,280
                               46,500                5.00                4.01                     --
                              150,000                5.80                3.38                150,000
                               65,000                6.90                3.14                 65,000
                              307,502                7.50                2.95                307,502
                               20,000                7.97                2.48                 20,000
                               67,340                9.69                1.92                 67,340
                                2,500               18.40                2.95                  2,500
                               30,000               18.60                0.39                 30,000
                            ---------              ------              ------              ---------
                              893,532              $ 6.35                3.80                847,032
                            =========              ======              ======              =========
</TABLE>

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 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 to Donald Norman, 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 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.


                                      F-21
<PAGE>

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

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

In July 1999 the Company granted 20,000 options to purchase shares of Common
Stock at $5.813 per share to Nate Kemler 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 67,340 options to purchase 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 grant.

In January 2000, the Company granted 60,000 options to purchase shares of
Merinta's Common Stock to 3 financial advisors for services rendered and the
Company recorded an expense of $1 for the grant.

In May 2000, the Company granted a warrant to purchase 50,000 shares of Common
Stock at $6.88 per share to Chase Manhattan Bank for bank fees and the Company
recorded an expense of $ 137 for the grant.

In June 2000, the Company granted a warrant to purchase 20,000 shares of Common
Stock at $7.97 per share to Stern Stewart, a consulting services firm and the
Company recorded an expense of $ 47 for the grant.

In October 2000, the Company granted 20,000 options to purchase shares of
Merinta's Common Stock to 2 financial advisors for services rendered and the
Company recorded an expense of $5 for the grant.

In October 2000, the Company granted 25,000 options to purchase shares of
Merinta's Common Stock to outside legal counsel for services rendered and the
Company recorded an expense of $6 for the grant.

On February 23, 2001, the Company sold 110,000 shares of its Common Stock to
three individuals for total proceeds of $225,200. In connection with the sale,
the Company issued warrants to purchase 27,500 shares of its Common Stock at an
exercise price of $2.40 per share of Common Stock. The warrants expire four
years from the date of grant. Mr. Joseph V. Joy, Jr. and Mr. Jack Ryan, then the
President and Vice President, Supply Chain Services, of Boundless Manufacturing,
respectively, participated in this offering. Mr. Frank Stephens, currently a
member of the Company's Board of Directors, but who was not associated with the
Company at the time of the sale, also participated in the offering. Proceeds
from this sale were used for general working capital purposes.

From May 29, 2001, through June 29, 2001, the Company sold 947,877 shares of its
Common Stock in a private placement offering, raising gross proceeds of
$963,500. In connection with this sale, the Company issued warrants to purchase
142,190 shares of its Common Stock at exercise prices ranging from $1.10 to
$1.36 per share of Common Stock. The warrants expire five years following the
date of grant. Fourteen individuals or legal entities participated in the
private placement, including four executive officers of the Company and a member
of the Company's Board of Directors.

The shares of Common Stock sold in the private placement, and the shares of
Common Stock underlying the warrants, are required by the Company to be
registered for sale in accordance with the Securities Act of 1933. The Company
is currently preparing an amended registration statement on Form S-3 and
anticipates filing such registration statement in April 2002.

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.

11   Related Party Transactions

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
outstanding) to the Company. Pursuant to their employment agreements, Mr. Joy
and Mr. Giovaniello will have the option, upon 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. The Company
has allocated 160 shares of its Boundless Manufacturing common stock for future
issuance under Boundless Manufacturing's incentive plan. Under terms of their
respective separation agreements, as described in Note 12, Mr. Combs and Mr. J.
Moore each agreed to transfer to the Company his 2,000,000 shares of common
stock to Boundless Manufacturing.


                                      F-22
<PAGE>


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

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 common stock.
Boundless Manufacturing and Merinta received third party fairness opinions
before granting options to Messrs. Combs and Moore.

In June 2000 the Company retained Cross Roads for the purpose of providing
investor relations services. The agreement, which terminated December 31, 2000,
called for fees of $150 plus expenses. The Company paid to Cross Roads $133 in
2000 under the investor relations services agreement.

12   Commitments

Leases

The Company leases certain manufacturing, sales and administrative facilities
and office equipment under operating lease agreements, which expire at various
times through May 2006. The most significant lease is for the Company's facility
in Boca Raton, Florida which expires in September 2005 with a total outstanding
commitment of $1,894. Total rent expense was $1,377, $935, and $825 in 2001,
2000 and 1999, respectively.

Future minimum rental commitments as of December 31, 2001 were as follows:

2002                      $ 819
2003                        788
2004                        780
2005                        448
2006                         53
                       --------
                        $ 2,888
                       ========

Other Commitments

In December 2001, the Company reached agreement on the substantive details of a
Separation Agreement and General Release (the "Separation Agreement") with each
of J. Gerald Combs, its Chairman and Chief Executive Officer, and Jeffrey K.
Moore, its Vice President of Corporate Development and issued a 6% Convertible
Promissory Note (the "Note") to each of them, with a principal amount of $475
for Mr. Combs and $382 for Mr. Moore, representing the separation payments. The
separation payments include a bonus from the Company for the year 2000 ($75 for
Mr. Combs and $25 for Mr. Moore). Simultaneously, the Company entered into a
Consulting Agreement with Mr. Combs and an Employment and Consulting Agreement
with Mr. Moore (together, the "Consulting Agreements"). Mr. Combs is to serve as
a consultant to the Company until March 31, 2003, and Mr. Moore is to remain as
an employee of the Company at a reduced salary and in a non-officer capacity
until March 31, 2002 and thereafter serve as a consultant to the Company until
February 27, 2003. Under the Consulting Agreements the Company agreed to pay a
total of $241 to Mr. Combs and $137 to Mr. Moore. The Company agreed that, to
the extent not already vested, all stock options held by Mr. Combs (480,000) and
Mr. Moore (205,000) would be fully vested immediately and such options would be
exercisable for five years from January 1, 2002. The exercise prices of such
stock options were not changed. The Company (including its subsidiaries) granted
releases to Mr. Combs and Mr. Moore, each of whom granted reciprocal releases to
the Company (and its subsidiaries).

Each Note is payable on February 27, 2003 and entitles the holder to convert it
at the price of $1.25 per share into restricted shares of the Company's common
stock at any time prior to such maturity date. However, if the Notes are not
converted and the Company has not raised equity financing of at least $2,500
prior to such maturity date, the Company has the option to extend the Notes for
two years and to pay the Notes in 24 monthly installments. The Company's
obligations to make payments under the Notes are subordinated to its current or
future obligations to repay all other indebtedness for borrowed money. The
shares into which the Notes may be converted are accompanied by "piggyback"
registration rights and are being registered under the Company's most recent
Registration Statement on Form S-3.

During the fourth quarter of 2001, the Company recorded $417 in current accrued
liabilities for the consulting services and $857 in long term liabilities for
the fair value of the two promissory notes, as substantially all amounts due
under the Separation Agreements relate to services provided prior to December
31, 2001.

                                      F-23
<PAGE>

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

13   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.

An action was commenced by Kareem Mangaroo, employed by Boundless Technologies
between February 1994 and April 1999 as a material handler ("Plaintiff"), on
February 5, 2001, against Boundless Technologies, Boundless Corporation, and
four employees of the Company (Joseph Gardner, its CFO, Michelle Flaherty,
formerly manager of Human Resources, Thomas Iavarone, director of Logistics, and
Anthony San Martin, manager of Shipping), seeking damages for the unlawful
termination of Plaintiff's employment in violation of Plaintiff's rights under
Title VII of the Civil Rights Act of 1964, as amended; the Equal Protection
Clause and Due Process Clause, pursuant to the Civil Rights Act of 1886, as
amended, 42 U.S.C. ss. 1981; and for damages as a result of the conspiratory
actions of defendants to deprive Plaintiff of his equal protection and due
process rights pursuant to 42 U.S.C. ss. 1985 and for violation of Plaintiff's
rights under the Employee Retirement Income Security Act 29 U.S. C. ss.1001.
Plaintiff further alleges claims under State law for breach of contract. The
verified complaint was filed in the United States District Court, Eastern
District of New York. Plaintiff seeks (i) compensatory damages of $1 million
from each of Boundless Technologies and four employees of the company (jointly
and severally), (ii) punitive damages of $2 million from each of Boundless
Technologies, the Company, and four employees of the Company (jointly and
severally), (iii) $1 million against Boundless Technologies for breach of
contract, and (iv) the value of forfeited options, attorney's fees, costs of the
action and other relief as the court deems necessary.

The Company intends to vigorously defend this suit since it believes that it has
meritorious defenses to the action. As of March 5, 2002 a deposition of the
Plaintiff had taken place. No depositions of the defendants have occurred and no
trial date has been established.

An action was commenced by Donald W. Lytle ("Plaintiff") on February 8, 2001,
against Boundless Technologies, Inc., GN Netcom, Inc., Portal Connect, Inc., and
Wholesale Audio Video, Inc. in the Iowa District Court, Johnson County; Law No.
LACU061503 alleging negligence and products defects resulting in injuries to
Plaintiff's hearing as a result of the use of the products. Plaintiff is suing
for unspecified damages. Document requests have been served on Plaintiff;
however, to date, no documents have yet been produced and no other discovery has
taken place.

14   Segment Reporting and Geographic Information

The Company's manufacturing is conducted at its New York and Florida facilities
and its sales force operates from five geographically dispersed locations in the
United States and United Kingdom.

Operating segments are identified as components of an enterprise about which
separate financial information is available for evaluation by its decision
making group. In line with the formation of its two new subsidiaries, effective
in 2000 the Company began managing its operations and reporting its financial
results as three business segments. However, due to the decision to discontinue
Merinta (see Note 17), only two continuing business segments remain. The results
of the reportable segments are derived from the Company's management reporting
system. These results are based on the Company's method of internal reporting
and are not necessarily in conformity with generally accepted accounting
principles. These results are used to evaluate the performance of each segment
and determine the appropriate resource allocation mix.

Information for the current and prior year by business segment is presented
below (in thousands):

                                      F-24
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                   Notes To Consolidated Financial Statements
                 (In thousands, except share and per share data)
<TABLE>
<CAPTION>
                                                                                  Boundless             Boundless
For the year ended                                             Elimi-             Technol-              Manufact-
December 31, 2001                            Total             nations            ogies/Corp.           uring
----------------------------------------   ---------           ---------          -----------           ---------
<S>                                        <C>                 <C>                 <C>                  <C>
 Customer Revenue                          $  59,581                               $ 32,872             $ 26,709
 Intercompany Revenue                                          $ (23,392)                                 23,392
                                           ---------           ---------           --------             --------
Total Revenue                              $  59,581           $ (23,392)          $ 32,872             $ 50,101
                                           =========           =========           ========             ========

Gross Margin                               $   6,283           $  (1,128)          $  7,963             $   (552)
                                           =========           =========           ========             ========
Gross Margin percent                            10.5%                                  24.2%               -1.1%
                                           =========                               ========             ========

Operating income (loss)                    $  (5,810)                              $    902             $ (6,712)
                                           =========                               ========             ========

Total assets by business segment           $  33,215                               $ 10,396             $ 22,819
                                           =========                               ========             ========


For the year ended                                             Elimi-             Technol-              Manufact-
December 31, 2000                            Total             nations            ogies/Corp.           uring
----------------------------------------   ---------           ---------          -----------           ---------
  Customer Revenue                         $  64,544                               $ 55,665             $  8,879
 Intercompany Revenue                                          $ (41,649)                                 41,649
                                           ---------           ---------           --------             --------
Total Revenue                              $  64,544           $ (41,649)          $ 55,665             $ 50,528
                                           =========           =========           ========             ========

Gross Margin                               $  15,500                               $ 16,183             $   (683)
                                           =========                               ========             ========
Gross Margin percent                            24.0%                                  29.1%               -1.4%
                                           =========                               ========             ========

Operating income (loss)                    $  (2,089)                              $  3,640             $ (5,729)
                                           =========                               ========             ========


Total assets by business segment           $  39,604                               $ 19,267             $ 20,337
                                           =========                               ========             ========
</TABLE>


Foreign sales were approximately $13,047, $18,157 and $27,946 for 2001, 2000 and
1999, 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:

                                  2001          2000           1999
                                  ----          ----           ----
United Kingdom                      8%            8%           14%
Other European countries           11%           13%           16%
Other foreign countries             3%            7%            5%
                                   --            --            --
     Total                         22%           28%           35%
                                   ==            ==            ==

All significant long-lived assets of the Company are in the United States.


                                      F-25
<PAGE>

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

15   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, 2001, 2000 and 1999 the Company made contributions
of $229, $173 and $70.

16   Selected Quarterly Financial Data - (unaudited)

Provided below is the selected unaudited quarterly financial data from 2001 and
2000. 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 loss for the three months ended December 31, 2001 includes $1,274 for
settlement of employment contracts with two executives of the Company as well as
$2,281 in income tax expense relating to deferred tax asset valuation
allowances.

Net loss for the three months ended December 31, 2000 reflects a writeoff of
$824 against the value of debt and equity securities of General Automation, Inc
and amortization of goodwill of $185 related to the change to a 3 year remaining
useful life and $2,324 related to reserves and accruals associated with
Merinta's transactions with Internet Appliance Network, Inc.
<TABLE>
<CAPTION>
                                                                            For the three months ended
                                                      December 31,      September 30,        June 30,            March 31,
                                                      ----------------------------------------------------------------------
                                                          2001               2001               2001                2001
                                                      -----------        ----------         ----------           ----------
<S>                                                   <C>                 <C>                 <C>                 <C>
Net revenue                                           $ 13,621            $ 18,074            $ 14,897            $ 12,989
Cost of product sold and services                       12,397              15,605              13,855              11,441
Gross profit                                             1,224               2,469               1,042               1,548
Income (loss) from continuing operations                (4,511)                224              (1,585)             (2,920)
Income (loss) from discontinued  operations                 --                 316                  --              (2,466)
Net income (loss)                                     $ (4,511)           $    540            $ (1,585)           $ (5,386)

Per share amounts:
Basic net income (loss) per common share              $  (0.89)           $   0.10            $  (0.32)           $  (1.16)
Diluted net income (loss) per common share            $  (0.89)           $   0.10            $  (0.32)           $  (1.16)


                                                                            For the three months ended
                                                      December 31,      September 30,        June 30,            March 31,
                                                      ----------------------------------------------------------------------
                                                          2000              2000               2000                2000
                                                      -----------        ----------         ----------           ----------
Net revenue                                           $ 14,461            $ 15,871            $ 17,480            $ 16,732
Cost of product sold and services                       11,345              11,884              12,986              12,829
Gross profit                                             3,116               3,987               4,494               3,903
Loss from continuing operations                         (1,932)               (657)               (232)               (434)
Loss from discontinued operations                       (4,396)             (3,753)             (3,569)             (2,286)
Net loss                                              $ (6,328)           $ (4,410)           $ (3,801)             (2,720)

Per share amounts:
Basic net loss per common share                       $  (1.39)           $  (0.97)           $  (0.84)           $  (0.61)
Diluted net loss per common share                     $  (1.39)           $  (0.97)           $  (0.84)           $  (0.61)
</TABLE>


                                      F-26
<PAGE>

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

17   Discontinued Operations

On May 11, 2001, the Board of Directors of the Company formally approved a plan
to discontinue the operations of Merinta. Since November 2000, following an
investment by National Semiconductor in Merinta, the Company was prohibited by
its lenders from contributing cash to the subsidiary. As a result, Merinta was
required to fund its working capital needs from the proceeds of the National
Semiconductor investment, cash generated from operations, and proceeds from any
additional investments. However, these funds were not sufficient to cover its
operating needs and the Company was not successful in raising additional funds
from investors. The loss from discontinued operations for the period January 1
through March 31, 2001 was $2,466. In the third quarter of 2001, the Company
realized a gain of $316 on the disposal of Merinta, net of operating losses
subsequent to March 31, 2001. The consolidated financial statements present
Merinta's results for the years ended December 31, 2001 and December 31, 2000 as
discontinued operations.

Net assets of Merinta were zero at December 31, 2001 and at December 31, 2000
consisted of the following:
                                                                  December 31,
                                                                  -------------
                                                                      2000
                                                                     ------
Assets of discontinued operations:
Cash                                                                 $3,544
Accounts Receivable, net                                                193
Prepaid software license fees                                         3,320
Prepaid expenses and other assets                                       637
Property and equipment, net                                             197
                                                                     ------
  Total assets                                                        7,891
                                                                     ------

Liabilities and minority interest of discontinued operations:
Accounts payable and other current accrued liabilities               $2,213
Other long-term liabilities                                              12
                                                                     ------
     Total liabilities                                                2,225
                                                                     ------

Minority interest                                                     5,000

                                                                     ------
  Net assets of discontinued operations                              $  666
                                                                     ======

The reported loss from discontinued operations for the year ended December 31,
2001 is as follows:


                                      F-27
<PAGE>

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

                                                                   December 31,
                                                                  --------------
                                                                       2001
                                                                     --------
Loss from discontinued operations from  January 1, 2001
 until the measurement date of March 31, 2001                        $(2,466)
                                                                     -------
Gain on disposal of subsidiary:
Loss from operations  from April 1, 2001 to date of disposal         $(1,237)
Net accounts receivable writeoff                                        (125)
Write off of prepaid license fees and other intangible assets         (4,011)
Net machinery and equipment writeoff                                    (180)
Gain on accounts payable settlements                                     869
Writeoff of minority interest in subsidiary                            5,000
                                                                     -------
Gain on disposal of subsidiary                                           316
                                                                     -------
   Total loss from discontinued operations                           $(2,150)
                                                                     =======

                                      F-28
<PAGE>

            SCHEDULE I -CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                (PARENT COMPANY)
                            CONDENSED BALANCE SHEETS
                 (In thousands, except share and per share data)
<TABLE>
<CAPTION>
 `                                                                                    December 31,
                                                                            ----------------------------
                                       ASSETS                                 2001                2000
                                                                            --------            --------
<S>                                                                         <C>                 <C>
Current assets:
  Cash and cash equivalents                                                 $     --            $     20
  Accounts receivable                                                             --                  66
  Other current assets                                                            50                  --
                                                                            --------            --------
    Total current assets                                                          50                  86
Investments in and advances to subsidiaries
    (eliminated in consolidation)                                             (4,168)              6,470
  Other assets                                                                    --                  --
                                                                            --------            --------
                                                                            $ (4,118)           $  6,556
                                                                            ========            ========
         LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Accounts payable and accrued expenses                                           25                 805
                                                                            --------            --------
    Total current liabilities                                                     25                 805
                                                                            --------            --------
Long-term liabilities:
  Other                                                                           --                  --
                                                                            --------            --------
    Total liabilities                                                             25                 805
                                                                            --------            --------
Commitments and contingencies Stockholders' equity (deficit):
Preferred stock, $0.01 par value, 1,000,000 shares
  authorized, none issued                                                         --                  --
Common stock, $0.01 par value, 25,000,000 shares
  authorized, 5,688,037 and 4,630,160 shares issued
  at December 31, 2001 and 2000, respectively                                     57                  46
Additional paid-in capital                                                    35,280              34,102
Accumulated deficit                                                          (39,339)            (28,397)
Accumulated other comprehensive loss                                            (141)                 --
                                                                            --------            --------
    Total stockholders' equity (deficit)                                      (4,143)              5,751
                                                                            --------            --------
                                                                            $ (4,118)           $  6,556
                                                                            ========            ========
</TABLE>


                                      S-1
<PAGE>

            SCHEDULE I -CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                (PARENT COMPANY)
                        CONDENSED STATEMENT OF OPERATIONS
                               FOR THE YEARS ENDED
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                                December 31,
                                                                                  -------------------------------------
                                                                                    2001           2000           1999
                                                                                  --------       --------       -------
<S>                                                                               <C>            <C>            <C>
Sales                                                                             $     --       $     --       $    --
Cost of sales                                                                           --             --            --
                                                                                  --------       --------       -------
    Gross margin                                                                        --             --            --
Expenses:
  General and administrative                                                      $    150       $    659       $   775
  Interest                                                                              --            (35)            5
  Other charges                                                                         --             --           153
                                                                                  --------       --------       -------
                                                                                       150            624           933
                                                                                  --------       --------       -------
Loss before income taxes and other items below                                        (150)          (624)         (933)
Income tax credit                                                                       --             --           317
                                                                                  --------       --------       -------
Loss before equity in income (loss) of consolidated subsidiaries                      (150)          (624)         (616)
Equity in income (loss) of consolidated subsidiaries, net of preferred stock
 dividend of $0, $0 and $50 in 2001, 2000 and 1999                                 (10,792)       (16,635)        3,805
                                                                                  --------       --------       -------
Net income (loss) applicable to common stockholders                               $(10,942)      $(17,259)      $ 3,189
                                                                                  ========       ========       =======
</TABLE>


                                      S-2
<PAGE>

            SCHEDULE I -CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                (PARENT COMPANY)
                        CONDENSED STATEMENT OFCASH FLOWS
                               FOR THE YEARS ENDED
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                  December 31,
                                                                   -------------------------------------------
                                                                     2001              2000              1999
                                                                   -------           -------           -------
<S>                                                                <C>               <C>               <C>
Net cash flows provided by (used in) operating activities          $  (930)          $  (234)          $ 4,497
                                                                   -------           -------           -------
Cash flows from investing activities:
Investment in subsidiaries                                            (279)           (1,644)           (4,161)
                                                                   -------           -------           -------
    Net cash used in investing activities                             (279)           (1,644)           (4,161)
                                                                   -------           -------           -------
Cash flows from financing activities:
  Proceeds from issuance of common stock                             1,189             1,398               164
                                                                   -------           -------           -------
    Net cash provided by financing activities                        1,189             1,398               164
                                                                   -------           -------           -------
Net increase (decrease) in cash and cash equivalents                   (20)             (480)              500
Cash and cash equivalents at beginning of year                          20               500                --
                                                                   -------           -------           -------
Cash and cash equivalents at end of year                           $    --           $    20           $   500
                                                                   =======           =======           =======
Non-cash transactions:
  Options, warrants and common stock issued for services           $    --           $   197           $   504
</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:
         2001                          $ 723               $ 993  (C)               $ 368  (A)            $ 1,348
         2000                            627                 221                      125  (A)                723
         1999                            489                 380                      242  (A)                627
 Inventory reserves:
         2001                          4,308               1,055                    1,912  (B)              3,451
         2000                          2,920               2,012  (C)                 624  (B)              4,308
         1999                          3,273                 340                      693  (B)              2,920
</TABLE>


(A)  Includes accounts written off during the period.
(B)  Includes inventory written off during the period.
(C)  Includes transfers in from other asset reserves for related amounts now
     included in inventory.


                                      S-4