10KSB/A

                    U. S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB/A

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

FOR THE FISCAL YEAR ENDED                                   COMMISSION FILE NO.
       JUNE 30, 1999                                             000-21477

                              JAVELIN SYSTEMS, INC.
                 (Name of Small Business Issuer in its Charter)

         DELAWARE                                           52-1945748
(State or Other Jurisdiction of                          (I.R.S. Employer
Incorporation or Organization)                          Identification No.)

                 17891 Cartwright Road, Irvine, California 92614
               (Address of Principal Executive Offices)(Zip Code)

                    Issuer's telephone number: (949) 440-8000

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

             Securities registered pursuant to Section 12(g) of the
                                 Exchange Act:

                          Common Stock, $0.01 Par Value

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

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
regulation S-B is not contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB. [ ]

The issuer's revenues for the fiscal year ended June 30, 1999 were $72,758,800.

The aggregate market value of the voting and non-voting stock held by
non-affiliates of the issuer as of September 15, 1999, was $71,105,565. Shares
of common stock held by each officer and director and by each person who owns 5%
of more of the outstanding common stock of the Company have been excluded
because such persons may be deemed to be affiliates.

The total number of shares outstanding of the Issuer's Common Stock was
8,894,803 as of September 15, 1999.

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

                     DOCUMENTS INCORPORATED BY REFERENCE



THIS ANNUAL REPORT ON FORM 10-KSB CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION
21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE COMPANY INTENDS THAT
SUCH STATEMENTS SHALL BE PROTECTED BY THE SAFE HARBORS PROVIDED FOR IN SUCH
SECTIONS. SUCH STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD
CAUSE ACTUAL RESULTS TO VARY MATERIALLY FROM THOSE PROJECTED IN THE
FORWARD-LOOKING STATEMENTS. THE COMPANY MAY EXPERIENCE SIGNIFICANT FLUCTUATIONS
IN FUTURE OPERATING RESULTS DUE TO A NUMBER OF ECONOMIC, COMPETITIVE,
GOVERNMENTAL AND TECHNOLOGICAL FACTORS, INCLUDING, AMONG OTHER THINGS, CHANGES
IN LAWS, THE SIZE AND TIMING OF CUSTOMER ORDERS, NEW OR INCREASED COMPETITION,
DELAYS IN NEW PRODUCT ENHANCEMENTS AND NEW PRODUCT AND/OR SERVICE INTRODUCTIONS,
QUALITY CONTROL DIFFICULTIES, CHANGES IN MARKET DEMAND, MARKET ACCEPTANCE OF NEW
PRODUCTS AND/OR SERVICES, PRODUCT RETURNS AND SEASONALITY IN PRODUCT AND
SERVICES PURCHASES. ANY OF THESE FACTORS, OR OTHERS, COULD CAUSE OPERATING
RESULTS TO VARY SIGNIFICANTLY FROM THOSE IN PRIOR PERIODS, AND THOSE PROJECTED
IN THE FORWARD-LOOKING STATEMENTS.



                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

         Javelin Systems, Inc. (together with its subsidiaries, "Javelin" or the
"Company") is a leading provider of retail foodservice technology solutions and
services that enable restaurants and retailers to capture, analyze, disseminate
and use information throughout the enterprise, from the point-of-sale (POS) cash
register terminal to the back office to an organization's headquarters. The
company designs, manufactures and markets open system touchscreen POS
network-ready hardware systems and provides POS systems integration services and
software solutions primarily for the foodservice and retail industries. The
Company's family of network-ready computers integrates substantially all of the
functionality of a standard desktop personal computer into durable, small,
footprint touchscreen workstations that run on industry standard open operating
systems. The Company's products utilize off-the-shelf, industry-specific
application software developed by third parties. The Company's products are
currently being marketed by value added resellers ("VARs"), original equipment
manufacturers ("OEMs") and directly to end users through the Company's sales
force. The Company's systems integration services are generally sold directly to
multi-site operators.

         in December 1997, Javelin made two strategic acquisitions, CCI Group,
Inc. ("CCI") and POSNET Computers, Inc. ("POSNET") that have enabled the Company
to offer full turn-key systems integration services, including system design,
staging, training, deployment and after-market product support and maintenance.
In addition to providing the Company with a significant new end user customer
base, the Company believes these acquisitions provide it with the ability to
become a national POS systems integrator in the foodservice and retail markets.

         In early 1998, Javelin established three international sales and
support subsidiaries in England, Australia and Singapore. The Company intends to
replicate its domestic distribution and acquisition strategies in the growing
international marketplace.

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

         In November 1998, Javelin acquired all of the outstanding common
stock of RGB/Trinet Limited ("RGB") and Jade Communications Ltd ("Jade"). RGB
and Jade are headquartered in England and provide complementary Wide Area
Networking (WAN) products and services primarily to large retail,
hospitality, and telecommunications companies.


                                      1.


         In April 1999, the Company acquired all of the outstanding capital
stock of Dynamic Technologies, Inc. ("DTI") and all of the outstanding capital
stock of SB Holdings, Inc. ("SB"). DTI and SB provide custom Internet/Intranet
software and services.

         In August 1999, the Company acquired all of the outstanding capital
stock of Restaurant Consulting Services, Inc. ("RCS"). RCS implements, operates
and supports packaged software applications for the restaurant industry.



INDUSTRY OVERVIEW

         The Company estimates that there are more than 450,000 restaurants and
more than 1.6 million retail stores in the United States. These restaurants and
retail stores are increasingly part of multi-location chains that have the need
to capture, analyze and disseminate information throughout the entire enterprise
in order to better manage inventory and costs, make pricing decisions, analyze
sales data and provide customized products and services. Moreover, businesses
that encounter local demographic changes or seek to expand globally face
additional challenges, such as multilingual customer and employee bases,
multiple currency transactions and local regulatory requirements. Consequently,
foodservice providers and retailers now require robust, integrated POS systems
and services that are able to reliably and efficiently capture, manage and
analyze large numbers of individual transactions generated by diversified points
of sale.

         The critical front and back office roles of integrated POS systems are
now being recognized by distinct market segments within the foodservice and
retail industries. Quick service restaurants ("QSRs") and full service
restaurants, the largest market segments within the foodservice industry, both
are investing in advanced POS systems, with QSRs generally being the first to
adopt the latest POS technology and full service restaurants being more price
sensitive and therefore more likely to adopt POS technology later in the product
life cycle. A typical QSR requires four to seven POS workstations to operate
efficiently, while a full service restaurant generally requires at least seven
POS workstations. The foodservice industry also encompasses hotel restaurants
and restaurants located in other hospitality locations, such as stadiums and
arenas, casinos, theme parks and cruise lines. Retail establishments, such as
convenience stores, gas stations, record stores and clothing stores, are
increasingly utilizing POS systems to expedite in-store transactions and more
effectively monitor inventory on a current basis.

         Initial POS systems targeted for the foodservice and retail industries
were generally designed to satisfy the individual operating requirements of a
particular large chain of restaurants or stores. These initial POS systems were
custom designed to meet the individual enterprise's needs and, as such, were
generally proprietary with all hardware, software and service developed or
provided by a single vendor. Because this focus on single company solutions
resulted in no generic POS standard operating system or computer architecture,
many large foodservice providers and retailers became captive to the relatively
small companies that had designed their proprietary POS systems. In addition,
the POS companies found it difficult to achieve significant economies of scale
due to the highly customized nature of their products. Instead, early POS
companies were forced to focus on establishing and maintaining long product life
cycles in order to recoup their high costs from developing custom products for a
limited customer base. There was little opportunity for these POS companies to
leverage their niche success into market-wide success.

         The POS industry has begun evolving from proprietary customized single
platform systems to open-architecture systems in which a variety of hardware and
software products from different manufacturers can be combined to obtain the mix
of features desired by the customer. With the advent of hardware and software
systems that use industry standard open-architecture, foodservice providers and
retailers are no longer captive to single solution vendors that had initially
created their POS systems. As in other markets for computer products and systems
where open systems are replacing proprietary platforms, new entrants have been
drawn to the growing POS market, increasing competition for POS software and
hardware and enhancing competitive pressure through faster design cycles.

                                      2.


          In addition to relying on single solution vendors, large multi-unit
foodservice and retail chains frequently implemented and maintained their
proprietary POS systems utilizing internal resources. However, as a result of
the competitive environment in which these businesses operate and the growing
complexity and multiplicity of available POS systems, foodservice providers and
retailers have found it increasingly difficult to design, implement and manage
these systems on their own. For example, a typical multi-chain enterprise
requires a POS system that is capable of supporting multiple applications and
processing high volumes of data across geographically remote locations. In
addition, the increasing variety of hardware and software applications utilized
in the foodservice and retail industries have resulted in connectivity and
compatibility problems for many POS systems. Multi-unit chains now generally
require a total systems integration solution including design, consulting,
system creation, acquisition of software applications and required hardware,
system installation and configuration, product support services and ongoing
system service and maintenance. The high demand for qualified network engineers
and other technical personnel has also made it increasingly difficult for these
types of businesses to recruit and train qualified POS technology professionals.
Consequently, many foodservice providers and retailers now rely upon third
parties for the technological expertise and personnel to meet their POS systems
needs. Javelin believes that the increasing complexity and rapid evolution of
POS system technologies have created a significant opportunity for companies
specializing in providing POS system solutions to the foodservice and retail
industries.

THE JAVELIN SOLUTION

         Javelin, through its Aspeon Solutions division, provides end-to-end
solutions, related to open systems touchscreen POS systems. The Company assists
corporate customers in identifying the best multi-vendor open systems solution
for the customer's particular business, manages the full deployment and ongoing
support of the POS solution, supports the remote LAN's in the customers' stores
and then accumulates all the remote site data and feeds it into a financial
system hosted in the Company's data centers. The Company has extensive
experience resolving the integration, implementation and management issues faced
by foodservice providers and retailers and substantial knowledge of advanced
information technologies, POS systems and the numerous software applications
developed by information system and software vendors for these markets. The
Company serves as a single point of contact to objectively assess its customers'
POS and information technology requirements, taking into account the products
and applications of various hardware and software vendors. The Company then
selects the optimal mix of applications and products of various hardware and
software vendors to create tailored advanced POS systems. By acting as the
project manager, the Company frees its customers from much of the time and
difficulties associated with large-scale systems installations, including
managing the variety of other vendors involved in the systems' installation. The
Company believes that its cumulative experience, foodservice and retail focus
and technology expertise enable it to understand its customers' core business
dynamics and deliver customized advanced POS systems and services to satisfy its
customers' specialized needs.

         Javelin also designs, manufactures and markets open system touch screen
POS computers primarily for the foodservice and retail industries. The
Company's family of network-ready computers integrates substantially all of the
functionality of a standard desktop personal computer into durable, small,
footprint touchscreen workstations that run on industry standard open operating
systems. The Company's products utilize off-the-shelf, industry specific
application software developed by third parties. The Company's hardware systems
enable customers to capture, analyze, disseminate and use information throughout
a foodservice or retail enterprise on a real-time basis, from the point of sale
to the in-store "back office" to the enterprise's headquarters, providing
transaction processing, in-store operating controls, and timely information used
to manage inventory and costs, analyze sales data and customize products and
services

BUSINESS STRATEGY

         The Company's objective is to become the premier POS systems solutions
provider for multi-site chain operators in the foodservice and retail
industries. The Company plans to achieve these objectives through internal
growth and development and, to the extent suitable acquisition candidates are
identified, through the acquisition of complementary businesses. Key elements of
Javelin's strategy include the following:

- -    PURSUE CLIENTS WITH END-TO-END SOLUTIONS. The Company intends to increase
     its sales of products and services to multi-unit chains by offering them a
     complete end-to-end solution to their POS systems need. The evolution

                                      3.


     of open systems, the complexity and cost of implementing information
     systems and the demand by customers for timely operational data, has
     created an opportunity for system integrators who have an in-depth
     knowledge of the industry and have the ability to integrate software and
     hardware packages into successful end-to-end solutions for clients. The
     advantages of this approach include:

          REDUCED IMPLEMENTATION TIME. Because Javelin provides pre-configured
               products that operate them in an established environment, Javelin
               can reduce implementation time significantly.

          REDUCED TECHNICAL AND INTEGRATION RISK. As a single vendor, Javelin
               takes full responsibility for delivering the service, including
               ongoing upgrades.

          REDUCED RELIANCE ON INTERNAL INFORMATION TECHNOLOGY PROFESSIONALS.
               Javelin's employees implement and operate the applications and
               provide client support twenty-four hours a day, seven days a
               week.

          LOWER COSTS. Javelin offers its services at a lower cost than its
               clients would otherwise bear to implement these applications on a
               traditional basis; additionally Javelin's approach reduces our
               clients' up-front investment.

- -    GROW RECURRING SERVICE REVENUE. The Company currently receives recurring
     revenue from its help desk, depot repair, managed network services and
     field services. The Company intends to expand these services in the
     future because the Company believes that an increase in these revenues
     can lessen the Company's reliance on product sales, which tend to
     fluctuate over time, and provide the Company with stable, recurring
     billings and cash flow.

- -    FOCUS ON INTERNATIONAL BUSINESS OPPORTUNITIES. The Company has
     established three sales and support branches in England, Australia and
     Singapore and acquired RGB/Trinet and Jade, which provide the Company
     with additional systems integration services and complementary
     networking products and services. The Company believes that the
     international markets continue to be fundamentally underserved with
     respect to technologically advanced POS systems, and, in particular, the
     Company believes that the European marketplace is well positioned both
     from a macroeconomic and product acceptance point of view to utilize the
     Company's products and services.

- -    INTRODUCE TIMELY NEW PRODUCTS. The Company intends to continue to
     develop new POS hardware systems incorporating advanced PC technology
     utilizing its engineering team composed of PC industry veterans. As part
     of its sales strategy, the Company consults with its OEMs and VARs in
     order to identify new product platforms and product refinements. The
     Company also obtains direct customer feedback through its systems
     integration business. Because a significant portion of the Company's
     management is experienced in the PC industry, the Company has been able
     to quickly launch new products in the POS system industry and respond
     quickly to its customers' specific needs. This experience has enabled
     Javelin to rapidly establish itself in the POS market by developing and
     introducing new products with advanced features in an average of six
     months compared to the industry standard of twelve to eighteen months.
     The Company intends to leverage its history of timely new product
     introductions and successful customer engagements and expand its
     marketing programs to enhance its market presence and visibility with
     the goal of making Javelin a recognized leader in providing POS
     solutions.

- -    MINIMIZE PRODUCTION COSTS. The Company plans to continue to outsource
     the manufacturing and assembly of its products in order to maintain low
     overhead and production costs. The Company also controls its costs by
     utilizing components that are generally available in the PC industry and
     anticipates streamlining its product line in order to further develop
     economies of scale. The Company believes that it will be able to
     maintain its cost advantage in the future through economies of scale and
     because the Company utilizes in-house design capabilities and integrates
     the design, manufacturing and engineering of its products, which reduces
     engineering costs and costly design changes. In addition, the Company
     utilizes contract manufacturers based in Singapore, which the Company
     believes will provide many benefits, including high quality, components
     cost reductions and lower corporate income tax.

                                      4.


SERVICES AND PRODUCTS

         SYSTEMS INTEGRATION

         Javelin's Systems integration business includes:

         -    NETWORK DESIGN/PROJECT MANAGEMENT. The Company provides network
              services ranging from network design to large-scale network
              implementation, which would include a review and audit of a
              customer's existing POS technology infrastructure, an assessment
              of the functional requirements of the customer's POS system, the
              preparation of network specifications and technical design
              documentation and diagrams. The Company's network implementation
              services involve the purchase, delivery, testing and installation
              of enterprise-wide POS systems. The Company acts as the single
              project manager for all parties involved in a multi-unit
              installation, to effectively converge and integrate all the
              client's business processes. The Company believes that the
              delivery of a combination of design, implementation and
              management services through a project manager enables the
              Company's personnel to fully understand the customer's computing
              and operating environments, install POS systems that meet the
              customer's specialized requirements and train the customer's
              users and internal POS system staff prior to the full migration
              to a new POS system. The Company's personnel have extensive
              experience resolving the integration, implementation and
              management issues faced by its customers, and the personnel
              involved in any particular project are carefully selected for
              their technical expertise to meet the requirements of the
              specific project. The Company assesses its customers' POS system
              requirements and selects the optimal mix of applications and
              products of various hardware and software vendors, and does not
              exclusively use Javelin products. The Company's expertise extends
              through each area of POS system networking to create a
              tailor-made infrastructure for the client, including structured
              cabling, power, local area network (LAN), wide area network (WAN)
              and internet technologies.

        -     BUSINESS PROCESS INTEGRATION. The Company offers total software
              integration solutions for POS clients who already have existing
              software platforms (e.g. accounting, inventory, payroll, and food
              costing) in place. Custom programs are provided and written in
              Visual Basic, C++ and Crystal Reports. The Company believes that
              the future of software systems integration is to develop and
              implement Intranet and Internet connections within multi-unit
              chains resulting in the localization of all critical operational
              data.

       -      APPLICATION SERVICE PROVIDER. The Company also offers a service to
              deploy, host, manage and rent access to applications from a
              centrally managed facility. The Company is responsible for
              providing all of the specific activities and expertise aimed at
              managing the software application or set of applications.

         SUPPORT SERVICES

         Javelin offers the following support services for its products and
systems integration business:

         -    MANAGED NETWORK SERVICES. As POS systems become more complex,
              foodservice providers and retailers are experiencing
              difficulties in hiring, training and retaining technology
              professionals who can maintain the performance and functionality
              of their POS systems. Accordingly, these companies are
              increasingly outsourcing certain maintenance and management
              functions for their POS systems in order to minimize the
              potentially high costs associated with POS system outages. The
              Company provides a range of enterprise network support and
              management services that are designed to maintain the effective
              performance of a customer's POS system. The Company uses its
              technical expertise and staffing experience to package, price
              and deliver combinations of these services, and the customer
              benefits from the Company's experience in providing network
              management services in a broad range of operating environments.
              The Company's network management services include combinations
              of the following services, which are selected by the customer to
              meet its specific needs: network health

                                      5.


              checks, baseline documentation and management maintenance,
              break/fix remote network management and diagnostics help desk
              services network outsourcing.

         -    HELP DESK. The Company's emergency software hotline is available
              for questions customers may have with respect to specific
              application software and operating systems. The Help Desk is
              designed to provide service and support for issues that can be
              resolved without an on-site visit. If at any time during the Help
              Desk call it is determined that hardware service is required, the
              support personnel will expedite the call to the hardware service
              department.

         -     HARDWARE SERVICE/HARDWARE MAINTENANCE/PREVENTATIVE
               MAINTENANCE. A variety of hardware maintenance options are
               currently provided on a 24 hour, seven day a week basis. Calls
               placed to a central service center are greeted with assistance
               to determine the nature of the call. Once the failure is
               determined, the responding field technician will answer the call
               in accordance with services needed and contracted coverage.
               Depot Service supplies configured equipment directly to the
               location for uninterrupted operations while defective equipment
               is returned from the site to the service center for repair via
               courier. Full service maintenance offers on-site technical
               maintenance from the Company's field service technician for both
               front and back of house equipment.

        -     TRAINING/INSTALLATION. Site-specific training is available through
              customer support personnel beginning with pre-install
              configuration and database building through installation and
              "live" date. Hardware preparation such as software load, equipment
              burn-in, cabling and performance testing of "pre-live" system is
              an essential component prior to staging and installation.


         THE JAVELIN PRODUCT LINE

         Javelin's product line offers customers a fully functioning PC inside a
small footprint touch screen POS workstation. All of Javelin's systems are
network ready and support industry standard operating systems, enabling the easy
installation and setup of leading industry standard POS software programs. The
Javelin system also virtually eliminates configuration conflicts due to the
Javelin system's proprietary embedded firmware. In addition, its single
motherboard design reduces costly trouble shooting and service calls, and
Javelin's systems are sealed to protect against liquid and other foreign matter
entering the interior electronic chamber. Javelin believes that its POS computer
systems offer its clients more features and better reliability than its
competitors' products at lower price points. The Company believes that the
retail price of its products to end users generally ranges from $2,500 to
$3,700. The Javelin product line is currently comprised of the Javelin-Wedge 5,
Javelin-Wedge P, Javelin-LC and Javelin-LCP series.

         JAVELIN-WEDGE 5. The Javelin-Wedge 5 is a small footprint, high
performance color LCD touch screen computer which is approximately 12.75"(W),
10.25"(D) and 6.0"(H). The Javelin-Wedge 5 features a 133mHz processor, system
memory from 4 MB of RAM to 64 MB of RAM, 1 MB of video memory, a 10.4 or 12.1
inch TFT active matrix screen, 4 serial ports, 1 enhanced parallel port, 2
electronic cash drawer ports, a 10 Base-T Ethernet port and an integrated
customer display. As a result of the product's inherent flexibility and rugged
design, it is being successfully marketed and sold as a POS workstation and as
an industrial operator interface.

         JAVELIN-WEDGE P. The Javelin-Wedge P is a product line extension of the
Javelin-Wedge 5 series and is believed by the Company to be the first fully
integrated, Pentium-based touch screen computer designed specifically for the
POS marketplace. The Wedge P features a 200 MHz Intel Pentium processor with
additional features such as a 512K Pipeline Burst cache and up to 128 MB of RAM.
The Wedge P approximately doubles the speed and performance of the Wedge 5 which
provides end users the ability to dramatically increase speed and performance
when using graphically intensive POS applications that operate in Windows 95 and
Windows NT environments.

         JAVELIN-LC. The Javelin-LC product line offers customers what the
Company believes is the smallest footprint of any POS computer in the
industry with a footprint of less than eight inches square and has been
designed to be more compact and elegant in appearance, making it suitable for
both the foodservice market and the retail

                                      6.


market. In addition, the systems reduced size and flat panel display allow it to
be mounted in a variety of ways, including wall-mounted, fixed to an adjustable
base or attached to an articulated arm. The Javelin-LC features a 133mHz
processor, system memory from 4 MB of RAM to 64 MB of RAM, 1 MB of video memory,
a 10.4 or 12.1 inch TFT active matrix screen, 2 serial ports, 1 enhanced
parallel port and a 10 Base-T Ethernet port.

         JAVELIN-LCP. The Javelin LCP is a product line extension of the
Javelin-LC. This is a Pentium based LC product which, like the LC, is believed
to have the smallest footprint of any POS computer in the industry. The speed of
the Pentium-based CPU offers clients the ability to dramatically increase speed
and performance when using graphically intensive POS applications. The LCP
features a 200 MHz Intel Pentium processor with additional features such as an
integrated sound card and full screen video, 3 serial ports and up to 128 MB of
RAM. The foodservice industry, especially the QSR segment, is demanding the
latest generation hardware to be based around the Pentium processor. The Javelin
LCP is specifically designed to meet the industry's unique hardware requirements
for speed, space, flexibility and multimedia features.

         JAVELIN-LP. The Javelin LP is a compact, low profile PC for the
high-traffic, POS environment. The LP is planned to be network-ready with an
integrated 100/10BaseT Ethernet controller. With 4 serial ports, two of which
can supply +5Volt power, the LP will accommodate a variety of peripheral
equipment such as cash drawers, card readers, scanners and printers. The Javelin
LP's rugged, aluminum die-cast, convection cooled case provides the Javelin LP
with a significant advantage over other POS systems. The LP is designed to be
spill-resistant with a solid cover, and, because it has no fans, is noiseless
and has no vents into which airborne debris can enter and collect inside the
system. The LP's low profile design requires minimal counter space, and I/O
connectors be located at the bottom of the unit allow easy routing of cables
through a small opening in a counter or desk top. The Javelin LP comes with an
integrated touchscreen controller supporting both Elographics and Microtouch Bus
Monitors, eliminating the need for an external controller.

         JAVELIN-HHT 40. The Javelin HHT-40 is being developed for the Company
by a third party. The HHT-40 is designed to be a compact, lightweight, wireless
handheld system that provides service people the ability to enter orders quickly
and efficiently and offers the benefit of sending information remotely to the
kitchen, bar, etc. With its built-in customer display and paging system, the
HHT-40 would expedite customer transactions, reduce operator errors, and most
significantly, increase table turns. The HHT-40 is planned to be based on a main
module where a battery, magnetic card reader or end-piece can be connected to
any side of the main module.

         NEW PRODUCTS

         VIPER- The Javelin Viper is a low, profile touchscreen PC designed for
the high-traffic, POS environment. The Viper is network-ready with an integrated
10/100Base T controller and Ethernet interface. Equipped with 6 serial ports,
the Viper can support a variety of peripheral POS equipment such as cash
drawers, card readers, scanners and printers. The Viper's low profile design
requires minimal counter space and its modular LCD display can be positioned at
various angles or even detached from the base to accommodate special area
requirements

                                      7.


PRODUCT DEVELOPMENT

         For the fiscal years ended June 30, 1999 and June 30, 1998, the Company
spent approximately $1,336,000 and $874,000, respectively, on product
development. The Company maintains an engineering staff of ten people, with
expertise in electronics, mechanical and software design, who are responsible
for prototyping, tooling and testing the Company's products. The Company's
engineering and manufacturing staff then coordinate with systems engineers and
quality control personnel to progress from the final design stage to mass
production. The Company intends to hire additional engineers and project
managers to better coordinate the product development process as the Company
expands its product development efforts.

PRODUCT DISTRIBUTION

         The Company's products are primarily distributed through its direct
sales organization, strategic relationships with OEMs and VARs that have a
strong reputation in the foodservice and retail POS markets. By initially
distributing its products through OEMs and VARs, the Company was able to take
advantage of the existing name recognition and market position of its OEMs and
VARs and quickly establish a market for its products, while minimizing
expenditures for direct sales, marketing, technical support and service. The
Company now intends to expand its direct sales organization to sell its
end-to-end solution, further penetrate its existing domestic and international
markets, as well as to gain access to new market segments and international
markets.

         To date, the Company's sales have been predominantly to small-to-mid
size restaurant chains. Javelin believes a major opportunity exists for it to
further penetrate large accounts (100 site or more chain organizations) with its
existing systems and ability to provide a total solution to the client. Large
accounts often require a "total solution" including initial consulting, hardware
and software installation, ongoing support and maintenance, product support
services and a super-regional or national presence. The Company believes that by
targeting different markets through its different distribution channels, it can
more effectively penetrate multiple markets while minimizing costs associated
with channel conflicts.

         DIRECT SALES ORGANIZATION. The Company's direct sales organization has
focused its efforts principally on large customers (100+ stores) because these
customer opportunities are beyond the scope that can be effectively managed by
the Company's regional VAR marketing partners. In this manner, the Company
believes it can minimize any potential distribution channel conflict with its
VARs. The Company typically provides a multi-vendor POS solution for its
corporate accounts, and the hardware utilized in any particular account may not
be Javelin hardware. The standardized nature of franchised operations enables
the Company to design and rapidly deploy customized solutions for these
large-scale customers. The Company intends to focus on growing its direct sales
business to take advantage of a scarcity of POS service providers currently in
the marketplace.

         VARS. The Company sells its products to VARs who integrate
industry-specific software with the Company's hardware product for resale into
various vertical markets comprised of relatively small customers (less than 50
stores). The Company works closely with these VARs as well as the various
software developers to stay abreast of the diversified needs of the Company's
targeted markets. The Company's VAR network currently totals approximately 250
VARS. The Company believes that VAR distribution channels are advantageous to
the Company as they generally have existing geographically diverse customers,
focus their businesses on providing customized solutions to their customers and
maintain their own sales and technical support staff.

         OEMS. The Company also sells its products to OEMs with significant
market presence in the foodservice and specialty retail industries. The OEMs
market the Company's products under their own names and sell either through
dealers or directly to mid-sized customers (50 to 100 stores). Because of the
high likelihood of the Company's product being offered by more than one OEM into
an end user account, the Company offers the OEM an opportunity to choose its own
customized design. The OEM is charged for mechanical design, prototyping and
tooling. One of the Company's principal strategies is to expand the OEM
distribution channel both domestically and internationally.

                                      8.


CUSTOMERS

         Certain end users of the Company's products are:



JAVELIN HARDWARE             SERVICES                                     BOTH JAVELIN HARDWARE AND SERVICES
- ----------------             --------                                     ----------------------------------
                                                                    
Madison Square Garden        Aramark                                      Universal Studios
Greyhound                        -Stadiums and Arenas                     Red Robin
Club Corp                        -National Parks and Recreation Centers   Direct Express
Greenall's Pubs              AFC                                          Claim Jumper
Ogden                            -Popeye's                                Blimpies
Mitsubishi Silicon               -Church's                                Quiznoz
                                 -Seattle's Best
                             Sonic
                             Allied Domecq
                                 -Baskin Robbins
                                 -Dunkin Donuts
                             Jamba Juice


SALES AND MARKETING

         The Company's direct sales and marketing efforts are staffed by 15
salespersons located in regional offices in the Unites States, England,
Australia and Singapore. The Company's direct sales business has grown
significantly as a result of its acquisitions and recent hirings. The Company
expects its systems integration business to operate under labels other than
"Javelin" in order to reinforce the independent role of the systems integrator
in a multi-vendor marketplace. The Company eventually expects to adopt a single
brand identity for all of its regional system integration subsidiaries.

         The Company's sales efforts in its indirect distribution channels are
divided into four regional groups, United States, Europe, Australia and Asia,
with international sales efforts directed from the Company's international
subsidiaries. In its indirect distribution channel, the Company has a sales
force of four salespersons spread throughout the regions, all of whom are
dedicated to developing the Company's OEM and VAR distribution channels. The
Company's technically sophisticated OEMs and VARs are responsible for all end
user interaction, including sales and warranty support, thereby reducing the
need for the Company to maintain large in-house sales or technical support staff
while increasing the Company's presence in the foodservice and retail markets.
The Company also consults with its OEMs and VARs in order to identify new
product opportunities and product refinements.

MANUFACTURING

         The Company designs all of the hardware and firmware components for all
Javelin products. The Company's manufacturing operations consist of the
procurement of components and the assembly, testing and quality assurance of
finished goods for shipment to its customers. The fabrication of major
sub-assemblies, such as circuit boards and sheet metal chassis, and the supply
of other finished components, such as touchscreens, are provided by third-party
manufacturers. Javelin monitors the quality of its purchased and manufactured
components through source and incoming inspection. The Company evaluates and
monitors suppliers based on quality, reputation, responsiveness and price. To
date, the Company has undertaken substantially all of the final assembly for its
products at its facility in Irvine, California.

         The principal components that make up the Company's products are
standard electronics available from a wide variety of suppliers. A single
supplier currently provides certain components utilized in the Company's
products. The Company believes that, with respect to these components, there are
a number of alternative suppliers that could supply components that could be
easily integrated into the Company's products without any significant
interruption in the Company's operations. The Company has no written long-term
contracts with the manufacturers of its products or with any suppliers of the
components used in the Company's products. The Company historically has

                                      9.


placed orders for products and components based on its projected sales over the
next approximately 90 days, and the Company currently maintains a 45-day supply
of product components in inventory.

         The Company recently has outsourced some final assembly of its products
to a local contract manufacturer. The Company believes that outsourcing will
reduce the likelihood of capacity constraints as production volumes for its
products increase. In addition, the Company has contracted with a manufacturer
based in Singapore to manufacture Javelin's new products on a turnkey basis.
Under the turnkey program, the Singapore manufacturer will ship finished
products to Javelin, with the manufacturer managing the day-to-day purchasing,
manufacturing and quality control requirements. The Company initially plans to
have all finished products inspected at its Irvine, California facility prior to
shipment to customers. The Company ultimately plans to have the manufacturer
ship products directly to the Company's subsidiaries and distributors for final
integration of the products and shipment to customers. Upon the successful
implementation of the turnkey project, the Company expects to have all of its
new products similarly manufactured and shipped in the future.

PRODUCT WARRANTY

         The Company's computer products have a warranty that covers defective
material and workmanship during the twelve-month warranty period commencing on
the date of delivery of the products. During the warranty period, the Company
will, at its sole option, repair or replace parts found to be defective or
refund the purchase price of products or parts. Certain of the Company's major
distributors also provide warranty service for the Company's products.

COMPETITION

         The Company believes that the open system architecture of its products
and systems integration services makes it well positioned to take advantage of
the current POS marketplace. The migration to open systems architecture in the
POS industry has been disruptive to many POS companies that built their
businesses on the proprietary operating model. While the Company focuses on
large-scale solutions to multi-site customer POS problems, companies promoting
proprietary systems have faced significant pressure on their operating margins
due to high product costs and substantial overheads. Many of these proprietary
vendors have now left the POS marketplace through acquisitions or financial
failure, and the remaining proprietary vendors generally have undergone
reorganizations that have resulted in rapid exits from significant market
segments and/or distribution channels. With the largest multinational open
systems computer companies not yet fully appreciating the potential of the open
systems POS market, the Company is focused on providing foodservice providers
and retailers with cost-effective POS solutions that satisfy their POS needs,
including system design, hardware and software installation and implementation
and ongoing support and maintenance.

         The market for the Company's products and services is highly
competitive, subject to rapid change and sensitive to new product introductions
or enhancements and marketing efforts by industry participants. The Company
expects to continue to experience significant and increasing levels of
competition in the future, in part as open systems architecture in its targeted
industries becomes more common. The principal elements of competition related to
the Company's products include price, product features and performance,
compatibility with open systems, quality and reliability, brand awareness, level
of customer service and quality of display. The POS systems integration industry
is also highly competitive and undergoing continual change. The principal
elements of competition related to the Company's systems integration services
include reputation, scope of services provided, availability of resources and
price. In many of the Company's markets, traditional computer hardware
manufacturing, communications and consulting companies provide the most
significant competition. The Company must also compete with smaller service
providers that have been able to develop strong local or regional customer
bases. Most of the Company's competitors for its products and services, as well
as certain potential competitors, are more established, benefit from greater
name recognition, have significantly greater financial, technological,
production and marketing resources, and have more extensive distribution
networks than the Company.

         The Company believes the use of open systems architecture in its
targeted industries is an important competitive element. Several of the
Company's competitors currently also offer open systems and the Company believes
that the number of competitors offering open systems solutions will grow over
the next several years. The

                                      10.


Company anticipates that a significant source of future competition may be from
existing competitors in the POS products and services market that the Company
believes are currently attempting to develop POS systems and support services
utilizing open systems architecture. Due to the greater sales, marketing,
product development and financial resources of the Company's competitors, the
Company anticipates that competition from these competitors will intensify in
the future. In order to effectively compete against these competitors, the
Company will need to continue its growth trend and attain sufficient revenues to
have the resources to timely develop new products and services in response to
evolving technology and customer demands and to sell products and services
through a broad distribution channel in competition with these other existing
and potential competitors. No assurance can be given that the Company will be
able to grow sufficiently to enable it to compete effectively in this
marketplace.

         The Company's competitors include a substantial number of large
well-established companies including International Business Machines (IBM),
MICROS Systems, Inc., Par Technology Corporation, Radiant Systems, Inc., NCR,
Panasonic and Fujitsu/ICL, each of which also offers open systems architecture
products and services related thereto. There can be no assurance that the
Company will be able to maintain its competitive advantage or that these
existing substantial competitors, or new competitors, will not develop
competitive products and services with favorable pricing. Moreover, the Company
has little or no proprietary barriers to entry that could keep its competitors
from developing similar products or services and technology or selling competing
products or services in the Company's markets.

         Increased competition from manufacturers or distributors of products
similar to or competitive with the Company's products, or from service providers
that provide services similar to the Company's services, could result in price
reductions, reduced margins and loss of market share or could render the
Company's technology obsolete, all of which could have a material adverse effect
on the Company's results of operations and financial condition. There can be no
assurance that the Company will be able to successfully compete in this
marketplace or develop sufficient new products and services to remain
competitive, and any failure to do so could have a material adverse effect on
its results of operations and financial condition.

EMPLOYEES

         As of August 31, 1999 the Company had approximately 300 full-time
employees, including 20 employed in sales and marketing, 250 employed in
research and development, engineering, technical support and production, and 30
employed as administrative and support staff. None of the Company's employees
are represented by unions, and the Company considers its employee relations to
be good.

RISK FACTORS

LIMITED OPERATING HISTORY; RECENT OPERATING PROFITABILITY

         The Company was incorporated in September 1995 and has a limited
operating history upon which to base an evaluation of its business and
prospects. The Company's operating results for future periods are subject to all
of the risks and uncertainties inherent in the development and growth of a young
business. The Company anticipates that in the future it will make significant
investments in its operations, particularly to support technological
developments and sales activities and, that as a result, operating expenses will
continue to increase. The Company intends to make investments on an ongoing
basis, primarily from cash generated from operations, and to the extent
necessary, funds available from the Company's line of credit, as the Company
develops and introduces new products and services and expands into new markets.
There can be no assurance that recent revenue growth is indicative of future
sales growth, if any. The Company has only recently achieved profitability on
both a quarterly and annual basis, and there can be no assurance that the
Company will be able to sustain profitability in any period.

RATE OF GROWTH

         The Company has experienced rapid growth and expansion. This rapid
growth and expansion is primarily due to acquisitions and increased sales of
hardware, both domestically and internationally. The Company does not believe
that domestic hardware sales will continue to grow at the rate at which they
have grown in the past. Further,

                                      11.


The Company cannot guarantee that it will be able to increase domestic service
sales or that its foreign hardware and services sales in the future will be at
or near the rates of the past.

MANAGEMENT OF GROWTH

         Because the Company is currently experiencing rapid growth and
expansion, it has also experienced and will continue to experience, a strain on
its administrative, engineering and operations resources and increased demands
on its systems and controls. The Company anticipates that continued growth would
require it to recruit and hire a number of additional management personnel,
particularly in operational management. There can be no assurance that the
Company will be successful at hiring or retaining these personnel. The Company's
ability to manage its growth successfully will also require the Company to
continue to expand and improve its operational, management and financial systems
and controls. If the Company's management is unable to manage growth
effectively, the Company's business, financial condition and results of
operations may be materially and adversely affected.

         In addition, the Company plans to increase its operating expenses in
order to expand its product line, increase its sales and marketing operations,
increase the volume of products manufactured, develop new distribution channels,
broaden its customer support capabilities, grow its international sales force,
and develop and fully integrate its international operations. There can be no
assurance that this internal expansion will be successfully implemented, that
the cost of this expansion will not exceed the revenues generated, or that the
Company's sales and marketing organization will be able to successfully compete
against the significantly more extensive and well-funded sales and marketing
operations of many of the Company's current or potential competitors, both
domestically and internationally. Moreover, the foregoing expenses may be
incurred prior to any potential positive impact on revenues. If these expenses
are not subsequently followed by sufficient increased revenues, the Company's
operating results and financial condition would be materially adversely
affected. If the Company is unable to effectively execute its expansion, the
Company's results of operations and financial condition could be materially
adversely affected.

SIGNIFICANT FLUCTUATIONS IN OPERATING RESULTS

         The Company has experienced in the past and may in the future
experience significant fluctuations in its operating results. Such fluctuations
may be caused by many factors, including, but not limited to: the size and
timing of individual orders, some of which may be of significant size;
seasonality of revenues; employee hiring and retention, particularly with
respect to sales personnel; lengthy sales and implementation cycles; reduction
in demand for existing products and services and shortening of product life
cycles; the timing of the introduction of products, product enhancements or
services by the Company or its competitors; competition and pricing in the POS
systems industry; market acceptance of new products; service personnel
utilization rates; the ability of the Company to expand its international and
domestic sales, as well as the mix of such sales; foreign currency exchange
rates; changes in the mix of products and services sold; general health of the
restaurant industry, particularly the quick service restaurant segment; the
ability of the Company to generate service agreements; product quality problems;
the ability of the Company to control costs; the Company's success in
establishing and expanding its direct and indirect distribution channels; the
mix of distribution channels through which the Company's products are sold; and
general economic conditions. The Company's products are typically shipped
shortly after orders are received and, consequently, order backlog at the
beginning of any quarter typically represents only a small portion of that
quarter's expected revenues. As a result, product revenues in any quarter are
substantially dependent on orders booked and shipped in that quarter and
revenues for any future quarter are not predictable with any significant degree
of accuracy. Product revenues are also difficult to forecast because the market
for the Company's products is rapidly evolving and the Company's sales and
implementation cycles, from initial evaluation to multiple product purchases and
the provision of support services, vary substantially from customer to customer.
The Company has in the past experienced and expects to continue to experience
quarters or periods with individual product or service orders which are
significantly larger than its typical product or service orders, adding to the
unpredictability of the Company's revenues. The Company's expense levels,
however, are based in significant part on the Company's expectations of future
revenues and therefore are relatively fixed in the near term. In addition, the
Company expects expense levels to increase in the near term as the Company
attempts to expand its operations. Net income may be disproportionately affected
by an unanticipated decline in revenue for a particular quarter because a
relatively small

                                      12.


amount of the Company's expenses varies with its revenue in the near term.
Moreover, the POS systems industry is generally dependent on system roll-outs
with fixed time horizons. The Company's operating results, particularly with
respect to its systems integration business, may vary significantly because of
the Company's failure to obtain major projects, the cancellation or delays in
the progress of major projects for any reason and the Company's failure to
timely replace projects that have been completed or are nearing completion. Any
of these factors could cause the Company's results of operations to fluctuate
significantly from period to period, including on a quarterly basis. The Company
may also experience relatively weaker demand for its products in August,
particularly in international markets, and December as a result of reduced sales
activities during those months.

         As a result of the above factors, revenues and earnings for any quarter
are subject to significant variation and the Company believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as indications of future performance.
Fluctuations in operating results may also result in volatility in the price of
the Company's Common Stock. Accordingly, it is likely that in some future
quarter the Company's total revenues or operating results will be below the
expectations of public market analysts or investors. In such event, or in the
event that adverse conditions prevail or are perceived to prevail generally or
with respect to the Company's business, the price of the Common Stock would
likely be materially adversely affected.

RISKS ASSOCIATED WITH ACQUISITIONS

         The Company has recently acquired CCI Group, Inc., POSNET Computers,
Inc., Aspact IT Services Ltd., RGB/Trinet Limited, Jade Communications, Ltd.,
Dynamic Technologies, Inc., SB Holdings, Inc. and Restaurant Consulting
Services, Inc. Acquisitions involve numerous risks, including difficulties in
the assimilation of the operations and personnel of the acquired business, the
integration of management information and accounting systems of the acquired
business, the diversion of management's attention from other business concerns,
risks of entering markets in which the Company has no direct prior experience,
and the potential loss of key employees of the acquired business. In particular,
all of the acquired companies have self-contained management information and
accounting systems, and the Company has not yet implemented a management
information and accounting system that fully integrates each acquired entity's
system. Further, all of the acquired companies are POS systems integrators and
service providers and therefore operate in a market in which the Company has no
direct prior experience. The Company currently intends as part of its business
strategy to continue to pursue additional acquisitions of complementary
businesses. The Company's management will be required to devote substantial time
and attention to the integration of the recently acquired, or any future
acquired, businesses and to any material operational or financial problems
arising as a result of the acquisitions. There can be no assurance that
operational or financial problems will not occur as a result of any acquisition.
Failure to effectively integrate acquired businesses could have a material
adverse effect on the Company's business, financial condition and results of
operations.

         The Company intends to continue to evaluate potential acquisitions of,
or investments in, companies which the Company believes will complement or
enhance its existing business. Future acquisitions by the Company may result in
potentially dilutive issuances of equity securities, the incurrence of
additional debt and amortization expenses related to goodwill and other tangible
assets which could adversely affect the Company's business, results of
operations and financial condition. The Company currently does not have any
arrangements or understandings with respect to any specific future acquisitions.
There can be no assurance that the Company will be able to identify or
consummate any acquisition in the future or, if consummated, that any
acquisition would ultimately be beneficial to the Company.

RISK OF INTERNATIONAL SALES AND INTERNATIONAL OPERATIONS

         The Company derived approximately 35% of its total revenues from sales
outside North America in the year ended June 30, 1999. The Company believes that
its growth and profitability will require additional expansion of its sales in
foreign markets. The Company has sales or support staff located in Singapore,
Australia and England. The Company's expansion into foreign countries has
required and will continue to require significant management attention and
financial resources, particularly with respect to the expansion of the Company's
sales force, the transferring of a significant portion of the Company's
manufacturing operations to a third-party manufacturer in Singapore, and the
Company's operation and management of its recently acquired service-based
subsidiaries in

                                      13.


England. To increase international sales in subsequent periods, the Company must
establish additional foreign operations, hire additional personnel and recruit
additional international resellers. To the extent that the Company is unable to
expand international sales in a timely and cost-effective manner, the Company's
business, financial condition and results of operations would be materially
adversely affected.

         In addition, there can be no assurance that the Company will be able to
maintain or increase international market demand for the Company's products or
services. Although the Company's product sales are currently denominated in U.S.
dollars, the Company's international service contracts are currently denominated
in local currency and, accordingly, gains and losses on the conversion to U.S.
dollars of accounts receivable and accounts payable arising from international
service revenues may contribute to fluctuations in the Company's operating
results. The Company does not currently utilize foreign currency hedging
instruments. There can be no assurance that fluctuations in currency rates will
not materially adversely impact the Company's business, financial condition and
results of operations in the future. Additional risks inherent in the Company's
international business activities, including its relationship with the expected
third-party manufacturer of the Company's products in Singapore, include various
and changing regulatory requirements, costs and risks of relying upon local
subcontractors, increased sales and marketing and research and development
expenses, export restrictions and availability of export licenses, tariffs and
other trade barriers, political and economic instability, difficulties in
staffing and managing foreign operations, longer payment cycles, seasonal
reduction in business activities, potentially adverse tax laws, complex foreign
laws and treaties and the potential for difficulty in accounts receivable
collection. Any of these factors could have a material adverse effect on the
Company's business, financial condition or results of operations. Certain of the
Company's customer purchase agreements are governed by foreign laws, which may
differ significantly from U.S. laws. Therefore, the Company may be limited in
its ability to enforce its rights under such agreements and to collect amounts
owing to the Company should any customer refuse to pay such amounts. In
addition, the Company is subject to the Foreign Corrupt Practices Act (the
"FCPA") which may place the Company at a competitive disadvantage to foreign
companies that are not subject to the FCPA.

         To date, the Company has not been negatively affected by the recent
turmoil in Asian markets; however, certain of the Company's customers, suppliers
and third-party manufacturers located in Asian markets may encounter financial
difficulties resulting from foreign currency fluctuations or other economic,
social or political instabilities which could restrict their ability to fulfill
their contractual obligations to the Company. In particular, the Company
operates a consulting and systems integration subsidiary in Singapore and has
transferred a portion of its manufacturing operations to a third-party
manufacturer in Singapore. There can be no assurance that a decline in the value
of any relevant foreign currency relative to the U.S. dollar or an economic,
social or political change in any relevant country, will not have a material
adverse effect on the Company's business, financial condition and results of
operations.

DEPENDENCE UPON SIGNIFICANT CUSTOMERS

         The Company has derived, and believes that it may continue to derive, a
significant portion of its revenues from a limited number of large customers.
For the fiscal year ended June 30, 1999, ScanSource, Inc. accounted for 11% of
the Company's revenues. For the fiscal year ended June 30, 1998, AFC
Enterprises, Inc. accounted for 11% of the Company's revenues. Most customer
product orders are placed within the quarter that delivery is expected;
therefore, projections of future orders may be unreliable. In addition, the
amount of the Company's products or services required by any of its customers
can be adversely affected by a number of factors, including technological
developments and the internal budget cycles of its customers. Moreover, the
volume of work performed for specific customers is likely to vary from year to
year, and a major customer in one year may not purchase the Company's products
or services in a subsequent year. The completion, cancellation or significant
reduction in the scope of a large customer product or service order, or the
failure by the Company to obtain future orders from a significant customer,
could have a material adverse effect on the Company's business, financial
condition and results of operations. As a result of the Company's focus in
specific vertical markets, economic and other conditions that affect these
industries could lead to a reduction in capital spending on its customer
projects, which would have a material adverse effect on the Company's business,
financial condition and results of operations.

                                      14.


DEPENDENCE ON KEY PERSONNEL

         The Company's success is dependent, in part, upon the continued
services of certain key executive officers, including Richard P. Stack, the
Company's President and Chief Executive Officer, Robert Nichols, the Company's
Executive Vice President and President of CCI Group, Inc and Horace Hertz, the
Company's Chief Financial Officer and Secretary. The Company believes that its
future success depends to a significant degree upon the continued contributions
of its existing key management, sales, marketing, research and development and
manufacturing personnel, many of whom would be difficult to replace. The Company
has entered into employment agreements with certain of the above individuals,
and the Company carries key-man life insurance on Mr. Stack. The Company also
believes its future success will also depend largely upon its ability to attract
and retain highly-skilled hardware engineers, managerial, and sales and
marketing personnel. Competition for such personnel is intense, and the Company
competes in the market for personnel against numerous companies, including
larger, more established companies with significantly greater financial
resources than the Company. There can be no assurance that the Company will be
successful in attracting and retaining skilled personnel. The loss of certain
key employees or the Company's inability to attract and retain other qualified
employees could have a material adverse effect on the Company's business,
financial condition and results of operations.

COMPETITION

         The market for the Company's products and services is highly
competitive, subject to rapid change and sensitive to new product introductions
or enhancements and marketing efforts by industry participants. The Company
expects to continue to experience significant and increasing levels of
competition in the future, in part as open systems architecture in its targeted
industries becomes more common. The principal elements of competition related to
the Company's products include price, product features and performance,
compatibility with open systems, quality and reliability, brand awareness, level
of customer service and quality of display. The POS systems integration industry
is also highly competitive and undergoing continual change. The principal
elements of competition related to the Company's systems integration services
include reputation, scope of services provided, availability of resources and
price. In many of the Company's markets, traditional computer hardware
manufacturing, communications and consulting companies provide the most
significant competition. The Company must also compete with smaller service
providers that have been able to develop strong local or regional customer
bases. Most of the Company's competitors for its products and services, as well
as certain potential competitors, are more established, benefit from greater
name recognition, have significantly greater financial, technological,
production and marketing resources, and have more extensive distribution
networks than the Company.

         The Company believes the use of open systems architecture in its
targeted industries is an important competitive element. Several of the
Company's competitors currently also offer open systems and the Company believes
that the number of competitors offering open systems solutions will grow over
the next several years. The Company anticipates that a significant source of
future competition may be from existing competitors in the POS products and
services market that the Company believes are currently attempting to develop
POS systems and support services utilizing open systems architecture. Due to the
greater sales, marketing, product development and financial resources of the
Company's competitors, the Company anticipates that competition from these
competitors will intensify in the future. In order to effectively compete
against these competitors, the Company will need to continue its growth trend
and attain sufficient revenues to have the resources to timely develop new
products and services in response to evolving technology and customer demands
and to sell products and services through a broad distribution channel in
competition with these other existing and potential competitors. No assurance
can be given that the Company will be able to grow sufficiently to enable it to
compete effectively in this marketplace.

         The Company's competitors include a substantial number of large
well-established companies including International Business Machines (IBM),
MICROS Systems, Inc., Par Technology Corporation, Radiant Systems, Inc., NCR,
Panasonic and Fujitsu/ICL, each of which also offers open systems architecture
products and services related thereto. There can be no assurance that the
Company will be able to maintain its competitive advantage or that these
existing substantial competitors, or new competitors, will not develop
competitive products and services with favorable pricing. Moreover, the Company
has little or no proprietary barriers to entry that could keep its competitors
from developing similar products or services and technology or selling competing
products or services in the Company's markets.

                                      15.


         Increased competition from manufacturers or distributors of products
similar to or competitive with the Company's products, or from service providers
that provide services similar to the Company's services, could result in price
reductions, reduced margins and loss of market share or could render the
Company's technology obsolete, all of which could have a material adverse effect
on the Company's results of operations and financial condition. There can be no
assurance that the Company will be able to successfully compete in this
marketplace or develop sufficient new products and services to remain
competitive, and any failure to do so could have a material adverse effect on
its results of operations and financial condition.

DISTRIBUTION RISKS

         The Company presently markets its products primarily through OEMs, VARs
and direct sales to end-users, and intends to continue to utilize these
distribution channels in the future. Moreover, as part of the Company's strategy
to increase international sales, the Company will need to more fully develop
similar distribution channels in international markets. The Company also
anticipates that its services business will increase in the future, resulting in
a greater emphasis on marketing and distributing to OEMs and directly to end
users. As the Company increasingly relies on direct sales to end users, the
Company anticipates competing to a certain extent with its VARs and OEMs. This
competition may harm the Company's relationship with certain of its VARs and
OEMs, potentially resulting in the termination of some relationships with the
Company. Failure by the Company to expand its distribution channels, develop its
international distribution channels or manage any potential channel conflicts
could have a material adverse effect on the Company's growth. Moreover, any
factors, such as general adverse economic conditions, high inventory levels,
financial condition, marketing considerations or governmental regulations and
restrictions, that affect the ability of the Company's resellers to sell the
Company's products will adversely affect the Company's sales and could have a
material adverse impact on the Company's financial condition and results of
operations.

         There can be no assurance that the Company will be able to attract
resellers or OEMs that will be able to market the Company's products effectively
and will be qualified to provide timely and cost-effective customer support and
service or that the Company will be able to manage conflicts among its resellers
and/or OEMs. In addition, the Company's agreements with resellers typically do
not restrict resellers from distributing competing products, and in most cases
may be terminated by either party without cause. The inability to recruit,
manage or retain important resellers or OEMs, or their inability to penetrate
their respective market segments, could materially adversely affect the
Company's financial condition and results of operations.

         The Company's future success will also depend in part upon the ability
of the Company to attract, integrate, train, motivate and retain sales and
technical support personnel. The Company intends to rely more heavily in the
future on direct sales to end users, and there can be no assurance that the
Company's efforts to expand its direct sales force will be successful or that
the cost of these efforts will not exceed the revenue generated. In addition,
the Company expects to experience a significant time lag between the date sales
personnel are hired and the date sales personnel become fully productive. The
Company's inability to manage its sales force expansion effectively could have a
material adverse effect on the Company's business, financial condition and
results of operations. Competition for sales and support personnel is intense,
and the Company competes in the market for sales personnel against numerous
companies, including larger, more established companies with significantly
greater financial resources than the Company. There also can be no assurance
that the Company will be successful in attracting and retaining sales personnel,
and the loss of certain sales personnel or the Company's inability to attract
and retain other qualified sales personnel could have a material adverse effect
on the Company's business, financial condition and results of operations.

DEPENDENCE UPON THIRD-PARTY MANUFACTURERS AND SUPPLIERS

         Although the Company has capacity to manufacture limited volumes of its
products, the Company currently relies upon, and intends in the future to rely
more heavily upon, third-party manufacturers for the manufacture, assembly and
subassembly of its products. Any termination of, or significant disruption in,
the Company's relationship with the third-party manufacturers of its products
may prevent the Company from filling customer orders in a timely manner, as the
Company generally does not maintain large inventories of its products or
components. The Company has occasionally experienced and may in the future
experience delays in delivery of products and

                                      16.


delivery of products of inferior quality from some of its third-party
manufacturers. Although alternate manufacturers are available to produce the
Company's products, the number of manufacturers of some products is limited, and
qualifying a replacement manufacturer could take several months. In addition,
the Company's use of third-party manufacturers reduces control over product
quality, manufacturing timing, yields and costs since the Company must rely on
the third-party manufacturers' ability to identify the Company's requirements
for products and components, the manufacturers' general competence and ability
to progress along the learning curve relating to the manufacture of the
Company's products, and the manufacturers' schedules and capacity. Disruption of
the manufacture of the Company's products or failure of a third-party
manufacturer to remain competitive in functionality or price could delay or
interrupt the Company's ability to manufacture or deliver its products to
customers on a timely basis and would have a material adverse effect on the
Company's business, financial condition and results of operations. Moreover,
although arrangements with the Company's manufacturers may contain provisions
for warranty obligations on the part of the third-party manufacturers, the
Company remains primarily responsible to its customers for warranty obligations.

         The Company also depends upon third-party suppliers to deliver
components that are free from defects, competitive in functionality and cost and
in compliance with the Company's specifications and delivery schedules.
Disruption in supply, a significant increase in the cost of one or more
components or failure of a third-party supplier to comply with any of the
Company's procurement needs could delay or interrupt the Company's ability to
manufacture or deliver its products to customers on a timely basis and would
have a material adverse effect on the Company's business, financial condition
and results of operations. Moreover, any factors, such as general adverse
economic conditions, financial condition or government regulations and
restrictions, that affect the Company's third-party manufacturers or suppliers
could have a material adverse impact on the Company's business, financial
condition and result of operations.

RISK OF PRODUCT DEFECTS; PRODUCT AND OTHER LIABILITY.

         Computer products and systems as complex as those sold by the Company
often contain undetected errors or performance problems, particularly during new
and enhanced product launches. Despite product testing prior to introduction,
the Company's products have in the past, on occasion, contained errors that were
discovered after commercial introduction. Errors or performance problems may
also be discovered in the future. In addition, the Company's computer products
have a warranty that covers defective material and workmanship during the
twelve-month warranty period commencing on the date of delivery of the products.
Any future defects discovered after shipment of the Company's products could
result in loss of sales, delays in or elimination of market acceptance, damage
to its brand or to the Company's reputation, or product returns and warranty
costs, particularly in the quick service restaurant market where certain product
defects could cause a restaurant's POS systems and cash registers to be
inoperable for periods of time. Any loss of sales, delays in market acceptance
or product returns and warranty costs that result from defects discovered after
shipment would have a material adverse effect on the Company's business, results
of operations and financial condition. The Company attempts to make adequate
allowance in its new product release schedule for testing of product
performance. Because of the complexity of the Company's products, however, the
release of new products by the Company may be postponed should test results
indicate the need for redesign and retesting, or should the Company elect to add
product enhancements in response to customer feedback. In addition, third-party
products, upon which the Company's products are dependent, may contain defects
which could reduce or undermine entirely the performance of the Company's
products.

         In addition, although the Company's sales agreements with its customers
typically contain provisions designed to limit the Company's exposure to
potential product liability claims, there can be no assurance that these
limitations of liability would be enforceable or would otherwise protect the
Company from liability for damages to a customer resulting from a defect in one
of the Company's products. Although the Company maintains product liability
insurance covering certain damages arising from implementation and use of the
Company's products, there can be no assurance that this insurance would cover or
be sufficient to cover any claims sought against the Company. Any product
liability or other claims against the Company, if successful and of sufficient
magnitude, could have a material adverse effect on the Company's business,
financial condition and results of operations.

                                      17.


DIFFICULTY OF PENETRATION INTO OTHER MARKET SECTORS

         Although the Company has historically sold most of its products and
services to the foodservice industry, the Company is increasingly focusing on
selling its products and services to retailers and in the industrial market. To
date, the Company has only recognized a limited amount of revenue in these
markets. There can be no assurance that the Company's products and services will
gain acceptance in or meet these sectors' expectations and needs. In addition,
the Company may attempt to penetrate other markets. The inability of the
Company, for any reason, to successfully sell its products and services into
these markets could materially adversely affect the Company's growth.

EVOLVING TECHNOLOGY AND MARKET

         The POS computer industry is characterized by evolving technology and
industry standards. The Company's touch screen computers presently consist of
the Javelin-Wedge 5, the Javelin-Wedge P, the Javelin-LC and the Javelin-LCP,
which are sold in various configurations to meet the needs of the Company's
customers. The Company is in the process of developing additional touch screen
computers and intends to introduce several new products during the fiscal year
ending June 30, 2000, although no assurance can be given that the Company will
be successful in developing any new products. The Company's success will depend,
in part, on its ability to maintain and enhance its existing products and
broaden its product offerings by developing and introducing new products that
keep pace with technological developments in a cost effective manner, respond to
evolving customer preferences and requirements and achieve market acceptance.
Lack of market acceptance for the Company's existing or new products, the
Company's failure to introduce new products in a timely or cost-effective manner
or the Company's failure to achieve a technological advantage over its
competition while also remaining price competitive, could materially adversely
affect the Company's results of operations and financial condition. There can be
no assurance that the Company will be successful in its product development
efforts. In addition, there can be no assurance that the Company's products,
even if successfully developed, will achieve timely market acceptance. Moreover,
the introduction of products embodying new technology and the emergence of new
industry standards could render the Company's existing products obsolete and
unmarketable.

         The Company's future success will depend on its ability to continue to
develop and manufacture new competitive products and to enhance its existing
products, both of which will require continued investment in engineering and
product development. The success of product enhancements and new products
depends on a variety of factors, including product selection and specification,
timely and efficient completion of product design, cost-effective implementation
of the manufacturing and assembly processes and effective sales and marketing
efforts. There can be no assurance that the Company will be able to successfully
manage all of the diverse aspects of successful new product development in order
to develop and maintain competitive products.

LACK OF PATENT PROTECTION

         The Company holds no patents and believes that its competitive position
is not materially dependent upon patent protection. The Company believes that
most of the technology used in the design and manufacture of most of the
Company's products is generally known and available to others. Consequently,
there can be no assurances that others will not develop, market and sell
products substantially equivalent to the Company's products, or utilize
technologies similar to those used by the Company. The Company is aware of at
least one competitor that has attempted to copy the Company's products in the
past, and there can be no assurance that similar attempts will not be made in
the future. Although the Company believes that its products do not infringe on
any third party's patents, there can be no assurance that the Company will not
become involved in litigation involving patents or proprietary rights. Patent
and proprietary rights litigation entails substantial legal and other costs, and
there can be no assurance that the Company will have the necessary financial
resources to defend or prosecute its rights in connection with any litigation.
Responding to, defending or bringing claims related to the Company's rights to
its intellectual property may require the Company's management to redirect its
resources to address these claims, which could have a material adverse effect on
the Company's business, financial condition and results of operations.

                                      18.


FUTURE CAPITAL REQUIREMENTS

         The Company has expended and will continue to expend substantial funds
on expansion of its sales and marketing efforts, expansion of its services
business, potential acquisitions and product development. Consequently, the
Company may require additional funds to finance its operations. The precise
amount and timing of the Company's funding needs cannot be determined at this
time, and will depend upon a number of factors, including the market demand for
the Company's products and services, the progress of the Company's product
development efforts, and the Company's management of its cash, accounts payable,
inventory and other working capital items. There can be no assurance that, if
required by the Company in the future, funds will be available on terms
satisfactory to the Company, if at all. If additional funds are raised through
the issuance of equity or convertible debt securities, the percentage ownership
of the existing stockholders of the Company will be reduced, the existing
stockholders may experience additional dilution and such securities may have
rights, preferences or privileges senior to those of the holders of the
Company's Common Stock. Additionally, any debt financing that may be available
to the Company may include restrictive covenants on the Company. An inability to
obtain needed funding on satisfactory terms may require the Company to reduce
planned capital expenditures, to reduce planned levels of advertising and
promotion, to scale back its manufacturing or other operations or to enter into
financing arrangements on terms which it would not otherwise accept, and could
have a material adverse effect on the Company's business, financial condition
and results of operations.

DEPENDENCE UPON INDEPENDENT SOFTWARE PROVIDERS

         The Company produces PC-based open system hardware for the foodservice
and retail industries; however, the Company does not develop software.
Consequently, the Company is dependent upon third party software providers to
develop the POS application software that operates on the Company's hardware
platform. As in other sectors of the computer industry, hardware sales can often
be driven by advances in software technology. Accordingly, if software providers
do not, or are unable to, continue to provide state-of-the-art POS application
software that runs on the Company's hardware, the Company's financial condition
and results of operations could be materially adversely affected.

IMPACT OF YEAR 2000 ISSUES

         Some older computer programs were written using two digits rather than
four to define the applicable year. As a result, those computer programs have
time-sensitive software that recognize a date using "00" as the year 1900 rather
than 2000. This failure to use four digits to define the applicable year has
created what is commonly referred to as the "Year 2000 Issue" and could cause a
system failure or miscalculations causing disruption of operations, including a
temporary inability to process transactions or engage in similar normal business
activities.

         The Company recognizes the need to ensure that its operations will not
be adversely impacted by the Year 2000 Issue. The Company does not believe that
it has a material exposure to the Year 2000 Issue with respect to its own
products or information systems since its products and systems correctly define
the Year 2000. The Company has not made any material expenditure to address the
Year 2000 Issue and does not anticipate that it will be required to make any
such expenditure in the future. The Company has contacted most of its
significant suppliers and service providers to determine the extent to which it
is vulnerable to their failure to address the Year 2000 Issue. Although the
Company has received verbal assurances from some of these third parties that
their systems are year 2000 compliant, the Company has not yet received written
assurances from any of them. Although the Company does not believe its
operations will be significantly disturbed even if third parties to whom it has
relationships are not year 2000 compliant, there can be no assurance that any
year 2000 compliance problems of its suppliers and resellers of its products
will not negatively affect the Company's financial performance. If the Company's
suppliers are unable to provide it sufficient quantities of materials or goods
as a result of their failure to be year 2000 compliant, the Company believes
that it can obtain adequate supplies of materials and goods at comparable prices
from other sources. If resellers of the Company's products are adversely
affected by any failure to become year 2000 compliant and are therefore unable
to purchase anticipated quantities of the Company's products on a timely basis,
the Company may seek to replace these resellers. Because uncertainty exists
concerning the potential costs and effects

                                      19.


associated with any year 2000 compliance, the Company intends to continue to
make efforts to ensure that third parties to whom it has relationships are year
2000 compliant.

         The Year 2000 Issue could also have an affect on the Company's
revenues. Demand for the Company's products and services may decline after
January 1, 2000, as the Company will not be able to incorporate its products and
services into a Year 2000 driven POS retrofit. Similarly, many companies may
spend substantial resources to prevent or minimize problems associated with the
Year 2000 Issue and therefore may choose not to, or not have the budget capacity
to, upgrade their current POS systems for some period of time. Any lessening of
demand for the Company's products and services could have a material adverse
affect on the Company's business, financial condition and results of operations.

POSSIBLE VOLATILITY OF STOCK PRICE

         The market price of the Common Stock has been, and is likely to
continue to be, volatile. Factors such as announcements of new customer orders
or services by the Company or its competitors, changes in pricing policies by
the Company or its competitors, quarterly fluctuations in the Company's
operating results, announcements relating to strategic relationships or
acquisitions, changes in earnings estimates by analysts, government regulatory
actions, general conditions in the market for POS systems, overall market
conditions and other factors may have a significant impact on the market price
of Common Stock. In addition, in recent years the stock market in general, and
the shares of technology companies in particular, have experienced extreme price
fluctuations. This volatility has had a substantial effect on the market prices
of securities issued by many companies for reasons unrelated to the operating
performance of the specific companies. These broad market fluctuations may
adversely affect the market price of the Common Stock.

POSSIBLE ISSUANCE OF PREFERRED STOCK; ANTI-TAKEOVER EFFECT OF DELAWARE LAW AND
CERTAIN CHARTER PROVISIONS

         The Company is authorized to issue up to 1,000,000 shares of preferred
stock, par value $.01 per share (the "Preferred Stock"). The Preferred Stock may
be issued in one or more series, the terms of which may be determined at the
time of issuance by the Board of Directors, without further action by the
Company's stockholders, and may include voting rights, preferences as to
dividends and liquidation, conversion and redemption rights, and sinking fund
provisions as determined by the Board of Directors. Although the Company has no
present plans to issue shares of Preferred Stock, the issuance of any additional
shares of Preferred Stock in the future could affect the rights of the holders
of Common Stock and thereby reduce the value of the Common Stock. In particular,
specific rights granted to future holders of Preferred Stock could be used to
restrict the Company's ability to merge with or sell its assets to a third
party, thereby preserving control of the Company by its present owners. The
issuance of Preferred Stock, rights to purchase Preferred Stock or additional
shares of Common Stock may have the effect of delaying or preventing a change in
control of the Company. In addition, the possible issuance of Preferred Stock or
additional shares of Common Stock could discourage a proxy contest, make more
difficult the acquisition of a substantial block of the Company's Common Stock
or limit the price that investors might be willing to pay for shares of the
Company's Common Stock. Further, the Company's Restated Certificate of
Incorporation (the "Restated Certificate") provides that any action required or
permitted to be taken by stockholders of the Company must be effected at a duly
called annual or special meeting of stockholders and may not be effected by
written consent. Special meetings of the stockholders of the Company may be
called only by the Chairman of the Board of Directors, the Chief Executive
Officer of the Company, by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of authorized directors or by the
holders of 10% of the outstanding voting stock of the Company. The Restated
Certificate and the Company's Bylaws also provide for staggered terms for the
members of the Board of Directors. These and other provisions contained in the
Restated Certificate and the Company's Bylaws, as well as certain provisions of
Delaware law, could delay or make more difficult certain types of transactions
involving an actual or potential change in control of the Company or its
management (including transactions in which stockholders might otherwise receive
a premium for their shares over then current market prices) and may limit the
ability of stockholders to remove current management of the Company or approve
transactions that stockholders may deem to be in their best interests and,
therefore, could adversely affect the price of the Company's Common Stock.

                                      20.


ITEM 2.       DESCRIPTION OF PROPERTY

              The Company's executive offices, research and product development,
warehousing and distribution facilities are currently housed in a single leased
industrial unit comprised of approximately 29,000 square feet located in Irvine,
California. Under the terms of the lease, the Company presently pays rent of
approximately $23,500 per month with predetermined monthly rent increases at
annual intervals. The lease expires in July 2003.

ITEM 3.       LEGAL PROCEEDINGS

              The Company is not a party to any material legal proceedings.

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

              None.

                                     PART II

ITEM 5.       MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The Company's Common Stock trades on the Nasdaq National Market under
the symbol "JVLN." The following table sets forth, for the periods indicated the
high and low sales prices of the Company's Common Stock as reported by Nasdaq.
Prices reflect inter-dealer prices without retail mark-up, mark-down or
commissions, and may not necessarily reflect actual transactions.



                                                                             HIGH            LOW
                                                                            -------        -------
                                                                                     
YEAR ENDED JUNE 30, 1998
         First Quarter                                                      11 1/4         4 1/2
         Second Quarter                                                     10 13/16       8 1/2
         Third Quarter                                                      10 3/4         7 1/2
         Fourth Quarter                                                     15             9 3/8

YEAR ENDED JUNE 30, 1999
         First Quarter                                                      13 1/8         7
         Second Quarter                                                     13 3/8         6 1/2
         Third Quarter                                                      17 1/2         9
         Fourth Quarter                                                     15             9 3/8


         There were approximately 80 holders of record as of September 15, 1999;
however, the Company believes the number of beneficial holders of the Company's
common stock to be in excess of 600.

         No dividends have been declared or paid on the Company's Common Stock.

     RECENT SALES OF UNREGISTERED SECURITIES.

     The Company has sold and issued the following securities which were not
registered under the Securities Act of 1933, as amended (the "Act") since June
30, 1998:

     1. On November 6, 1998, the Company issued 257,058 shares of the Company's
Common Stock to Gary Green, Roger Scarlett, Anthony Sampson and Contech
Consultants, Ltd. as partial consideration for all of the outstanding capital
stock of RGB/Trinet Limited and of Jade Communications, Ltd., corporations
organized under the laws of England. The issuance of the Common Stock was deemed
to be exempt from registration under the Act by virtue of Regulation S under the
Act.

                                      21.


     2. On February 28, 1999, the Company issued 68,771 shares of the
Company's Common Stock to Gary Green, Roger Scarlett, Anthony Sampson and
Contech Consultants, Ltd. as further consideration for all of the outstanding
capital stock of RGB/Trinet Limited and of Jade Communications, Ltd.,
corporations organized under the laws of England. The issuance of the Common
Stock was deemed to be exempt from registration under the Act by virtue of
Regulation S under the Act.

     3. On April 22, 1999, the Company issued 452,226 shares of the Company's
Common Stock to John Biglin, Denise Biglin and John Seitz as partial
consideration for all of the outstanding capital stock of Dynamic
Technologies, Inc. and of SB Holdings, Inc., corporations organized under the
laws of state of Pennsylvania. The issuance of the Common Stock was deemed to
be exempt from registration under the Act by virtue of Section 4(2) of the
Act.

     4. On May 31, 1999, the Company issued 91,146 shares of the Company's
Common Stock to Gary Green, Roger Scarlett, Anthony Sampson and Contech
Consultants, Ltd. as further consideration for all of the outstanding capital
stock of RGB/Trinet Limited and of Jade Communications, Ltd.., corporations
organized under the laws of England. The issuance of the Common Stock was
deemed to be exempt from registration under the Act by virtue of Regulation S
under the Act.

The recipients of the above-described securities represented their intention to
acquire the securities for investment only and not with a view to distribution
thereof. Appropriate legends were affixed to the stock certificates issued in
such transactions. All recipients had adequate access, through employment or
other relationships, to information about the Registrant.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

         The following discussion should be read in conjunction with the
Company's consolidated financial statements and the related notes thereto and
the other financial information included elsewhere in this Annual Report. This
discussion contains forward-looking statements that include risk and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of any number of
factors, including those set forth under "Risk Factors" in Item 1 and elsewhere
in this Annual Report.

                                    22



OVERVIEW

Javelin Systems, Inc. ("Javelin") was incorporated in September 1995 and
commenced shipping its initial products in December 1995.

In December 1997, Javelin acquired all of the outstanding common stock of CCI
Group, Inc. ("CCI") and POSNET Computers, Inc. ("Posnet"). CCI and Posnet have
been consolidated and operate as CCI Group, Inc. CCI sells Javelin hardware as
well as hardware from other manufacturers and provides services directly to
end-users. These acquisitions were consummated, among other things, to enable
the Company to sell products and services directly to end-users and to capture a
greater proportion of each customer's POS system expenditures, including
maintenance and help-desk.

Through March 31, 1998, a significant portion of the Company's sales had been
made to domestic customers. To implement its marketing strategy in the
international arena, the Company established foreign subsidiaries in March and
April 1998 in England, Singapore and Australia.

In November 1998, Javelin acquired all of the outstanding common stock of
RGB/Trinet Limited ("RGB") and Jade Communications Ltd ("Jade"). RGB and Jade
are headquartered in England and provide complementary Wide Area Networking
(WAN) products and services primarily to large retail, hospitality, and
telecommunications companies.

In April 1999, the Company acquired all of the outstanding capital stock of
Dynamic Technologies, Inc. ("DTI") and all of the outstanding capital stock of
SB Holdings, Inc. ("SB"). DTI and SB provide custom Internet/Intranet software
and services.

In August 1999, the Company acquired all of the outstanding capital stock of
Restaurant Consulting Services, Inc. ("RCS"). RCS implements, operates and
supports packaged software applications for the restaurant industry.

Each of the above acquisitions provided a key component in delivering an
end-to-end POS system solution: CCI and Jade provide the remote site deployment
and support capabilities; DTI and Aspact provide the Enterprise Application
Integration skills; and RCS provides the foodservice financial system expertise.
Revenues from end-to-end solutions may include POS hardware and related
installation services and will integrate Internet communications, data center
management and packaged software applications implementation and support.
Revenues from solution services will consist of monthly recurring fees under a
contract for a specified period of time. Such revenues will be recognized
ratably as earned over the contract term. In September 1999, the Company
launched Aspeon Solutions, a division responsible for marketing end-to-end
solutions to the foodservice industry.

All of the acquisitions were accounted for by the purchase method, and
accordingly, the results of operations of these subsidiaries have been included
with those of the Company commencing on the dates of acquisition. Goodwill
resulting from these acquisitions is amortized over a range of 10 to 25 years.

                                    23


COMPOSITION OF REVENUES

The replacement cycle for hardware in the POS foodservice industry is generally
long, and consequently, revenues for hardware products to a specific end-user
tend to be non-recurring. Certain services, such as design, consulting and
installation, tend not to be recurring. Other services, such as maintenance and
help desk, are of an on-going nature and the related revenues tend to be
recurring. Service revenues represented approximately 8% and 19% of total
revenues for the years ended June 30, 1998 and 1999, respectively. Management
anticipates that services revenues in the future will increase and become a more
significant percentage of total revenues. As sales of hardware products and
services to specific end-users become more significant relative to total
revenues, the Company may experience significant variations in any quarterly or
annual reporting period. These variations may result from, among other things,
delays in installations or the Company's inability to timely replace
installations that have been completed or near completion. Any of these factors
could cause the Company's results of operations to fluctuate significantly from
period to period, including on a quarterly basis.

If the Company's strategy to increase sales to large end-users who have volume
purchasing power is successful, the Company believes its gross margins may
decline over time. Notwithstanding such potential decline in gross margins, the
Company believes that increased sales to large end-users may improve operating
margins because (1) related sales and marketing costs as a percentage of
revenues may be lower than the costs incurred to generate sales to indirect
distribution channels, and (2) increased related general and administrative
costs necessary to support the additional revenues should not be significant. In
addition, sales to large end-users may result in significant variations in
revenues or profits from period to period due to, among other things, the timing
and size of large orders, delays in system installations or the Company's
inability to generate new sales on a timely basis to large end-users.


COST OF REVENUES

Cost of revenues from product sales consists of the acquisition costs of
non-Javelin product line hardware that is resold by the Company and the costs of
components and payroll and related costs for assembly, manufacturing,
purchasing, quality control and repairs of Javelin products. Sales of
non-Javelin hardware generally carry a lower gross margin than do other product
sales. The cost of the components incorporated in the Javelin product line
represents in excess of 85% of the total cost of such products. The cost of five
components represents in excess of 75% of the cost of all components included in
the Javelin product line. While the Company has in the past experienced
reductions in the cost of components due to increased volume of purchases, it
believes that these costs have now stabilized and that further material
reductions may be difficult to achieve. The Company has a qualified independent
outside contract manufacturer to assist the Company in the manufacturing of new
products and with increased capacity needs for existing products. The Company
anticipates that the cost of manufacturing its products will not be materially
affected by the shifting of production to outside contract manufacturers.

Cost of service revenues consists primarily of payroll and related costs for the
technical and support staff providing the services. In anticipation of gaining
new customers, the Company has invested and will continue to invest in the
service business by incurring costs necessary to meet the needs of a higher
level of service revenues. These costs are of a relatively fixed nature in the
short term whereas the level of annual service revenues per multi-year contract
is relatively modest in the periods immediately following execution of the
contract. Service revenues per contract increase as new installations under the
contract are completed. Consequently, until the Company has a larger volume of
matured service contracts, gross margins on service revenues will be lower than
the Company believes can be realized by its service operations. Additionally,
because the Company's service business should generate higher revenues and
higher margins in periods in which the Company handles significant system
deployments, and because contracts for such deployments are non-recurring in
nature, the Company anticipates that revenues and gross margins from its service
business will fluctuate from period to period.

                                    24


RESULTS OF OPERATIONS

The following table sets forth certain statements of operations data as a
percentage of total revenues for the fiscal years ended June 30, 1998 and 1999:




                                                                   JUNE 30,
                                                              ------------------
                                                              1998          1999
                                                              ----          ----
                                                                      
                  Revenues:
                    Product sales                              91.5%        80.6%
                    Services                                    8.5         19.4
                                                              -----        -----
                  Total revenues                              100.0        100.0
                                                              -----        -----

                  Cost of revenues:
                    Cost of product sales (1)                  73.1         70.6
                    Cost of services (1)                       75.8         75.3
                                                              -----        -----
                  Total cost of revenues                       73.3         71.5
                                                              -----        -----


                  Gross profit                                 26.7         28.5
                                                              -----        -----
                  Operating expenses:
                    Research and development                    2.9          1.8
                    Selling and marketing                       4.0          5.4
                    General and administrative                 14.2         12.7
                                                              -----        -----


                  Total operating expenses                     21.1         19.9
                                                              -----        -----
                  Income from operations                        5.6          8.6
                  Interest expense                             (0.4)        (0.9)
                  Other income                                  0.2          0.1
                  Provision for income taxes                   (2.0)        (2.8)
                                                              -----        -----

                  Net income                                    3.4%         5.0%
                                                              =====        =====


(1)      Expressed as a percentage of related revenues, not of total revenues.

FISCAL YEAR ENDED JUNE 30, 1999 COMPARED TO FISCAL YEAR ENDED JUNE 30, 1998

REVENUES-PRODUCT SALES. Revenues from product sales increased by 116.2% to $58.7
million in 1999 compared to revenues of $27.1 million in 1998. The change is due
to an increase in revenues relating to Javelin hardware sales of $9.2 million,
revenues from CCI of $6.9 million, revenues from RGB/Jade of $6.7 million and
revenues from the newly established foreign subsidiaries of $8.7 million. The
increase relating to Javelin is attributable primarily to an increase in the
number of units sold.

REVENUES-SERVICES. Revenues from services increased by 460.4% to $14.1 million
in 1999 compared to revenues of $2.5 million for 1998. The change is due to an
increase in service revenues from CCI of $1.5 million, service revenues from
RGB/Jade of $7.5 million, service revenues from DTI of $1.6 million and service
revenues from the newly established foreign subsidiaries of $951,000.

                                       25


GROSS PROFIT. Gross profit increased by 162.1% to $20.7 million in 1999 compared
to a gross profit of $7.9 million in 1998. The increase is comprised of the
following:



                                             Year ended June 30,
                                  -----------------------------------------
                                        1998                  1999                INCREASE
                                  ----------------      -------------------     -------------
                                                                       
           Product sales            $7.3 million          $17.2 million         $ 9.9 million
           Service                  $609,000              $ 3.5 million         $ 2.9 million


The change in gross profit from product sales is due to an increase in gross
profit from the sale of Javelin hardware of $3.8 million, an increase in gross
profit from CCI of $1.2 million, gross profit from RGB/Jade of $2.4 million and
gross profit from the newly established foreign subsidiaries of $2.5 million.
The increase relating to Javelin is attributable to the increase in the number
of units sold, offset by a decrease in average sales price per unit and a
reduction in the cost of its products due to reductions in prices from the
Company's suppliers resulting from increased volume of purchases by the Company
and the realization of manufacturing efficiencies.

The change in gross profit from service revenues is due to gross profit on
services provided by RGB/Jade of $1.7 million, from services provided by DTI of
$908,000, gross profit on services provided by the newly established foreign
subsidiaries of $687,000 offset by a decrease in gross profit from services
provided by CCI of $438,000. The decrease in gross profit from CCI is due to a
lower number of roll-outs in 1999 as compared to 1998.

RESEARCH AND DEVELOPMENT. Research and development expenses increased by 52.9%
to $1.3 million in 1999 compared to research and development expenses of
$874,000 in 1998. All research and development activities are conducted by
Javelin. The increase is primarily attributable to increased payroll costs due
to the hiring of additional engineers.

SELLING AND MARKETING. Selling and marketing expenses increased by 227.3% to
$3.9 million in 1999 compared to selling and marketing expenses of $1.2 million
in 1998. The change is due to an increase in selling and marketing expenses of
Javelin of $608,000, selling and marketing expenses of RGB/Jade of $1.7 million,
selling and marketing expenses of DTI of $55,000 and selling and marketing
expenses of the newly established foreign subsidiaries of $521,000. Such
expenses consisted primarily of payroll, tradeshow fees, and travel costs.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased by
120.5% to $9.3 million in 1999 compared to general and administrative
expenses of $4.2 million in 1998. The change is due to an increase in general
and administrative expenses relating to Javelin of $1.2 million, increase in
general and administrative expenses of CCI of $1.4 million, general and
administrative expenses from DTI of $99,000, general and administrative
expenses from the newly established foreign subsidiaries of $1.9 million and
general and administrative expenses of RGB/Jade of $732,000. The increase at
Javelin consisted primarily of increased payroll costs due primarily to an
increase in the number of employees and increased facility costs due to
expansion.

INTEREST EXPENSE. Interest expense increased by $552,400 to $667,400 in 1999
compared to interest expense of $115,000 in 1998. The increase is due to
borrowings under the credit facility prior to the completion of the Company's
public offerings in November 1998 and February 1999. Such borrowings were
necessary to sustain the growth of business.

INCOME TAXES. Provision for federal, state and foreign income taxes increased by
$1.4 million to $2.0 million in 1999 compared to a provision for income tax of
$585,000 in 1998. The increase is attributable to the overall increase in income
before income taxes of $4.1 million as well as increases in income from the
Company's foreign subsidiaries operating in jurisdictions with lower income tax
rates than those in the United States.


LIQUIDITY AND CAPITAL RESOURCES

On June 8, 1998, the Company and its U.S. subsidiaries obtained a credit
facility of $7.5 million from a financial institution. The credit facility
expires on June 8, 2001 and consists of a line of credit of up to $6.0 million
and a term loan of $1.5 million. Under the line of credit, the Company may
borrow up to 80% of eligible receivables (as defined) and 50% of eligible
inventory (as defined) with monthly interest based

                                       26


upon the prime rate of a national financial institution plus 1.75% (9.5% as of
June 30, 1999). As of June 30, 1999 borrowings outstanding under the line
amounted to $1.4 million with approximately $3.5 million available for future
borrowings. Borrowings under the term loan are collateralized by substantially
all of the assets of the Company and bear interest at 13.65% per annum. The
Company is required to pay $25,000 per month under the term loan with all unpaid
principal and interest due on June 8, 2001.

As of June 30, 1999, Jade has a line of credit facility of $1,800,000 from an
unrelated financial institution. Borrowings under the line of credit are
collateralized by all of the assets of Jade and bear interest at 2% over the
U.K. Base rate (as defined). As of June 30, 1999, borrowings outstanding under
the line amounted to $613,000 with approximately $1,187,000 available for future
borrowings.

In November 1998, the Company completed a public offering of 1,395,000 shares of
its common stock at $6.75 per share, netting proceeds to the Company of
approximately $8.1 million. Proceeds to the Company were used to repay
borrowings under the revolving line of credit of approximately $3.2 million, to
purchase all of the outstanding common stock of RGB and Jade and for general
corporate purposes.

In February 1999, the Company completed a public offering of 2,375,000 shares of
its common stock at $12.25 per share, netting proceeds to the Company of
approximately $26.9 million. Proceeds to the Company were used for the
acquisition of DTI and SB, working capital and general corporate purposes.

As of June 30, 1999, the Company had cash and cash equivalents of $5.6 million
and working capital of $30.6 million.

Cash used in operating activities for the year ended June 30, 1999 amounted to
$7.1 million and consisted primarily of increases in trade receivables and
inventories. Cash used in investing activities for the year ended June 30, 1999
amounted to $20.7 million and consisted primarily of cash used to acquire the
outstanding common stock of RGB, Jade, DTI and SB and the purchase of equipment.
Cash provided by financing activities for the year ended June 30, 1999 amounted
to $33.7 million and consisted primarily of the proceeds from the public
offerings completed in November 1998 and February 1999.

In August 1999, the Company completed the acquisition of Restaurant Consulting
Services, Inc. See Note 3 to the consolidated financial statements for
additional details.

The Company believes that it has adequate financial resources to meet its
capital requirements for the next twelve months.


YEAR 2000

         Some older computer programs were written using two digits rather than
four to define the applicable year. As a result, those computer programs have
time-sensitive software that recognize a date using "00" as the year 1900 rather
than 2000. This failure to use four digits to define the applicable year has
created what is commonly referred to as the "Year 2000 Issue" and could cause a
system failure or miscalculations causing disruption of operations, including a
temporary inability to process transactions or engage in similar normal business
activities.

         The Company recognizes the need to ensure that its operations will not
be adversely impacted by the Year 2000 Issue. The Company does not believe that
it has a material exposure to the Year 2000 Issue with respect to its own
products or information systems since its products and systems correctly define
the Year 2000. The Company has not made any material expenditure to address the
Year 2000 Issue and does not anticipate that it will be required to make any
such expenditure in the future. The Company has contacted most of its
significant suppliers and service providers to determine the extent to which it
is

                                       27


vulnerable to their failure to address the Year 2000 Issue. Although the Company
has received verbal assurances from some of these third parties that their
systems are year 2000 compliant, the Company has not yet received written
assurances from any of them. Although the Company does not believe its
operations will be significantly disturbed even if third parties to whom it has
relationships are not year 2000 compliant, there can be no assurance that any
year 2000 compliance problems of its suppliers and resellers of its products
will not negatively affect the Company's financial performance. If the Company's
suppliers are unable to provide it sufficient quantities of materials or goods
as a result of their failure to be year 2000 compliant, the Company believes
that it can obtain adequate supplies of materials and goods at comparable prices
from other sources. If resellers of the Company's products are adversely
affected by any failure to become year 2000 compliant and are therefore unable
to purchase anticipated quantities of the Company's products on a timely basis,
the Company may seek to replace these resellers. Because uncertainty exists
concerning the potential costs and effects associated with any year 2000
compliance, the Company intends to continue to make efforts to ensure that third
parties to whom it has relationships are year 2000 compliant.

The Year 2000 Issue could also have an affect on the Company's revenues. Demand
for the Company's products and services may decline after January 1, 2000, as
the Company will not be able to incorporate its products and services into a
Year 2000 driven POS retrofit. Similarly, many companies may spend substantial
resources to prevent or minimize problems associated with the Year 2000 Issue
and therefore may choose not to, or not have the budget capacity to, upgrade
their current POS systems for some period of time. Any lessening of demand for
the Company's products and services could have a material adverse affect on the
Company's business, financial condition and results of operations.


ITEM 7.  FINANCIAL STATEMENTS.

         The information required by this item is included in Pages F-1 through
F-29 attached hereto and incorporated herein by reference. The index to the
financial statements can be found on page F-1.

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

         None

PART III

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


                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company and their ages are as
follows:


Name                        Age     Position
- ----                        ---     --------
                              
Richard P. Stack (1)        34      President, Chief Executive Officer and Director

Robert D. Nichols (2)       46      Vice President, Sales and Marketing,
                                    President, CCI Group, Inc. and Director

C. Norman Campbell          45      Vice President, Engineering

Horace M. Hertz             50      Chief Financial Officer and Secretary

Andrew F. Puzder(1)(2)      45      Director

Jay L. Kear(1)(2)           62      Director

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


DIRECTORS CONTINUING IN OFFICE UNTIL THE 1999 ANNUAL MEETING

RICHARD P. STACK, age 34, has been President, Chief Executive Officer and a
director of the Company since the Company's inception in September 1995.
Prior to that time, from 1991 through September 1995, Mr. Stack was Managing
Director of Hi-Technology Supply, a manufacturer and distributor of personal
computers and components located in South Africa, which he founded and grew
to approximately $6 million in annual sales and 15 employees prior to its
sale to a South Africa-based personal computer and component manufacturing
company. From 1988 through 1991, Mr. Stack was employed by Pan[cad 220]American
Airlines in technical management positions. Mr. Stack holds a B.A. degree
from the University of California at Berkeley.

ROBERT NICHOLS, age 46, has been Vice President, Sales and Marketing, and a
director of the Company since April 1998, and has been President of CCI
Group, Inc. since its inception in 1992. Prior to that time, from 1991 to
1992, Mr. Nichols served as Director of Sales and Marketing for DP-Tek, Inc.,
an electronic components manufacturer and systems integrator. From 1985
through 1991, Mr. Nichols served in various sales and marketing positions,
most recently as Sales Manager, Quick Service Restaurants, for Unisys
Corporation, a publicly-traded computer and information systems provider. Mr.
Nichols holds an Associates Degree from the State University of New York and
B.S. and M.B.A. degrees from the University of Missouri.

C. NORMAN CAMPBELL, age 45, has been Vice President, Engineering, of the
Company since its inception in September 1995. Mr. Campbell also served as
director of the Company from its inception through May 1998. Prior to that
time, from 1991 through September 1995, Mr. Campbell served in various
engineering management positions, including Director of Research and
Development, Singapore, for Advanced Logic Research, a publicly-traded
high-end file server manufacturing company. From 1984 to 1991, Mr. Campbell
also acted as consultant to the computer industry with such companies as
Intel, ITT, Orange Micro Inc. and IBC (UK).

HORACE M. HERTZ, age 50, has been Chief Financial Officer of the Company
since November 1997. Prior to that time, from 1996 to 1997, Mr. Hertz acted
as financial consultant for various companies. From October 1995 to December
1995, Mr. Hertz was the Chief Financial Officer of Access Healthnet, Inc., an
entity that declared bankruptcy in December 1995. From 1991 to 1995, Mr.
Hertz was a partner of Corbin & Wertz, a CPA firm specializing in
publicly[cad 220]held companies. From 1974 to 1991, Mr. Hertz was a partner of
Deloitte & Touche LLP. Mr. Hertz holds a masters degree in mathematics from
the University of California at Irvine.

DIRECTOR CONTINUING IN OFFICE UNTIL THE 2000 ANNUAL MEETING

There are currently two vacancies in the class of directors to be elected at
the 2000 Annual Meeting of Stockholders. The Board intends to identify and
elect at least one qualified person to fill such vacancies prior to the 2000
Annual Meeting.

DIRECTORS CONTINUING IN OFFICE UNTIL THE 2001 ANNUAL MEETING

JAY L. KEAR, age 62, was elected as a director of the Company in August 1996.
Since 1988, Mr. Kear has represented Stack Enterprises in working with and
investing in high technology companies. From 1988 through 1993, Mr. Kear also
engaged in similar work for the Noorda Family Trust. Prior to 1988, Mr. Kear
held various sales, marketing, engineering, and general management positions
with private and public companies in the high technology sector. Mr. Kear
received a B.S. degree from the University of Southern California.

ANDREW F. PUZDER, age 49, was elected as a director of the Company in
November 1996. Mr. Puzder is currently Executive Vice President of
Irvine-based Fidelity National Financial, Inc., Executive Vice President and
General Counsel of CKE Restaurants, Inc., Chief Executive Officer and a
director of Santa Barbara Restaurants Group, and a director of Checkers
Drive-In Restaurants, Inc. He is also a partner on leave at the law firm of
Stradling, Yocca, Carlson & Rauth. Mr. Puzder received his J. D. from the
Washington University School of Law.


To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended June 30, 1999, all
officers, directors and greater than ten percent beneficial owners complied
with all Section 16(a) filing requirements applicable to them; except that
one report, covering one transaction, was filed late by each of Messrs.
Stack, Hertz, Nichols and Campbell, respectively.

                                       28


ITEM 10:   EXECUTIVE COMPENSATION.

Compensation of Directors

The members of the Board do not receive any cash compensation for their
service as a director, but are eligible for reimbursement of their expenses
incurred in connection with attendance at Board meetings in accordance with
Company policy.

Further, each non-employee director of the Company is to be granted options
to purchase 30,000 shares of the Company's Common Stock pursuant to the terms
of the Company's stock option plan then in effect for services rendered as a
director of the Company. During the last fiscal year, the Company did not
grant options to its non-employee directors. As of September 15, 1999 no
non-employee director had exercised any options.

Compensation Of Executive Officers

The following table shows for the fiscal year ended June 30, 1999,
compensation awarded or paid to, or earned by, the Company's Chief Executive
Officer and the three other most highly compensated executive officers who
earned more than $100,000 in the fiscal year ended June 30, 1999
(collectively, the "Named Executive Officers"):

Summary Compensation Table




                                                                                  Long-Term
                                                    Annual Compensation      Compensation Awards
                                                    -------------------      -------------------
                                                    Salary        Bonus           Securities
Name and Principal Position               Year       ($)           ($)        Underlying Options
- ---------------------------               ----    ----------   ----------    -------------------
                                                                 
Richard P. Stack........................  1999    $187,887        --                75,000
President, Chief Executive Officer        1998    $105,508        --                50,000
and Director                              1997    $ 87,958        --                  --

Robert D. Nichols.......................  1999    $ 37,500      $152,909            75,000
Vice President, Sales and Marketing,      1998    $ 73,250      $ 87,500             5,000
President, CCI Group, Inc. and Director

Horace M. Hertz.........................  1999    $143,333      $ 20,000           110,000
Chief Financial Officer                   1998    $ 65,215         --               55,000

C. Norman Campbell......................  1999    $149,995         --               75,000
Vice President, Engineering               1998    $107,593         --               30,000
                                          1997    $ 90,415         --                 --



               Option Grants in Last Fiscal Year

The following table sets forth each grant of stock options made during the
fiscal year ended June 30, 1999 to each of the Named Executive Officers:




                                        Individual Grants
                      --------------------------------------------------------------------
                                           % of Total
                         Number of          Options
                         Securities        Granted to         Exercise or     Market Price
                     Underlying Options   Employees in        Base Price       on Date of        Expiration
Name                     Granted(1)      Fiscal Year(2)         ($/Sh)            Grant             Date
- ------               ------------------  --------------       -----------     ------------       ----------
                                                                  
Richard Stack             75,000              8.3%            $  8.75         $  8.75             11/10/08

Robert D. Nichols         75,000              8.3%            $  8.75         $  8.75             11/10/08

Horace M. Hertz           75,000              8.3%            $  8.75         $  8.75             11/10/08
                          45,000              5.0%            $ 10.875        $ 10.875             7/10/08

C. Norman Campbell        75,000              8.3%            $  8.75         $  8.75             11/10/08

- ------------------
(1) The options referenced above become exercisable over a 4-year period with
    25% vesting one year from the date of grant and 25% of the remaining shares
    vesting yearly thereafter.

(2) Based on options to purchase 903,750 shares granted to employees in the
    fiscal year ended June 30, 1999, including the Named Executive Officers.

               Aggregated Fiscal Year-End Option Values

There were no option exercises by the Named Executive Officers during the
fiscal year ended June 30, 1999. The following table sets forth
information with respect to the number and value of securities underlying
unexercised options held by the Named Executive Officers as of June 30,
1999:



                                       Number of
                                 Securities Underlying       Value of Unexercised
                                  Unexercised Options        In-the-Money Options
                                 at Fiscal Year-End(1)       at Fiscal Year-End(2)
                             ---------------------------   ---------------------------
Name                         Exercisable   Unexercisable   Exercisable   Unexercisable
- ----------                   -----------   -------------   -----------   -------------
                                                             
Richard P. Stack..........     10,000        115,000         $36,250       $407,500

Robert D. Nichols.........      1,000         79,000         $ 3,563       $276,750

Horace M. Hertz...........     18,333        156,667         $66,457       $457,243

C. Norman Campbell........      7,500         97,500         $27,188       $344,063

- ------------------
(1) Includes both "in-the-money" and "out-of-the-money" options.
    "In-the-money" options are options with exercise prices below the market
    price of the Company's Common Stock.

(2) Based on the fair market value of the Common Stock as of June 30, 1999.
    Amounts reflected are based on the fair market value minus the exercise
    price and do not indicate that the optionee sold such stock.


                           Employment Agreements

The Company and Richard P. Stack entered into an Employment Agreement dated
August 19, 1996 (the "Stack Employment Agreement"). The Stack Employment
Agreement expired on August 19, 1999 and was not renewed. The Stack
Employment Agreement provided for payment to Mr. Stack of an annual salary of
$95,000 from January 1, 1997 through December 31, 1997 and $105,000 from and
after January 1, 1998. On April 1, 1998, Mr. Stack's annual salary was
increased to $150,000. During the 1999 fiscal year, Mr. Stack's annual salary
was increased to $200,000. In addition to his salary, Mr. Stack was
reimbursed for all reasonable and necessary travel and other business
expenses incurred in connection with the performance of his duties. The
Company was also obligated to pay the premium for a life insurance policy
insuring Mr. Stack's life providing for death benefits of up to $750,000 to
the named beneficiary of the policy. During the term of the Stack Employment
Agreement, if Mr. Stack's employment with the Company was terminated for
cause (as defined in the Stack Employment Agreement), Mr. Stack would have
been entitled to receive his base salary through the date of termination.
During the term of the Stack Employment Agreement, if Mr. Stack's employment
with the Company was terminated without cause, he would have been entitled to
receive payment of his base salary for the greater of (i) the remaining term
of the Stack Employment Agreement, or (ii) one (1) year from the date of
termination.

The Company and C. Norman Campbell entered into an Employment Agreement dated
August 19, 1996 (the "Campbell Employment Agreement"). The Campbell
Employment Agreement expired on August 19, 1999 and was not renewed. The
Campbell Employment Agreement provided for payment to Mr. Campbell of an
annual salary of $95,000 from January 1, 1997 through December 31, 1997 and
$105,000 from and after January 1, 1998. On April 1, 1998, Mr. Campbell's
annual salary was increased to $130,000. During the 1999 fiscal year, Mr.
Campbell's annual salary was increased to $150,000. In addition to his
salary, Mr. Campbell was reimbursed for all reasonable and necessary travel
and other business expenses incurred in connection with the performance of
his duties. The Company was also obligated to pay the premium for a life
insurance policy insuring Mr. Campbell's life providing for death benefits of
up to $750,000 to the named beneficiary of the policy. During the term of the
Campbell Employment Agreement, if Mr. Campbell's employment with the Company
was terminated for cause (as defined in the Campbell Employment Agreement),
Mr. Campbell would have been entitled to receive his base salary through the
date of termination. During the term of the Campbell Employment Agreement, if
Mr. Campbell's employment with the Company was terminated without cause, he
would have been entitled to receive payment of his base salary for the
greater of (i) the remaining term of the Campbell Employment Agreement, or
(ii) one year from the date of termination.


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


ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of September 15, 1999,
by (i) each person who is known by the Company to own beneficially more than
5% of the Company's outstanding Common Stock, (ii) each Named Executive
Officer, (iii) each of the Company's directors, and (iv) all current
directors and executive officers as a group. Except as indicated in the
footnotes to this table, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable.




                                                  Amount and Nature
                                                    of Beneficial
                                                      Ownership
                                                 ---------------------
Name and Address of Beneficial Owner(1)(2)       Number        Percent
- ------------------------------------------      --------       -------
                                                         
Richard P. Stack(3)                             706,791          7.9%
Robert D. Nichols(4)                            403,783          4.5
C. Norman Campbell(5)                           281,884          3.2
Jay L Kear(6)                                    41,000            *
Andrew F. Puzder(7)                              25,000            *
Horace M. Hertz(8)                               49,833            *
All Executive Officers and Directors as a
group(6 persons)(9)                           1,305,941         16.6

- ------------------
* Less than one percent

(1) All persons listed above have an address c/o the Company's principal
executive offices at 17891 Cartwright Road, Irvine, CA 92614.

(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "SEC") and generally includes voting
or investment power with respect to securities. Except as indicated by
footnote, and subject to community property laws where applicable, the
persons named in the table above have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
Percentage of beneficial ownership is based on 8,894,803 shares of Common
Stock outstanding as of September 15, 1999.

(3) Includes 9,700 shares owned by Mr. Stack's children and 62,000 shares
owned by Mr. Stack's mother. Also includes 31,250 shares subject to options
exercisable within 60 days of September 15, 1999.

(4) Includes 12,600 shares owned by Mr. Nichols' children. Also includes
19,750 shares subject to options exercisable within 60 days of September 15,
1999.

(5) Includes 26,250 shares subject to options exercisable within 60 days of
September 15, 1999.

(6) Includes 5,000 shares held by the Jay Louis Kear family Trust of which
Mr. Kear is the trustee and 12,000 shares owned by an individual retirement
account of which Mr. Kear is the trustee. Also includes 24,000 shares subject
to options exercisable within 60 days of September 15, 1999.

(7) Includes 24,000 shares subject to options exercisable with 60 days of
September 15, 1999.

(8) Includes 1,500 shares held by GAK Limited, a partnership of which Mr.
Hertz is a general partner. Also includes 48,333 shares subject to options
exercisable with 60 days of September 15, 1999.

(9) Includes 173,583 shares subject to options exercisable within 60 days of
September 15, 1999.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

                      CERTAIN TRANSACTIONS

On September 25, 1999, the Company loaned $80,000 to Andrew Puzder, a
director of the Company, at an interest rate of 6% per year for personal
reasons. Mr. Puzder's options to purchase 30,000 shares of the Company's
Common Stock serve as collateral for such loan.

On December 22, 1997, the Company issued 557,500 shares of the Company's
Common Stock to Robert Nichols, Executive Vice President, Sales and
Marketing, and a Director of the Company, for his entire interest in CCI in
connection with the purchase by the Company of all the outstanding capital
stock of CCI. In connection with the acquisition of CCI, the Company also
assumed a note payable to Mr. Nichols with a balance of approximately
$185,000 (the "Nichols Note"). In February 1998, the Company repaid to Mr.
Nichols the principal amount and all accrued interest outstanding under the
Nichols Note.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      Exhibits.  See Exhibit Index below

         (b) The Company filed a Current Report on Form 8-K May 3, 1999 related
         to the acquisition of Dynamic Technologies, Inc. and SB Holdings, Inc.



EXHIBIT
NUMBER             DESCRIPTION OF DOCUMENT
- ------             ------------------------
                
3.1(8)       --    Registrant's Amended and Restated Certificate of
                   Incorporation.

3.2(1)       --    Registrant's Amended and Restated Bylaws.

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

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

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

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

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

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

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

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

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

10.9(1)      --    Employment Agreement dated August 19,1996 by and between the
                   Company and C. Norman Campbell.

10.10(6)     --    Employment Agreement dated January 1, 1998 by and between CCI
                   Group, Inc. and Robert Nichols.

10.11(6)     --    Standard Industrial/Commercial Multi-Tenant Lease-Modified
                   Net dated January 27, 1998 by and between the Company and
                   BRS-Campo Investment Company LP.

10.12(1)     --    Standard Industrial/Commercial Single-Tenant Lease-Gross
                   dated October 19, 1995 by and between the Company and Robert
                   P. Peebles Trust, dated April 11, 1979.

10.13(2)     --    Standard Sublease dated September 9, 1997 by and between the
                   Company, D. Howard Lewis and William R. Miller.

10.14(6)     --    The Business Center Office/Warehouse Lease dated April 4,
                   1997 by and between CCI Group, Inc and Nooney Krombech
                   Company.

10.15(2)     --    Distributor Agreement dated March 14, 1997 by and between
                   the Company and ScanSource, Inc.

10.16(6)     --    Loan and Security Agreement dated June 8, 1998 by and
                   among the Company, CCI Group,


                                       29


                
                    Inc., Posnet Computers, Inc. and Finova Capital Corporation and
                    related Secured Promissory Note, Pledge Agreement and Secured
                    Continuing Corporate Guaranty.

10.17(6)      --    Form of Warrant issued by the Company in favor of Finova
                    Capital Corporation.

10.18(8)      --    Second and Third Amendments to Loan and Security Agreement
                    dated December 15, 1998 and January 10, 1999, respectively,
                    by and among the Company, CCI Group, Inc., Posnet Computers,
                    Inc. and FINOVA Capital Corporation and related Security
                    Promissory Note, Pledge Agreement and Secured Continuing
                    Corporate Guaranty.

10.19(7)      --    Stock Purchase Agreement, dated April 23, 1999 by and
                    among Javelin Systems, Inc., Dynamic Technologies, Inc.,
                    SB Holdings, Inc., John Biglin, Denise Biglin and John
                    Seitz.

10.20*        --    1999 Non-Officer Stock Option Plan.

10.21*        --    Form of non-qualified stock option agreement under the
                    1999 Non-Officer Stock Option Plan.

10.22*        --    Form of 1999 Plan Stock Option Grant Notice.

21.1*         --    Subsidiaries

23.1          --    Consent of PricewaterhouseCoopers LLP, independent
                    accountants.

24.1          --    Power of Attorney. Reference is made to page 32 of Form
                    10-KSB filed on October 1, 1999.

27.1*         --    Financial Data Schedule.



- ----------
* Previously filed

(1) Filed as a exhibit to the Company's Registration Statement on Form SB-2, as
    amended (No. 333-11217), and incorporated herein by reference.
(2) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for the
    fiscal year ended June 30, 1997 and incorporated herein by reference.
(3) Filed as an exhibit to the Company's Current Report on Form 8-K dated
    December 30, 1997 and incorporated herein by reference.
(4) Filed as an exhibit to the Company's Current Report on Form 8-K/A dated
    March 4, 1998 and incorporated herein by reference.
(5) Filed as an exhibit to the Company's Current Report on Form 8-K dated
    January 5, 1998 and incorporated herein by reference.
(6) Filed as an exhibit to the Company's Annual Report on Form 10_KSB for the
    fiscal year ended June 30, 1998 and incorporated herein by reference.
(7) Filed as an exhibit to the Company's Current Report on Form 8-K filed May 3,
    1999, and incorporated herein by reference.
(8)  Filed as an exhibit to the Company's Quarterly report on Form 10-QSB for
     the quarter ended December 31, 1998 and incorporated herein by reference.

                                       30



                                   SIGNATURES


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

                                        Javelin Systems, Inc.



Date: October 26, 1999             By:  /s/ Horace Hertz
                                      ----------------------------------------
                                        Horace Hertz
                                        Chief Financial Officer



                                       31





      Signature                                                Title                             Date
      ---------                                                -----                             ----
                                                                                         

/s/ *                                                     President, Chief Executive           October 26, 1999
- ------------------------------------                      Officer, Director
Richard P. Stack                                          (PRINCIPAL EXECUTIVE OFFICER)


/s/ Horace Hertz                                          Chief Financial Officer              October 26, 1999
- ------------------------------------                      (PRINCIPAL FINANCIAL AND
Horace Hertz                                              ACCOUNTING OFFICER)


/s/ *                                                     Director                             October 26, 1999
- ------------------------------------
Steven J. Goodman


/s/ *                                                     Director                             October 26, 1999
- ------------------------------------
Jay L. Kear


/s/ *                                                     Director                             October 26, 1999
- ------------------------------------
Andrew F. Puzder


/s/ *                                                     Director                             October 26, 1999
- ------------------------------------
Robert Nichols


*By: /s/ Horace Hertz
- ------------------------------------
     Horace Hertz
     Attorney-In-Fact



                                        32



                             JAVELIN SYSTEMS, INC.

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                  FOR THE YEARS ENDED JUNE 30, 1998 AND 1999



                                   CONTENTS
                                                                        
Report of Independent Accountants..........................................F-2

Consolidated Financial Statements

Consolidated Balance Sheets................................................F-3
Consolidated Statements of Operations......................................F-4
Consolidated Statements of Cash Flows......................................F-5
Consolidated Statement of Stockholders' Equity.............................F-7
Notes to Consolidated Financial Statements.................................F-8



                                       F-1



                         REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of Javelin Systems, Inc.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of Javelin
Systems, Inc. and its subsidiaries at June 30, 1998 and 1999, and the results of
their operations and their cash flows for each of the two years in the period
ended June 30, 1999 in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe our audits provide a reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

Costa Mesa, California
August 31, 1999

                                     F-2



                              JAVELIN SYSTEMS, INC.
                           CONSOLIDATED BALANCE SHEETS



                                                                              JUNE 30,               JUNE 30,
                                                                                1998                   1999
                                                                         -------------------    --------------------
                                                                                          
ASSETS
Current assets:
   Cash and cash equivalents                                             $             ---      $       5,641,500
   Investments                                                                                          7,472,000
   Accounts receivable - net of allowance for doubtful accounts of
     $248,800 as of June 30, 1998 and of $454,400 as of June 30, 1999
                                                                                 7,449,700             16,000,200
   Inventories                                                                   5,925,300             14,565,700
   Deferred income taxes                                                           204,900                530,900
   Other current assets                                                            426,900                823,500
                                                                         -------------------    --------------------
     Total current assets                                                       14,006,800             45,033,800
   Property and equipment, net                                                   1,036,400              2,861,400
   Excess of cost over net assets of purchased businesses                        6,457,500             27,021,200
   Deferred financing costs                                                        889,000                617,600
   Other assets, net                                                               141,600                273,600
                                                                         -------------------    --------------------
     Total assets                                                        $      22,531,300      $      75,807,600
                                                                         ===================    ====================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Line of credit                                                        $       1,343,000      $       2,056,600
   Accounts payable                                                              5,636,900              7,681,800
   Accrued expenses                                                                625,000              2,446,200
   Current maturities of long-term debt                                            300,000                300,000
   Customer deposits                                                             1,197,200                  2,700
   Deferred maintenance revenues                                                   385,300                397,500
   Income taxes payable                                                            438,700              1,517,400
                                                                         -------------------    --------------------
     Total current liabilities                                                   9,926,100             14,402,200
                                                                         -------------------    --------------------

  Long-term debt, net of current portion                                         1,200,000              1,774,000
  Deferred rent expense                                                              6,300                 21,000
  Commitments and contingencies (Note 7)

   Stockholders' equity:
   Preferred stock, $0.01 par value: authorized shares--1,000,000;
     issued and outstanding shares--none
   Common stock, $0.01 par value: authorized shares--20,000,000;
     issued and outstanding shares--4,111,962
      as of June 30, 1998 and 8,887,203 as of June 30, 1999                         41,100                 88,900
   Additional paid in capital                                                   11,270,900             55,800,700
   Deferred compensation                                                           (39,200)                (6,700)
   Retained earnings                                                               132,900              3,799,700
   Accumulated other comprehensive loss                                             (6,800)               (72,200)
                                                                         -------------------    --------------------
     Total stockholders' equity                                                 11,398,900             59,610,400
                                                                         -------------------    --------------------
       Total liabilities and stockholders' equity                        $      22,531,300      $      75,807,600
                                                                         ===================    ====================


SEE ACCOMPANYING NOTES.
                                 F-3



                              JAVELIN SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS



                                                              FOR THE YEAR ENDED                         FOR THE YEAR ENDED
                                                                 JUNE 30, 1998                             JUNE 30, 1999
                                                       -----------------------------------  -----------------------------------
                                                                                      
Revenues:
  Product sales                                                               $27,132,400                          $58,672,400
  Services                                                                      2,513,700                           14,086,400
                                                       -----------------------------------  -----------------------------------
Total revenues                                                                 29,646,100                           72,758,800
                                                       -----------------------------------  -----------------------------------

Cost of revenues:
  Cost of product sales                                                        19,831,300                           41,408,400
  Cost of services                                                              1,904,700                           10,618,400
                                                       -----------------------------------  -----------------------------------
Total cost of revenues                                                         21,736,000                           52,026,800
                                                       -----------------------------------  -----------------------------------

                                                       -----------------------------------  -----------------------------------
Gross profit                                                                    7,910,100                           20,732,000
                                                       -----------------------------------  -----------------------------------

Operating expenses:
     Research and development                                                     874,000                            1,336,100
     Selling and marketing                                                      1,179,900                            3,861,400
     General and administrative                                                 4,195,500                            9,251,500
                                                       -----------------------------------  -----------------------------------
Total operating expenses                                                        6,249,400                           14,449,000
                                                       -----------------------------------  -----------------------------------

Income from operations                                                          1,660,700                            6,283,000

Interest expense                                                                 (115,000)                            (667,400)
Other income                                                                       53,300                               61,700

                                                       -----------------------------------  -----------------------------------
Income before income taxes                                                      1,599,000                            5,677,300
Provision for income taxes                                                       (584,900)                          (2,010,500)
                                                       -----------------------------------  -----------------------------------
Net income                                                                     $1,014,100                           $3,666,800
                                                       ===================================  ===================================

Earnings  per common share:
      Basic                                                                         $0.28                                $0.59
                                                       ===================================  ===================================
      Diluted                                                                       $0.27                                $0.57
                                                       ===================================  ===================================

Shares used in computing earnings per share:
      Basic                                                                     3,622,604                            6,259,965
                                                       ===================================  ===================================
      Diluted                                                                   3,750,611                            6,474,181
                                                       ===================================  ===================================


SEE ACCOMPANYING NOTES.
                                    F-4


                                          JAVELIN SYSTEMS, INC.
                                   CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                     FOR THE YEAR ENDED         FOR THE YEAR ENDED
                                                                         JUNE 30, 1998             JUNE 30, 1999
                                                                 -------------------------- --------------------------
                                                                                      
OPERATING ACTIVITIES
Net income                                                                      $1,014,100                 $3,666,800
Adjustments to reconcile net income to net cash used
      in operating activities:
   Depreciation and amortization                                                   354,900                  1,509,700
   Amortization of deferred compensation                                            51,600                     32,500
   Loss on disposal of assets                                                       55,100
   Deferred income taxes                                                          (204,900)                  (326,000)
   Deferred rent expense                                                             6,300                     14,700
   Income tax benefit from exercise of stock options                                59,200                    223,600
   Non-cash allowances:
     Inventories                                                                   312,800                    274,700
     Accounts receivable                                                           243,800                    263,000
     Other                                                                         130,000                    (35,000)
   Changes in operating assets and liabilities, net of acquisitions:
        Accounts receivable                                                     (3,403,500)                (5,585,900)
        Inventories                                                             (2,985,800)                (8,024,200)
        Other current assets                                                      (313,900)                  (170,900)
        Accounts payable                                                         2,838,100                    725,800
        Accrued expenses                                                            35,100                    949,200
        Deferred maintenance revenues                                              129,200                    (99,600)
        Customer deposits                                                         (408,500)                (1,194,500)
        Income taxes payable                                                       239,000                    707,300
                                                                 -------------------------- --------------------------
     Net cash used in operating activities                                      (1,847,400)                (7,068,800)
                                                                 -------------------------- --------------------------
INVESTING ACTIVITIES
   Purchase of equipment                                                          (724,600)                (2,051,000)
   Cash received from (paid for) purchased businesses                              392,400                (11,083,300)
   Investments in securities                                                                               (7,472,000)
   Other assets                                                                    (75,200)                  (131,200)
                                                                 -------------------------- --------------------------
   Net cash used in investing activities                                          (407,400)               (20,737,500)
                                                                 -------------------------- --------------------------
FINANCING ACTIVITIES
   Net borrowings (repayments) under line of credit                                774,200                 (1,000,900)
   Proceeds from issuance of long-term debt                                      1,500,000                     43,500
   Payments of notes payable to related parties                                   (515,500)                  (320,000)
   Repayment of notes payable                                                                                (399,200)
   Deferred financing costs                                                       (278,900)                    10,000
   Net proceeds from public offerings                                                                      35,007,300
   Exercise of stock options and warrants                                           95,600                    338,700
                                                                 -------------------------- --------------------------
     Net cash provided by financing activities                                   1,575,400                 33,679,400
                                                                 -------------------------- --------------------------
CUMULATIVE TRANSLATION ADJUSTMENT                                                   (6,800)                  (231,600)
                                                                 -------------------------- --------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                  (686,200)                 5,641,500


SEE ACCOMPANYING NOTES.
                                        F-5



CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                   686,200
                                                                 -------------------------- --------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                       $  -- ---               $  5,641,500
                                                                 ========================== ==========================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Income tax paid                                                              $  298,000               $  1,388,700
                                                                 ========================== ==========================
   Interest paid                                                                $  113,200               $    494,100
                                                                 ========================== ==========================

   SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING
     AND INVESTING ACTIVITIES:
    See Note 3 for the acquisitions of businesses in exchange for shares of the
     Company's common stock.

   See Note 6 for the warrants issued in connection with credit facility.

   See Note 3 for issuance of the Company's common stock for the cancellation of
     earnout shares.


SEE ACCOMPANYING NOTES.
                                       F-6


                              JAVELIN SYSTEMS, INC.

                  CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                   FOR THE YEARS ENDED JUNE 30, 1998 AND 1999






                                                                                            RETAINED     ACCUMULATED
                                                               ADDITIONAL                   EARNINGS       OTHER
                                            COMMON STOCK        PAID-IN     DEFERRED     (ACCUMULATED   COMPREHENSIVE
                                         SHARES      AMOUNT     CAPITAL   COMPENSATION      DEFICIT)         LOSS          TOTAL
                                         -----------------------------------------------------------------------------------------
                                                                                                  

BALANCE AS OF JULY 1, 1997               3,119,250   $31,200   $4,295,300   $ (90,800)    $  (881,200)   $             $ 3,354,500

VALUE ASSIGNED TO WARRANTS ISSUED IN
  CONNECTION WITH CREDIT FACILITY                                 621,900                                                  621,900

EXERCISE OF STOCK OPTIONS AND EXCHANGE
  OF WARRANTS FOR COMMON STOCK              63,662       600       95,000                                                   95,600

SHARES ISSUED IN CONNECTION WITH
  ACQUISITION OF POSNET AND CCI            929,050     9,300    6,199,500                                                6,208,800

AMORTIZATION OF DEFERRED COMPENSATION                                          51,600                                       51,600

INCOME TAX BENEFIT FROM EXERCISE OF
  STOCK OPTIONS                                                    59,200                                                   59,200

COMPREHENSIVE INCOME                                                                        1,014,100        (6,800)     1,007,300

                                         -----------------------------------------------------------------------------------------
BALANCE AS OF JUNE 30, 1998              4,111,962    41,100   11,270,900     (39,200)        132,900        (6,800)    11,398,900


EXERCISE OF STOCK OPTIONS AND EXCHANGE
  OF WARRANTS FOR COMMON STOCK              79,790       800      337,900                                                  338,700

ISSUANCE OF COMMON STOCK IN CONNECTION
  WITH THE ELIMINATION OF POSNET
  EARNOUT SHARES                            56,250       600      362,600                                                  363,200

SHARES ISSUED IN CONNECTION WITH PUBLIC
  OFFERINGS, NET OF OFFERING COSTS       3,770,000    37,700   34,969,600                                               35,007,300

SHARES ISSUED IN CONNECTION WITH
  ACQUISITION OF RGB AND JADE              416,975     4,200    3,774,600                                                3,778,800

SHARES ISSUED IN CONNECTION WITH
  ACQUISITION OF DTI AND 6B                452,226     4,500    4,861,500                                                4,866,000

AMORTIZATION OF DEFERRED COMPENSATION                                          32,500                                       32,500

INCOME TAX BENEFIT FROM EXERCISE OF
  STOCK OPTIONS                                                   223,600                                                  223,600

COMPREHENSIVE INCOME                                                                        3,666,800       (65,400)     3,601,400

                                         -----------------------------------------------------------------------------------------
BALANCE AS OF JUNE 30, 1999              8,887,203    88,900   $55,800,700  $  (6,700)     $3,799,700      $(72,200)   $59,610,400
                                         -----------------------------------------------------------------------------------------


                                       F-7


                              JAVELIN SYSTEMS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  GENERAL

Javelin Systems, Inc. ("Javelin") was incorporated in the State of Delaware on
September 19, 1995 under the name of Sunwood Research, Inc. Javelin is a leading
provider of retail foodservice technology solutions and services that enable
restaurants and retailers to capture, analyze, disseminate and use information
throughout the enterprise, from the point-of-sale (POS) cash register terminal
to the back office to an organization's headquarters. Javelin designs,
manufactures and markets open system touchscreen POS network-ready hardware
systems and provides POS systems integration services and software solutions
primarily for the foodservice and retail industries.

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

In December 1997, Javelin acquired all of the outstanding common stock of POSNET
Computers, Inc.("Posnet") and CCI Group, Inc. ("CCI") as described in Note 3.
Posnet and CCI provide full turn-key systems integration services, including
system consulting, staging, training, deployment, product support and
maintenance.

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

In May 1998, Javelin Asia acquired all of the outstanding common stock of Aspact
IT Services (Singapore) Pte Ltd ("Aspact") as described in Note 3. Aspact is
headquartered in Singapore and provides consulting and system integration
services.

In November 1998, the Company completed a public offering of 1,395,000 shares of
its common stock at $6.75 per share, netting proceeds to the Company of
approximately $8.1 million. Proceeds to the Company were used to repay
borrowings under a revolving line of credit of approximately $3.2 million, to
purchase all of the outstanding common stock of RGB/Trinet Limited ("RGB") and
Jade Communications Ltd ("Jade"), as described below, and for general corporate
purposes.

In November 1998, Javelin acquired all of the outstanding common stock of RGB
and Jade as described in Note 3. RGB and Jade are headquartered in England and
provide

                                        F-8



complementary Wide Area Networking (WAN) products and services primarily to
large retail, hospitality, and telecommunications companies.

In February 1999, the Company completed a public offering of 2,375,000 shares of
its common stock at $12.25 per share, netting proceeds to the Company of
approximately $26.9 million. Proceeds to the Company were used to purchase the
outstanding common stock of Dynamic Technologies, Inc. ("DTI") and SB Holdings,
Inc. ("SB"), as described below, and for working capital and general corporate
purposes.

In April 1999, the Company acquired all of the outstanding capital stock of DTI
and all of the outstanding capital stock of SB, as described in Note 3. DTI and
SB provide custom Internet/Intranet software and services.

In August 1999, the Company acquired all of the outstanding capital stock of
Restaurant Consulting Services, Inc. ("RCS"). RCS implements, operates and
supports packaged software applications for the restaurant industry as described
in Note 10.

Hereinafter, Javelin and its subsidiaries are referred to as the Company.



2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Javelin and of its
wholly owned subsidiaries. All significant intercompany transactions and
balances have been eliminated.


USE 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 disclosures of
contingent assets and liabilities at the date of the financial statements,
and the reported amounts of revenues and expenses during the reported period.
Actual results could materially differ from these estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

These consolidated financial statements contain financial instruments whereby
the fair market value of the financial instruments could be different than that
recorded on a historical basis in the accompanying consolidated financial
statements. The financial instruments consist of cash and cash equivalents,
investments, accounts receivable, accounts payable, accrued expenses and debt.
The carrying amounts of the Company's

                                        F-9



financial instruments as of June 30, 1998 and 1999 approximate their respective
fair values.

CONCENTRATION OF BUSINESS AND CREDIT RISK

Javelin operates within an industry that is subject to rapid technological
advancement, intense competition and uncertain market acceptance. The
introduction of new technologies, competitors' alternative products and ultimate
market acceptance of the products sold by Javelin, could have a substantial
impact on the future operations of the Company.

Financial instruments which potentially subject the Company to a concentration
of credit risk consist primarily of trade receivables. In the normal course of
business, the Company provides credit terms to its customers and collateral is
generally not required. Accordingly, the Company performs ongoing credit
evaluations of its customers and maintains allowances for potential losses
which, when realized, have been within the range of management's expectations.

During the year ended June 30, 1998 one customer in the solutions business
segment (see Note 9) accounted for approximately 11% of net sales. During the
year ended June 30, 1999 one customer in the hardware products business segment
accounted for approximately 11% of net sales. Sales were not to the same major
customers in 1998 and 1999. See Note 9 for sales to geographic areas.

CASH AND CASH EQUIVALENTS

Bank overdrafts of $847,000 and $613,400 as of June 30, 1998 and 1999,
respectively, are included in accounts payable. The Company considers all highly
liquid investments purchased with original maturities of three months or less to
be cash equivalents.

INVESTMENTS

Investments consist of U.S. government and corporate debt securities with
original maturities ranging from three to nine months. Investments are stated at
market value determined by the most recently traded price of each security at
the balance sheet date. By policy, the Company invests primarily in high-grade
marketable securities. All investments are defined as trading securities under
the provisions of Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115").

Management determines the appropriate classification of its investments at the
time of purchase and reevaluates such determination at each balance sheet date.
Securities that are bought and held principally for the purpose of selling them
in the near term are classified as trading securities and unrealized gains and
losses are included in earnings. Cost is determined using the specific
identification method for the purpose of computing unrealized gains and losses.

                                        F-10



Investments consisted of the following as of June 30, 1999:

                                                            
             Obligations of U.S. government agencies                        $3,981,900
             U.S. Treasury securities                                          988,400
             Corporate debt securities                                       2,501,700
                                                                           -----------
             Total investments                                              $7,472,000
                                                                           ===========

             

Gains on trading securities for the year ended June 30, 1999 were not
significant.


INVENTORIES

Inventories consist primarily of computer hardware and components and are
stated at the lower of cost (first-in, first-out) or market as follows:



                                                       June 30,                    June 30,
                                                         1998                        1999
                                                  --------------------        -------------------
                                                                        
          Raw materials                           $      3,572,500             $     7,195,600
          Work-in-process                                                              227,000
          Finished goods                                 2,352,800                   7,143,100
                                                  --------------------        -------------------

                                                  $      5,925,300             $    14,565,700
                                                  ====================        ===================


PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Maintenance and repairs are charged
to expense as incurred, and the costs of additions and betterments are
capitalized. Depreciation is provided in amounts, which amortize costs over the
useful lives of the related assets, generally three to five years, utilizing the
straight-line method. Leasehold improvements are amortized over the terms of the
respective leases or useful lives of the improvements, whichever is shorter.

Management of the Company assesses the recoverability of property and equipment
when certain events are known to management which may affect the carrying value
of such assets in relation to fair value. Management assesses impairment by
determining whether the carrying value of such assets over their remaining lives
can be recovered through projected undiscounted cash flows. The amount of
impairment, if any, is measured based on projected discounted cash flows and is
charged to operations in the period in which such impairment is determined by
management. To date, management has not identified any impairment of property
and equipment. Depreciation expense was $217,700 and $629,800 for the years
ended June 30, 1998 and 1999, respectively.

                                    F-11


Property and equipment consists of the following:



                                                     June 30,                    June 30,
                                                       1998                        1999
                                                --------------------        -------------------
                                                                      
        Machinery and
        equipment                               $        603,000            $     2,978,100

        Furniture and fixtures
                                                         638,000                    732,500

        Leasehold improvements
                                                          35,200                    254,000
                                                --------------------        -------------------

                                                       1,276,200                  3,964,600

        Less accumulated
        depreciation and
        amortization                                    (239,800)                (1,103,200)
                                                --------------------        -------------------

        Property and
        equipment, net                          $      1,036,400            $     2,861,400
                                                ====================        ===================


EXCESS OF COST OVER NET ASSETS OF PURCHASED BUSINESSES

Excess of cost over net assets of purchased businesses (goodwill) represents the
excess of purchase price over the fair value of the net assets of acquired
businesses. For the acquisitions of Posnet, CCI, Aspact, RGB and Jade, the
excess was allocated entirely to goodwill. Management determined that for these
acquired companies, there were no other identifiable intangible assets, such as
workforce, that would require an allocation of the purchase price. The workforce
of the acquired companies requires limited specialized skills. Goodwill is
stated at cost and is amortized on a straight-line basis over 10 years for DTI
and SB and over 25 years for all other acquired companies. The Company assesses
the recoverability of these intangible assets by determining whether the
amortization of the goodwill balances over the remaining lives can be recovered
through projected undiscounted cash flows of the related operations. The amount
of goodwill impairment, if any, is measured based on projected discounted cash
flows and is charged to operations in the period in which goodwill impairment is
determined by management. To date, management has not identified any impairment
of goodwill.

The Company recorded $125,200 and $598,500 in goodwill amortization for the
years ended June 30, 1998 and 1999, respectively. Accumulated amortization was
$153,200 and $751,700 as of June 30, 1998 and 1999, respectively.

                                    F-12


DEFERRED FINANCING COSTS

Deferred financing costs represent incremental costs to unrelated parties
incurred in connection with the credit facility described in Note 5 and are
deferred and amortized over the term of the related debt.

FOREIGN CURRENCY TRANSLATION

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

REVENUE RECOGNITION

The Company sells its hardware and software products both as part of a solutions
package and on a stand-alone basis, principally to the foodservice industry.
Sales of the Company's products which are part of a solutions package typically
include hardware, third-party software, consulting and installation. Sales of
products on a stand-alone basis exclude revenues from installation and
consulting services.

Revenues from sales of products sold on a stand-alone basis are recognized upon
shipment of the products. The Company does not have any significant remaining
obligations upon shipment of the products. Product returns and sales allowances,
which historically have not been significant, are provided for at the date of
sale. These revenues are generally from sales made by Javelin, Javelin Europe,
Javelin Asia, Javelin Australia and RGB.

Products and services which are part of a solution are recognized upon the
completion of the installation of the product as acknowledged by the customer.
Products sold in this fashion are reflected as product sales revenue while the
installation and consulting services are reflected as services revenue. These
revenues are generally from sales of CCI and Jade.

Service contract revenues are recognized ratably over the term of the related
contract. These revenues are generally from maintenance, help desk and asset
management contracts at CCI and DTI and are reflected as services revenues.

The Company generally recognizes software customization and development services
as revenues using the percentage-of-completion method over a period of time that
commences with the execution of the license agreement and ends with the
completion of

                                    F-13


the initial customization and installation. Some of the Company's newer products
do not require initial customization. If the customer does not require such
customization, the Company generally recognizes the license fees from these
products upon delivery, assuming the services to be provided are not essential
to the functionality of the software. License fees through June 30, 1999 have
been insignificant. These revenues are from sales of DTI.

The Company also generates revenue by providing solution services to customers
in industries other than the foodservice industry. The Company through its
wholly owned subsidiary DTI, maintains a staff of industry certified network
engineers, server developers and technical project managers with experience
providing design, development, installation and management of systems to
customers outside of the foodservice industry. These solutions services are
generally offered under time and material type contracts. Accordingly, revenues
are recognized as time is incurred by the consultants providing the service and
reflected as services revenues.


WARRANTIES

The Company's products are under warranty for defects in material and
workmanship for one year. Certain components included in the Company's products
are covered by manufacturers' warranties. The Company establishes an accrual for
estimated warranty costs at the time of sale.

ADVERTISING COSTS

The Company expenses the costs of advertising as incurred.

RESEARCH AND DEVELOPMENT

The Company expenses the cost of research and development as incurred. Research
and development expenses are principally comprised of payroll and related costs
and the cost of prototypes.

STOCK-BASED COMPENSATION

During 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123. ("SFAS 123"), "Accounting for
Stock-Based Compensation," which defines a fair value based method of accounting
for stock-based compensation. However, SFAS 123 allows an entity to continue to
measure compensation cost related to stock and stock options issued to employees
using the intrinsic method of accounting prescribed by Accounting Principles
Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to Employees."
Entities electing to use APB 25 for accounting for stock-based compensation to
employees must make pro forma disclosures of net income or loss, as if the fair
value method of accounting defined in SFAS 123 had been applied. The Company has
elected to account for its stock-based compensation to employees under APB 25.

                                    F-14


INCOME TAXES

The Company accounts for its income taxes using the asset and liability method
whereby deferred tax assets and liabilities are determined based on temporary
differences between bases used for financial reporting and income tax reporting
purposes. Income taxes are provided based on the enacted tax rates in effect at
the time such temporary differences are expected to reverse. A valuation
allowance is provided for certain deferred tax assets if it is more likely than
not that the Company will not realize those taxes through future operations.

EARNINGS PER COMMON SHARE

The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards. No. 128, " Earnings per Share" ("SFAS 128"),
which specifies the computation, presentation and disclosure requirements for
earnings per share ("EPS"). It replaces the presentation of primary and fully
diluted EPS with basic and diluted EPS. Basic EPS excludes all dilution. It
is based upon the weighted average number of common shares outstanding during
the period. Diluted EPS reflects the potential dilution that would occur if
securities or other contracts to issue common stock were exercised or
converted into common stock. The Company adopted SFAS 128 in the quarter
ended December 31, 1997 and restated all previously reported per share
amounts to conform to the new presentation.

A reconciliation of basic and diluted EPS for the years ended June 30, 1998 and
1999 is as follows:



                                                              Year Ended                             Year Ended
                                                            June 30, 1998                           June 30, 1999
                                              ---------------------------------------------------------------------------
                                                   BASIC             DILUTED                 BASIC              DILUTED
                                              --------------       -----------           -------------        -----------
                                                                                                  
Net income                                    $    1,014,100       $ 1,014,100           $   3,666,800        $ 3,666,800
Weighted average common shares
   outstanding                                     3,622,604         3,622,604               6,259,965          6,259,965
Additional shares due to potential
   exercise of stock options                                           128,007                                    214,216
Diluted weighted average common shares
   outstanding                                     3,622,604         3,750,611               6,259,965          6,474,181
Earnings per share
                                              $         0.28              0.27           $        0.59               0.57


There were approximately 146,375 options in 1999 that were not included in the
computation of diluted EPS because the exercise price was greater than the
average market price of the common stock, thereby resulting in an
antidilutive effect. The number of antidilutive options in 1998 was not
material.


                                      F-15


SEGMENT  INFORMATION

In fiscal year 1999, the Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131"). SFAS 131 supersedes SFAS 14, "Financial Reporting for
Segments of a Business Enterprise", replacing the "industry segment" approach
with the "management" approach. The management approach designates the internal
organization that is used by management for making operating decisions and
assessing performance as the source of the Company's reportable segments. SFAS
131 also requires disclosures about products and services, geographic areas, and
major customers. The adoption of SFAS 131 did not affect results of operations
or financial position but did affect the disclosure of segment information (see
Note 9).

COMPREHENSIVE INCOME

Effective in the first quarter of fiscal year 1999, the Company adopted
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130"). SFAS 130 establishes standards for reporting and
displaying comprehensive income and its components in the Company's consolidated
financial statements. Comprehensive income is defined in SFAS 130 as the change
in equity (net assets) of a business enterprise during a period from
transactions and other events and circumstances from nonowner sources.
Accumulated other comprehensive loss consists of the change in the cumulative
translation adjustment. Total comprehensive income was $1,007,300 and $3,601,400
for the years ended June 30, 1998 and 1999, respectively.



3.       ACQUISITIONS

Cash paid (received) in connection with the Company's purchase acquisitions is
as follows:



                                                              1998                       1999
                                                         --------------            --------------
                                                                             
         Fair value of assets acquired, including
            goodwill and net of cash received            $   10,422,000            $   22,893,100
         Less liabilities assumed                             4,561,200                 4,912,100
         Less stock issued to sellers                         6,253,200                 6,897,700
                                                         --------------            --------------
          Cash paid (received)                           $     (392,400)           $   11,083,300
                                                         ==============            ==============


In December 1997, the Company acquired all of the outstanding capital stock of
Posnet. Posnet sells, installs and maintains POS systems and turnkey retail
automation systems. The original purchase price for the Posnet capital stock
consisted of 225,000 shares of the Company's common stock. The Company was
required to issue an additional 75,000 shares of its common stock in 1998 and
shares of its common stock with a market value of $500,000 in each of 1999 and
2000 based upon the cumulative net profits of Posnet during the three years
ending December 31, 2000. The acquisition has been accounted

                                      F-16


for by the purchase method, and accordingly, the results of operations of
Posnet have been included with those of the Company commencing on the date of
acquisition. The purchase price of $1,594,200 (including acquisition costs of
approximately $75,500) was determined by discounting the value of the common
stock issued by 25% from the quoted price principally due to restrictions and
liquidity factors and resulted in excess of purchase price over the fair
value of net assets acquired of approximately $2,036,000. Such excess (which
was increased for the contingent payments described below) is being amortized
on a straight-line basis over 25 years. During the year ended June 30, 1998,
the Company issued 18,750 shares of its common stock as additional
consideration. In August 1998, the Company agreed to issue 56,250 shares of
its common stock to the former shareholders of Posnet in consideration for
the elimination of any future contingent payments. The value of these shares
has been recorded as additional goodwill.

In December 1997, the Company acquired all of the outstanding capital stock of
CCI. CCI sells, installs and maintains POS systems and turnkey retail automation
systems. The purchase price for the CCI capital stock consisted of 670,000
shares of the Company's common stock. The acquisition has been accounted for by
the purchase method, and accordingly, the results of operations of CCI have been
included with those of the Company commencing on the date of acquisition. The
purchase price of $4,476,800 (including costs of acquisition of approximately
$111,300) was determined by discounting the value of the common stock issued by
25% from the quoted price principally due to restrictions and liquidity factors
and resulted in excess of purchase price over the fair value of net assets
acquired of approximately $4,097,500. Such excess is being amortized on a
straight-line basis over 25 years.

In April 1999, the Company acquired all of the outstanding capital stock of DTI
and all of the outstanding capital stock of SB. DTI and SB provide custom
Internet/Intranet software and services. The aggregate purchase price for DTI
and SB consisted of $10,000,000 in cash and 452,226 shares of the Common Stock
of the Company with an additional (i) $2,000,000 in cash and (ii) $1,000,000 in
value (as defined in the Agreement) of Common Stock of the Company issuable upon
the satisfaction of certain milestones for each of the quarters in the twelve
months ending April 30, 2000. The acquisition has been accounted for by the
purchase method, and accordingly, the results of operations of DTI and SB have
been included with those of the Company commencing on the date of acquisition.
The purchase price of $14,398,700 (including costs of acquisition of
approximately $148,700) was determined by discounting the value of the common
stock issued by 15% from the quoted price principally due to restrictions and
liquidity factors and resulted in excess of purchase price over the fair value
of net assets acquired of approximately $13,490,400. Such excess is being
amortized on a straight-line basis over 10 years. The final allocation of the
purchase price may vary as additional information is obtained, and accordingly,
the ultimate allocation may differ from that used in the accompanying
consolidated financial statements.

                                      F-17


Unaudited pro forma consolidated results of operations as if the acquisitions of
Posnet and CCI had occurred as of July 1, 1996 and the acquisition of DTI and SB
had occurred as of July 1, 1997 are as follows:



                                                           YEAR ENDED                  YEAR ENDED
                                                          JUNE 30, 1998              JUNE 30, 1999
                                                                               
REVENUES                                                         $ 41,721,300                $ 78,550,900
COST OF SALES                                                      27,888,300                  52,510,800
                                                    -------------------------- ---------------------------
GROSS PROFIT                                                       13,833,000                  26,040,100

OPERATING EXPENSES                                                 12,250,200                  18,727,700
                                                    -------------------------- ---------------------------
INCOME FROM OPERATIONS                                              1,582,800                   7,312,400
OTHER (EXPENSE)                                                       (66,300)                   (609,500)
                                                    -------------------------- ---------------------------

INCOME BEFORE INCOME TAXES                                          1,516,500                   6,702,900
PROVISION FOR INCOME TAXES                                         (1,103,200)                 (2,488,700)
                                                    -------------------------- ---------------------------
NET INCOME                                                         $  413,300                $  4,214,200
                                                    ========================== ===========================

INCOME PER SHARE:
      BASIC                                                            $ 0.10                       $0.63
                                                                       ======                       =====
      DILUTED                                                          $ 0.10                       $0.62
                                                                       ======                       =====



The above unaudited pro forma amounts are not necessarily indicative of what the
actual results might have been if the acquisitions had occurred as of dates
indicated.

On May 14, 1998, Javelin Asia acquired all of the outstanding common stock of
Aspact for $170,000 in cash and 15,300 shares of the Company's common stock. The
acquisition of Aspact has been accounted for as a purchase. Accordingly, the
purchase price of $567,400 has been allocated to assets and liabilities based on
their estimated fair value at the date of acquisition. Results of operations of
Aspact have been included in the consolidated financial statements from the date
of acquisition. The purchase price resulted in excess of purchase price over the
fair value of net assets acquired of approximately $320,000. Such excess is
being amortized on a straight-line basis over 25 years. The results of
operations of Aspact prior to the date of acquisition were not material.

In November 1998, the Company acquired all of the outstanding capital stock of
RGB and 52.5% of the outstanding common stock of Jade. The remaining 47.5% of
the outstanding common stock of Jade is owned by RGB. RGB and Jade provide
complementary Wide Area Network (WAN) products and services to large retail and
hospitality chains as well as the telecommunications industry. The aggregate
purchase price for the RGB and Jade capital stock consisted of $1,922,900 in
cash (including acquisition costs of $181,800) and 257,058 shares of the
Company's common stock. The Company may be required to issue additional shares
of its common stock with a market value of $4,112,500 in each of 1999 and 2000
based upon the cumulative net profits of RGB and Jade during the twenty-four
month period ending September 30, 2000. During the six months ended June 30,
1999, the Company issued 159,917 shares of its common

                                     F-18


stock at a value of $1,748,200. The acquisitions have been accounted for by the
purchase method, and accordingly, the results of operations of RGB and Jade have
been included with those of the Company commencing on the date of acquisition.
The purchase price of $3,561,600 resulted in excess of purchase price over the
fair value of net assets acquired of approximately $2,987,700. Such excess
(which increases for any contingent payments) is being amortized on a
straight-line basis over 25 years. The final allocation of the purchase price
may vary as additional information is obtained, and accordingly, the ultimate
allocation may differ from that used in the accompanying consolidated financial
statements. The results of operations of RGB and Jade prior to the date of
acquisition were not material.

See Note 10 for acquisition of RCS completed after June 30, 1999.


4.    INCOME TAXES

Earnings before income taxes consist of the following for the years ended June
30, 1998 and 1999:



                                         1998                           1999
                                       ---------                     ----------
                                                               
U.S.                                   $1,570,200                    $3,230,100
Foreign                                    28,800                     2,447,200
                                       ----------                    ----------
Total                                  $1,599,000                    $5,677,300
                                       ==========                    ==========


The components of income tax expense for the years ended June 30, 1998 and 1999
are as follows:



                                             1998                          1999
                                          ----------                    ---------
                                                                  
Current:
  Federal                                  $686,300                     $1,157,500
  State                                      70,700                        351,800
  Foreign                                    32,800                        827,200

Deferred:
  Federal                                  (157,400)                      (297,400)
  State                                     (47,500)                       (28,600)
  Foreign
                                           ========                     ==========

Total                                      $584,900                     $2,010,500
                                           ========                     ==========


                                       F-19


The Company's effective tax rate differs from the U.S. federal statutory tax
rate, as follows:



                                                                     1998               1999
                                                                     ----               ----
                                                                                  
       Income tax provision at statutory tax rates                   34.0%              34.0%
       State taxes, net of federal tax effect                         2.5                3.8
       Foreign earnings taxed at different rates                                        (0.2)
       Goodwill                                                       2.7                3.0
       Non-deductible items                                           4.1                0.3
       Net operating loss benefit                                    (8.7)
       Adjustments to estimated income tax accruals                   2.0               (5.5)
                                                                     ----               ----
       Total                                                         36.6%              35.4%
                                                                     ====               ====


Components of the deferred income tax balance are as follows:



                                                                  1998             1999
                                                                --------         --------
                                                                           
       Deferred tax assets:
         Accrued expenses                                       $195,000         $515,200
         Other                                                     9,900           15,700
                                                                --------         --------

       Deferred tax assets                                      $204,900         $530,900
                                                                ========         ========


Management believes it is more likely than not that the Company will realize its
deferred tax asset based upon current year and expected results.

Undistributed earnings of foreign subsidiaries aggregated $2.6 million as of
June 30, 1999, which under existing tax law, will not be subject to U.S. tax
until distributed as dividends. Since the earnings have been or are intended to
be indefinitely reinvested in foreign operations, no provision has been made for
any U.S. taxes that may be applicable thereto. Furthermore, any taxes paid to
foreign governments on these earnings may be used in whole or in part as credits
against U.S. tax on dividends distributed from such earnings. It is not
practicable to estimate the amount of unrecognized deferred U.S. taxes on these
undistributed earnings .

5.   LINE OF CREDIT AND LONG-TERM DEBT

On June 8, 1998, the Company and its U.S. subsidiaries obtained a credit
facility of $7,500,000 from an unrelated financial institution. The credit
facility expires on June 8, 2001 and consists of a line of credit of up to
$6,000,000 and a term loan of $1,500,000.

Under the terms of the line of credit, the Company may borrow up to 80% of
eligible accounts receivable (as defined) and 50% of eligible inventory (as
defined) with monthly

                                      F-20


interest payments based upon the prime rate of a national financial institution
plus 1.75% (9.5% as of June 30, 1999). Borrowings under the line of credit are
collateralized by substantially all the assets of the Company. As of June 30,
1999, borrowings outstanding under the line amounted to $1,443,200 with
approximately $3,245,000 available for future borrowings based on the balances
of eligible accounts receivable and inventory as of June 30, 1999.

As of June 30, 1999, Jade has a line of credit facility of $1,800,000 from an
unrelated financial institution. Borrowings under the line of credit are
collateralized by all of the assets of Jade and bear interest at 2% over the
U.K. Base rate (as defined). As of June 30, 1999, borrowings outstanding under
the line amounted to $613,400 with approximately $1,186,600 available for future
borrowings.

Borrowings under the term loan are collateralized by substantially all of the
assets of the Company, bear interest at 13.65% per annum and are repayable at
$25,000 per month with all unpaid principal and interest due on June 8, 2001.




6.   STOCKHOLDERS' EQUITY

COMMON STOCK

During the year ended June 30, 1998, the Company issued 929,050 shares of its
common stock in connection with the acquisitions described in Note 3, 27,300
shares of common stock upon the exercise of stock options with a weighted
average exercise price of $3.50 per share and 36,362 shares of its common stock
upon the exercise of warrants issued to the underwriter in connection with the
initial public offering.

During the year ended June 30, 1999, the Company issued 3,770,000 shares of its
common stock in connection with the public offerings described in Note 1,
869,201 shares of its common stock in connection with the acquisitions described
in Note 3, 56,250 shares of its common stock to the former shareholders of
Posnet in consideration for the elimination of future Earnout Shares (see Note
3), 69,000 shares of common stock upon the exercise of stock options with a
weighted average exercise price of $4.95 per share and 10,790 shares of its
common stock upon the exercise of warrants issued to the underwriter in
connection with the initial public offering.

In December 1998, the Company increased the number of authorized shares of
common stock from 10,000,000 to 20,000,000.

STOCK OPTION PLANS

The Company has elected to follow APB 25 and related interpretations in
accounting for its employee stock options. Under APB 25, the Company recognizes
as compensation

                                      F-21


expense the difference between the exercise price and the fair market value of
the underlying stock on the date of grant. Stock based compensation expense is
deferred and amortized over the vesting period of the stock option. During the
years ended June 30, 1998 and 1999, the Company recognized $51,600 and $32,500,
respectively, in stock based compensation expense.

In August 1996, the Company adopted a stock incentive award plan (the "Plan")
under which the Board of Directors (the "Board"), or a committee appointed
for such purpose, may from time to time grant options, restricted stock or
other stock-based compensation to the directors, officers, eligible employees
or consultants of the Company to acquire up to an aggregate of 300,000 shares
of common stock, in such numbers, under such terms and at such exercise
prices as are determined by the Board or such committee. Options vest over a
3-year period based on the following schedule: 40% after year one, 30% after
year two, and 30% at the end of year three. All options expire ten years from
the date of grant. It is the Company's intention to grant options under the
Plan principally to employees.

In December 1997, the stockholders approved the Company's 1997 Equity
Incentive Plan (the "1997 Plan") under which the Board, or a committee
appointed for such purpose, may from time to time grant options, restricted
stock or other stock-based compensation to the directors, officers, eligible
employees or consultants of the Company to acquire up to an aggregate of
1,100,000 shares of common stock, in such numbers, under such terms and at
such exercise prices as are determined by the Board or such committee.
Options generally vest 20% per year over a 5-year period. All options expire
ten years from the date of grant. It is the Company's intention to grant
options under the 1997 Plan principally to employees.

In April 1999, the Board approved the Company's 1999 Non-Officer Stock Option
Plan (the "1999 Plan") under which the Board, or a committee appointed for
such purpose, may from time to time grant nonstatutory options to eligible
employees or consultants of the Company who are not officers or members of
the Board to acquire up to an aggregate of 1,000,000 shares of common stock,
in such numbers, under such terms and at such exercise prices as are
determined by the Board or such committee. Options generally vest 25% per
year over a 4-year period. All options expire ten years from the date of
grant. It is the Company's intention to grant options under the Plan
principally to employees.

                                      F-22


The following option activity occurred in the years ended June 30, 1998 and
1999:



                                                                                    WEIGHTED AVERAGE
                                                             OPTIONS                 EXERCISE PRICE
                                                             -------                ---------------
                                                                              
FOR OPTIONS GRANTED AT LESS THAN FAIR
  MARKET VALUE ON THE DATE OF GRANT:

Outstanding as of July 1, 1997                               167,500                     $3.73
Granted
Exercised                                                     27,300                     $3.50
Canceled
                                                             -------
Balance, June 30, 1998                                       140,200                     $3.77
Granted
Exercised                                                     36,950                     $3.57
Canceled                                                       4,050                     $3.50
                                                             -------
Balance, June 30, 1999                                        99,200                     $3.78
                                                             =======

Exercisable at June 30, 1999                                  68,000                     $3.90
                                                             =======





                                                                                    WEIGHTED AVERAGE
                                                             OPTIONS                 EXERCISE PRICE
                                                             -------                ---------------
                                                                              
FOR OPTIONS GRANTED AT FAIR
  MARKET VALUE ON THE DATE OF GRANT:
Outstanding as of July 1, 1997                                78,000                     $4.90
Granted                                                      623,000                     $9.42
Exercised
Canceled                                                       7,500                     $9.50
                                                           ---------
Balance, June 30, 1998                                       693,500                     $8.96
Granted                                                      903,750                     $9.77
Exercised                                                     32,050                     $6.54
Canceled                                                      45,400                     $7.84
                                                           ---------
Balance, June 30, 1999                                     1,519,800                     $9.50
                                                           =========

Exercisable at June 30, 1999                                 153,183                     $7.73
                                                           =========

Weighted-average fair value of options
granted during the year at fair market value:
                   1999                                        $5.04
                                                           =========
                   1998                                        $3.62
                                                           =========


The weighted average remaining contractual life of options outstanding as of
June 30, 1999 was 9.0 years.

The range of exercise prices for options outstanding as of June 30, 1999 was
$2.50 to $13.00. Income tax benefits from the exercise of the stock options
during the fiscal years ended June 30, 1998 and June 30, 1999 of $59,200 and
$223,600, respectively, have

                                      F-23


been credited to additional paid in capital in the accompanying consolidated
balance sheets.

Pro forma information regarding net income and earnings per share is required by
SFAS 123, which also requires that the information be determined as if the
Company accounted for its employee stock options granted subsequent to June 30,
1996 under the fair value method of the Statement. The fair value for these
options was estimated at the date of grant using a Black-Scholes option pricing
model with the following weighted-average assumptions:



                                                        June 30, 1998        June 30, 1999
                                                        -------------        ------------
                                                                       
Risk free interest rate                                        6.0%                 6.0%
Dividend Yield                                                None                  None
Volatility factor of
  of the expected market
  price of the Company's
   common stock                                               0.57                  0.60
Weighted- average expected
  life of each option                                      3 years               5 years


The Black-Scholes option pricing model was developed for use in estimating the
fair value of traded options, which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of fair value of its employee stock options. For purpose of pro forma
disclosures, the estimated fair value of the options is amortized to expenses
over the options vesting period. The Company's pro forma information for the
years ended June 30, 1998 and 1999 follows:



                                                              1998                  1998
                                                              ----                  ----
                                                                            
Net income as reported                                      $1,014,100            $3,666,800
Net income-SFAS 123 adjusted                                  $743,300            $3,054,000
Earnings per share as reported:
              Basic                                              $0.28                 $0.59
              Diluted                                            $0.27                 $0.57
Earnings per share-SFAS 123 adjusted:
              Basic                                              $0.21                 $0.49
              Diluted                                            $0.20                 $0.47


WARRANTS

In connection with its initial public offering, the Company sold the
representatives of the underwriters a warrant to purchase 85,000 shares of the
Company's common stock at

                                   F-24


$6.25 per share. During the year ended June 30, 1999, warrants to purchase
19,430 shares of the Company's common stock were exchanged into 10,790 shares of
common stock. During the year ended June 30, 1998, warrants to purchase 65,570
shares of the Company's common stock were exchanged into 36,362 shares of common
stock. The fair value of the common stock issued approximated the fair value of
the warrants received.

In connection with the credit facility described in Note 5, the Company issued
warrants to purchase 100,000 shares of its common stock at $9.00 per share to
the financial institution and warrants to purchase 35,000 shares of its common
stock at prices ranging from $9.36 to $12.65 to its independent financial
advisors. The fair value of these warrants was estimated at $621,900 at the date
of grant using a Black-Scholes pricing model with the assumptions described
above. The fair value of the warrants has been reflected as deferred financing
costs and additional paid in capital in the accompanying balance sheets.

7. COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company leases its facilities and certain equipment under noncancelable
operating leases subject to scheduled rent increases. The leases expire at
various dates through December 2003.

Future minimum annual lease payments as of June 30, 1999 are as follows:



                          Year Ending
                            June 30,
                            -------
                                    
                             2000      $1,097,500
                             2001         995,200
                             2002         890,800
                             2003         705,900
                             2004         124,200
                                       ----------
                             Total     $3,813,600
                                       ==========


Rent expense under operating lease agreements aggregated approximately $230,100
and $907,600 for the years ended June 30, 1998 and 1999, respectively, and is
included in general and administrative expenses in the accompanying consolidated
statements of operations.

EMPLOYMENT AGREEMENTS

The Company has employment agreements with key employees of the Company, which
expire at various dates through August 2004. Some of the agreements provide for
incentive bonuses which are payable if specified management goals are attained.

                                   F-25


Future annual minimum payments under the employment agreements as of June 30,
1999 are as follows:



                     Year Ending
                       June 30,
                     -----------
                                                    
                        2000                           $ 2,939,600
                        2001                             2,093,700
                        2002                             1,292,900
                        2003                               385,000
                        2004                               200,000
                        2005                                33,300
                                                       -----------
                        Total                          $ 6,944,500
                                                       ===========


8.   RELATED PARTY TRANSACTIONS

In connection with the acquisitions of Posnet, CCI, RGB and Jade described in
Note 3, the Company assumed certain debt payable of $835,000 to former
shareholders of the acquired entities and current shareholders of the Company.
All of such debt was repaid prior to June 30, 1999.

9.       SEGMENT INFORMATION

In 1999, the Company adopted SFAS 131. The 1998 segment information has been
restated to conform to the 1999 presentation. The Company's three reportable
segments are as follows:

       (1)  Research and development- provides all research and development
            activities for the other business segments.
       (2)  Hardware products- designs, manufactures and markets open system
            touchscreen point-of-sale (POS) network-ready hardware systems.
            These systems can be sold on a stand-alone basis or integrated as
            part of an end-to-end solution.
       (3)  Solutions- provides retail foodservice technology solutions and
            services that enable restaurants and retailers to capture,
            analyze, disseminate and use information throughout the
            enterprise, from the point-of-sale (POS) cash register terminal to
            the back office to an organization's headquarters.

The accounting policies of the segments are the same as those described in the
"Summary of Significant Accounting Policies". Segment data includes intersegment
revenues. The Company does not allocate corporate-headquarters costs or research
and development costs to the operating segments. Resources for research and
development are allocated based on budgets. The Company evaluates the
performance of its segments and allocates resources to them based on net
income/loss.

                                      F-26


The table below presents information about reportable segments for the years
ended June 30:



                              RESEARCH AND         HARDWARE
                              DEVELOPMENT          PRODUCTS         SOLUTIONS          TOTAL
                                                                          
          1998
 SALES                                              $19,590,000       $10,968,700     $30,558,700
 NET INCOME                        $(567,700)        $1,774,400          $583,200      $1,789,900
 TOTAL ASSETS                                       $17,118,700        $5,412,600     $22,531,300



                              RESEARCH AND         HARDWARE
                              DEVELOPMENT          PRODUCTS         SOLUTIONS          TOTAL
                                                                          
          1999
 SALES                                              $39,687,400       $36,184,300     $75,871,700
 NET INCOME                        $(927,600)        $4,394,200        $1,701,800      $5,168,400
 TOTAL ASSETS                                       $56,519,900       $19,287,700     $75,807,600



A reconciliation of total segment sales to total consolidated sales and of total
segment net income to total consolidated net income for the years ended June 30,
1998 and 1999 is as follows:



                  SALES
                                                            1998                 1999
                                                                        
                  Total segment sales                    $30,558,700          $75,871,700
                  Elimination of intersegment sales          912,600            3,112,900
                                                         -----------          -----------
                  Consolidated sales                     $29,646,100          $72,758,800
                                                         ===========          ===========


                  Net Income
                  Total segment net income                $1,789,900           $5,168,400
                  Elimination of intersegment
                   gross profit net of income taxes         (201,300)            (366,200)
                  Elimination of non-segment
                   expenses, net of income taxes            (574,500)          (1,135,400)
                                                         -----------          -----------
                  Consolidated net income                 $1,014,100           $3,666,800
                                                         ===========          ===========


                                       F-27


 Specified items included in segment profit/loss for the years ended June 30:



                              RESEARCH AND         HARDWARE
                              DEVELOPMENT          PRODUCTS         SOLUTIONS          TOTAL
                                                                           
          1998
 INTEREST EXPENSE                                      $100,900           $14,100        $115,000
 DEPRECIATION AND
   AMORTIZATION EXPENSE                                $120,600          $234,300        $354,900
 INCOME TAX EXPENSE
   (BENEFIT)                       $(306,300)        $1,005,300          $304,600      $1,003,600
  EXPENDITURES FOR
   ADDITIONS TO
   LONG-LIVED ASSETS                                 $1,199,600        $6,996,700      $8,196,300



                              RESEARCH AND         HARDWARE
                              DEVELOPMENT          PRODUCTS         SOLUTIONS          TOTAL
                                                                           
          1999
 Interest expense                                      $542,000          $125,400        $667,400
 DEPRECIATION AND
   AMORTIZATION EXPENSE                                $406,900          $811,600      $1,218,500
 INCOME TAX EXPENSE                $(408,500)        $2,001,700        $1,128,700      $2,721,900
  EXPENDITURES FOR
   ADDITIONS TO
   LONG-LIVED ASSETS                                 $1,469,700       $17,059,400     $18,529,100



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



                                 UNITED
                                 STATES             EUROPE              ASIA            AUSTRALIA          TOTAL
                                                                                            
          1998

 REVENUES                         $28,749,700          $724,100             $88,300           $84,000     $29,646,100

 LONG-LIVED ASSETS                 $8,331,200            $5,900             $19,800           $26,000      $8,382,900



                                 UNITED
                                 STATES             EUROPE              ASIA            AUSTRALIA          TOTAL
                                                                                            
          1999

 REVENUES                         $47,969,500       $21,824,800          $1,536,200        $1,428,300     $72,758,800


LONG-LIVED ASSETS                 $23,803,700        $6,254,900            $397,800           $43,800     $30,500,200


                                        F-28


10.   SUBSEQUENT EVENTS

In August 1999, the Company acquired all of the outstanding capital stock of
RCS. RCS implements, operates and supports packaged software applications for
the restaurant industry. The aggregate purchase price for the RCS capital stock
consisted of $3,033,100 in cash. The Company may be required to pay an
additional $1,516,600 in cash and issue shares of its common stock with a market
value of $1,516,600 based upon the cumulative net profits of RCS during the
twenty four months ending August 31, 2001. The acquisition has been accounted
for by the purchase method, and accordingly, the results of operations of RCS
will be included with those of the Company commencing on the date of
acquisition. The purchase price resulted in excess of purchase price over the
fair value of net assets acquired of approximately $3.0 million. Such excess
(which will increase for any contingent payments) is being amortized on a
straight-line basis over 10 years. The results of operations of RCS prior to
August 1999 were not material.

                                        F-29


                                 EXHIBIT INDEX



EXHIBIT
NUMBER                DESCRIPTION OF DOCUMENT
- ------                -----------------------
                   
3.1(8)          --    Registrant's Amended and Restated Certificate of
                      Incorporation.
3.2(1)          --    Registrant's Amended and Restated Bylaws.
4.1(1)          --    Form of Common Stock Certificate of Registrant.
10.1(1)         --    Form of Indemnity Agreement entered into between the
                      Company and its directors and executive officers.
10.2(1)         --    1996 Stock Incentive Award Plan (the "1996 Plan").
10.3(1)         --    Form of Director Non-Qualified Stock Option Agreement
                      under the 1996 Plan.
10.4(1)         --    Form of Employee Non-Qualified Stock Option Agreement
                      under the 1996 Plan.
10.5(6)         --    1997 Equity Incentive Plan, as amended.
10.6(6)         --    Form of Incentive Stock Option Agreement under the 1997
                      Plan.
10.7(6)         --    Form of Nonstatutory Stock Option Agreement under the 1997
                      Plan.
10.8(1)         --    Employment Agreement dated August 19, 1996 by and between
                      the Company and Richard P. Stack.
10.9(1)         --    Employment Agreement dated August 19,1996 by and between
                      the Company and C. Norman Campbell.
10.10(6)        --    Employment Agreement dated January 1, 1998 by and between
                      CCI Group, Inc. and Robert Nichols.
10.11(6)        --    Standard Industrial/Commercial Multi-Tenant Lease-Modified
                      Net dated January 27, 1998 by and between the Company and
                      BRS-Campo Investment Company LP.
10.12(1)        --    Standard Industrial/Commercial Single-Tenant Lease-Gross
                      dated October 19, 1995 by and between the Company and
                      Robert P. Peebles Trust, dated April 11, 1979.
10.13(2)        --    Standard Sublease dated September 9, 1997 by and between
                      the Company, D. Howard Lewis and William R. Miller.
10.14(6)              The Business Center Office/Warehouse Lease dated April 4,
                      1997 by and between CCI Group, Inc and Nooney Krombech
                      Company.
10.15(2)        --    Distributor Agreement dated March 14, 1997 by and between
                      the Company and ScanSource, Inc.
10.16(6)        --    Loan and Security Agreement dated June 8, 1998 by and
                      among the Company, CCI Group, Inc., Posnet Computers, Inc.
                      and Finova Capital Corporation and related Secured
                      Promissory Note, Pledge Agreement and Secured Continuing
                      Corporate Guaranty.
10.17(6)        --    Form of Warrant issued by the Company in favor of Finova
                      Capital Corporation.
10.18(8)        --    Second and Third Amendments to Loan and Security
                      Agreement dated December 15, 1998 and
                      January 10, 1999, respectively, by and among the Company,
                      CCI Group, Inc., Posnet Computers, Inc. and FINOVA Capital
                      Corporation and related Security Promissory Note, Pledge
                      Agreement and Secured Continuing Corporate Guaranty.
10.19(7)        --    Stock Purchase Agreement, dated April 23, 1999 by and
                      among Javelin Systems, Inc., Dynamic Technologies, Inc.,
                      SB Holdings, Inc., John Biglin, Denise Biglin and John
                      Seitz.
10.20*          --    1999 Non-Officer Stock Option Plan.
10.21*          --    Form of non-qualified stock option agreement under the
                      1999 Non-Officer Stock Option Plan.
10.22*          --    Form of 1999 Plan Stock Option Grant Notice.
21.1*           --    Subsidiaries
23.1            --    Consent of PricewaterhouseCoopers LLP, independent
                      accountants.
24.1            --    Power of Attorney. Reference is made to page 32 of Form
                      10-KSB filed on October 1, 1999.
27.1*           --    Financial Data Schedule.

- ----------
* Previously filed

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



(2) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for the
    fiscal year ended June 30, 1997 and incorporated herein by reference.
(3) Filed as an exhibit to the Company's Current Report on Form 8-K dated
    December 30, 1997 and incorporated herein by reference.
(4) Filed as an exhibit to the Company's Current Report on Form 8-K/A dated
    March 4, 1998 and incorporated herein by reference.
(5) Filed as an exhibit to the Company's Current Report on Form 8-K dated
    January 5, 1998 and incorporated herein by reference.
(6) Filed as an exhibit to the Company's Annual Report on Form 10_KSB for the
    fiscal year ended June 30, 1998 and incorporated herein by reference.
(7) Filed as an exhibit to the Company's Current Report on Form 8-K filed May 3,
    1999, and incorporated herein by reference.
(8)  Filed as an exhibit to the Company's Quarterly report on Form 10-QSB for
     the quarter ended December 31, 1998 and incorporated herein by reference.

EX-23.1

               CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration
Statements on Forms S-8 (No. 333-29481, 333-66011 and 333-88403) of Javelin
Systems, Inc. of our report dated August 31, 1999 relating to the financial
statements, which appears in this Form 10-KSB/A.

PricewaterhouseCoopers LLP

Costa Mesa, California
October 25, 1999