Use these links to rapidly review the documentCLST Holdings, Inc. INDEX TO FORM 10-K CLST HOLDINGS, INC. AND SUBSIDIARIES Index to Consolidated Financial Statements



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K

|(Mark One)                                                    |                                                                                         
|------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                                             | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|For the fiscal year ended November 30, 2007                  
|OR                                                           
|o                                                             | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the transition period
from                             to

Commission File Number 0-22972

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CLST HOLDINGS, INC.(Exact name of registrant as specified in its charter)

|Delaware(State or other jurisdiction of
incorporation or organization)                             |  | 75-2479727(I.R.S. Employer Identification No.)
|-------------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|15950 N. Dallas Parkway, Tower II, Suite 400
Dallas, Texas(Address of principal executive offices) |  | 75248(Zip Code)                               

Registrant's telephone number including area code:(972) 361-8428

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

Title of each classNone

Name of each exchange on
which registeredN/A


Securities
registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.01 per share(Title of Class)

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Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes o    No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes o    No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. See definition of "accelerated
filer," "large accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (check one)

|Large accelerated filer o |  | Accelerated filer o |  | Non-accelerated filer o (Do not check if a smaller reporting company) |  | Smaller reporting company ý
|------------------------- |  | ------------------- |  | --------------------------------------------------------------------- |  | ---------------------------

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes o    No ý

The aggregate market value of the registrant's common stock held by non-affiliates of the registrant as of May 31, 2007, the last business day
of the Company's most recently completed second fiscal quarter, based on the closing sale price of $2.57 as reported by the Nasdaq National Market on May 31, 2007, was approximately
$49,323,265.

On
February 28, 2008, there were 20,553,205 outstanding shares of common stock, $0.01 par value per share.

DOCUMENTS INCORPORATED BY REFERENCE

None.



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CLST Holdings, Inc.        INDEX TO FORM 10-K



|          |             |                                                                                                              | Page Number
|--------- | ----------- | ------------------------------------------------------------------------------------------------------------ | -----------
|PART I.   |             |                                                                                                              |            
|          | Item 1.     | Business                                                                                                     |            
|          | Item 1A.    | Risk Factors                                                                                                 |            
|          | Item 1B.    | Unresolved Staff Comments                                                                                    |            
|          | Item 2.     | Properties                                                                                                   |            
|          | Item 3.     | Legal Proceedings                                                                                            |            
|          | Item 4.     | Submission of Matters to a Vote of Security Holders                                                          |            
|PART II.  |             |                                                                                                              |            
|          | Item 5.     | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |            
|          | Item 6.     | Selected Consolidated Financial Data                                                                         |            
|          | Item 7.     | Management's Discussion and Analysis of Financial Condition and Results of Operations                        |            
|          | Item 7A.    | Quantitative and Qualitative Disclosures About Market Risk                                                   |            
|          | Item 8.     | Consolidated Financial Statements and Supplementary Data                                                     |            
|          | Item 9.     | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |            
|          | Item 9A(T). | Controls and Procedures                                                                                      |            
|          | Item 9B.    | Other Information                                                                                            |            
|PART III. |             |                                                                                                              |            
|          | Item 10.    | Directors, Executive Officers and Corporate Governance                                                       |            
|          | Item 11.    | Executive Compensation                                                                                       |            
|          | Item 12.    | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |            
|          | Item 13.    | Certain Relationships and Related Transactions, and Director Independence                                    |            
|          | Item 14.    | Principal Accounting Fees and Services                                                                       |            
|PART IV.  |             |                                                                                                              |            
|          | Item 15.    | Exhibits, Financial Statement Schedules                                                                      |            
|          | Signatures  |                                                                                                              | 37         

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PART I.

Special Cautionary Notice Regarding Forward-Looking Statements

Certain of the matters discussed in this Annual Report on Form 10-K may constitute "forward-looking" statements for purposes of the Securities
Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (as so amended the "Exchange Act"), and, as such, may involve known and unknown risks, uncertainties and other factors that
may cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking
statements. When used in this report, the words "anticipates," "estimates," "believes," "continues," "expects," "intends," "may," "might," "could," "should," "likely," and similar expressions are
intended to be among the statements that identify forward-looking statements. Statements of various factors that could cause the actual results, performance or achievements of the Company to differ
materially from the Company's expectations ("Cautionary Statements") are disclosed in this report, including, without limitation, those discussed in the "Risk Factors" section in Item 1A of
this Form 10-K, those statements made in conjunction with the forward-looking statements and otherwise herein. All forward-looking statements attributable to the Company are
expressly qualified in their entirety by the Cautionary Statements. We have no intention, and disclaim any obligation, to update or revise any forward-looking statements, whether as a result of new
information, future results or otherwise.

Item 1.    Business

CLST Holdings, Inc. was formed on April 1, 1993 as a Delaware corporation under the name of CellStar Corporation to hold the stock of National Auto
Center, Inc. ("National Auto Center"), a company that is now an operating subsidiary. We operated in the wireless telecommunications industry through National Auto Center, which was originally
formed in 1981 to distribute and install automotive aftermarket products and later, in 1984, began offering wireless communications products and services.
In 1989, National Auto Center became an authorized distributor of Motorola wireless handsets in certain portions of the United States. National Auto Center entered into similar arrangements with
Motorola in the Latin American Region in 1991. The terms "CLST," "the Company," "we," "our" and "us" refer to CLST Holdings, Inc. and its consolidated subsidiaries, unless the context suggests
otherwise.

Sale of Operations in Fiscal 2007

On December 18, 2006, we entered into a definitive agreement (the "U.S. Sale Agreement") with a wholly owned subsidiary of Brightpoint, Inc., an
Indiana corporation ("Brightpoint"), providing for the sale of substantially all of the Company's United States and Miami-based Latin American operations and for the buyer to assume certain
liabilities related to those operations (the "U.S. Sale"). Our operations in Mexico and Chile and other businesses or obligations of the Company were excluded from the transaction.

Our
Board of Directors and Brightpoint unanimously approved the proposed transaction set forth in the U.S. Sale Agreement. The offered purchase price was $88 million in cash,
subject to the Company's working capital and other terms of the agreement at closing, and also subject to adjustment based on changes in net assets from December 18, 2006 to the closing date.

Also
on December 18, 2006, we entered into a definitive agreement (the "Mexico Sale Agreement") with Soluciones Inalámbricas, S.A. de C.V. ("Wireless
Solutions") and Prestadora de Servicios en Administración y Recursos Humanos, S.A. de C.V. ("Prestadora"), two affiliated Mexican companies, providing for the sale of all of the
Company's Mexico operations (the "Mexico Sale"). The Mexico Sale was a stock acquisition of all of the outstanding shares of the Company's Mexican subsidiaries, and included our interest in
Comunicación Inalámbrica Inteligente, S.A. de C.V. ("CII"),

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our
joint venture with Wireless Solutions. Our Board of Directors unanimously approved the proposed transaction set forth in the Mexico Sale Agreement. Under the terms of the transaction, we received
$20 million in cash, and are to receive our pro rata share of CII profits from January 1, 2007, up to the consummation of the transaction, within 150 days from the closing date.
We have not received any pro-rata share of the CII profits and other terms required as of 150 days from the closing date. A demand for payment of up to $1.7 million and other
required terms of the agreement was sent to the purchasers on September 11, 2007. While we believe that CII was profitable and therefore the purchasers owe the Company its pro rata share, the
purchasers are disputing this claim. We continue to pursue the amounts we believe we are due, but at this time the purchasers are not responding to or cooperating with our demands. Currently we cannot
make any estimates regarding future amounts we may be able to collect or the timing of any collections on this matter.

We
filed a proxy statement with the SEC on February 20, 2007, which more fully describes the U.S. and Mexico Sale transactions. Both of the transactions were subject to customary
closing conditions and the approval of our stockholders, and the transactions were not dependent upon each other. The proxy statement also included a plan of dissolution, which provides for the
complete liquidation and dissolution of the Company after the completion of the U.S. Sale (subject to abandonment by the board of directors in the exercise of their fiduciary duties), and a proposal
to change the name of the Company from CellStar Corporation to CLST Holdings, Inc. On March 28, 2007, our stockholders approved the U.S. Sale, the Mexico Sale, the plan of dissolution,
and the name change to CLST Holdings, Inc. We continue to follow the plan of dissolution. Consistent with the plan of dissolution and its fiduciary duties, our board of directors will continue
to consider the proper implementation of the plan of dissolution and the exercise of the authority granted to it thereunder, including the authority to abandon the plan of dissolution.

The
U.S. Sale closed on March 30, 2007. At closing, $53.6 million was received and $11.5 million was included in accounts receivableother in the
accompanying balance sheet for August 31, 2007; $8.8 million of which was placed in an escrow account and subject to any indemnity claims by the buyers of the Company's U.S. business. A
portion of the proceeds from the sale was used to pay off the Company's bank debt (see footnote 7). We recorded a pre-tax gain of $52.7 million on the transaction during the twelve
months ended November 30, 2007. Brightpoint asserted total claims for indemnity against the escrow of approximately $1.4 million. The Company objected to these claims. Brightpoint also
proposed negative adjustments to the net working capital of approximately $1.4 million, which these claims for adjustment were largely the same as the claims for indemnity asserted against the
escrow account. As of November 30, 2007, we had received approximately $7.6 million of the amounts held in the escrow account, which such amount included accrued interest. On
December 21, 2007, we entered into a Letter Agreement (the "Letter Agreement") with Brightpoint which settled the dispute concerning the additional escrow amount. All currently outstanding
disputes between the parties regarding the determination of the purchase price under the U.S. Sale Agreement have been resolved, and payments of funds in respect thereof were made in accordance with
the terms described in the Letter Agreement. Pursuant to the Letter Agreement, in January 2008 we received approximately $3.2 million from Brightpoint plus accrued interest and less transition
expenses, and approximately $1.4 million from the escrow agent. These amounts were the final amounts received under the U.S. Sale Agreement.

The
Mexico Sale closed on April 12, 2007, and we recorded a loss on the transaction of $7.0 million primarily due to accumulated foreign currency translation adjustments as
well as expenses related to the transaction. We had approximately $9.1 million of accumulated foreign currency translation adjustments related to Mexico. As the proposed sale did not meet the
criteria to classify the operations as held for sale under SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", as of February 28, 2007, we
recognized the $9.1 million as a charge upon the

2

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closing
of the Mexico Sale. Again, as described above, we have sent a demand for payment of up to $1.7 million and other required terms of the agreement to the purchasers.

On
March 22, 2007, we signed a letter of intent to sell our operations in Chile to a group that included local management for approximately book value. On June 11, 2007, we
completed the sale of our operations in Chile. The purchase price and cash transferred from the operations in Chile prior to closing totaled $2.5 million, and we recorded a gain of
pre-tax $0.6 million on the transaction during the quarter ending August 31, 2007. With the completion of the sale of our operations in Chile, we no longer have any operating
locations.

We
recently moved from our previous corporate headquarters located in Coppell, Texas to a new office located in Dallas, Texas, in October 2007.

Prior Business

Prior to the sale of our operations and assets through these various transactions, the Company was a leading distributor of wireless products and provider of
distribution and value-added logistics services to the wireless communications industry, serving network operators, agents, resellers, dealers, and retailers with operations in the North American and
Latin American Regions. We provided comprehensive logistics solutions and facilitated the distribution of handsets, related accessories and other wireless products from leading manufacturers to
network operators, agents, resellers, dealers and retailers. We also provided activation services in Mexico and Chile that generated new subscribers for wireless carriers. When the Company was
operating in the wireless communications industry, we derived substantially all of our revenues from net product sales, which included sales of handsets and other wireless communications products. We
also derived revenues from value-added services, including activations, residual commissions, and prepaid wireless services, none of which accounted for 10% or more of consolidated revenues in fiscal
2007. Value-added service revenues include fulfillment service fees, handling fees and assembly revenues.

Our
business concentrated primarily on distribution and logistics. We delivered handsets and related accessories from the manufacturers to carriers, other distributors, retailers, and
consumers. We assisted the manufacturers in expanding their distribution network and customer base. Our fulfillment, kitting, packaging, and other services assisted the carriers in getting the
handsets ready for use by their subscribers. Our distribution services included purchasing, selling, warehousing, picking, packing, shipping and "just-in-time" delivery of
wireless handsets and accessories. We also offered one of the industry's first completely integrated asset recovery and logistics services, our Omnigistics® (patent pending) supply chain
management system. In addition, we offered value-added services, including Internet-based supply chain services via our OrderStar® system (patent pending), Internet-based tracking and
reporting, inventory management, marketing, prepaid wireless products, product fulfillment, kitting and customized packaging, private labeling, light assembly, accounts receivable management and
end-user support services. We also provided wireless activation services and operated retail locations in certain markets from which we sold wireless communications products and
accessories directly to the public. Both Omnigistics® and OrderStar® were included in the U.S. sale to Brightpoint.

Our
customers included large carriers, rural carriers, agents, mobile virtual network operators (MVNOs), big box and small retailers, distribution companies, and insurance warranty
providers. We marketed our products to wholesale purchasers using, among other methods, direct sales strategies, the Internet, strategic account management, trade shows and trade journal advertising.
We offered a variety of name brand products, comprehensive forward and reverse logistics solutions, highly-responsive customer service, merchandising and marketing elements and access to
hard-to-find products to potential new and existing customers. During fiscal 2006, the Company maintained or acquired agreements with such manufacturers as Motorola, LG
Electronics MobileComm U.S.A., Inc. ("L.G."),

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Nokia, Inc.
("Nokia"), Kyocera Wireless Corp. ("Kyocera"), Palm, Inc. ("Palm") and Pantech Co., Ltd. ("Pantech").

Prior
to the sale of our U.S., Mexico and Chile operations our customer base consisted of Dobson Cellular Systems, Inc., Telefonica Moviles Colombia, S.A., Radio Movil
Dipsa S.A. de C.V. and Claro Chile S.A. as well as manufacturers such as Motorola, LG Electronics MobileComm U.S.A., Inc., Nokia, Inc., Kyocera Wireless Corp. and
Palm, Inc.

Financial Information

The Company's consolidated financial statements and accompanying notes for the last two fiscal years can be found in Part IV of this
Form 10-K.

Competition

Because we have no operations at this time, we do not face competition in any particular industry.

Employees

At November 30, 2007, the Company had 2 permanent and 0 temporary employees worldwide.

Available Information and Code of Ethics

We maintain an Internet website atwww.clstholdings.com. Our annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to these reports will be made available, free of charge, at our website as soon as
reasonably practicable after we electronically file such reports with or furnish them to the Securities and Exchange Commission.

We
have adopted a code of ethics that applies to our directors, officers and all employees. Our Business Ethics Policy can be found at our Internet website at www.clstholdings.com.

Item 1A.    Risk Factors

Our future performance is subject to a variety of risks. If any of the events or circumstances described in the following risk factors actually occurs, our
business, financial condition or results of operations could suffer and the trading price of our common stock could be negatively affected. In addition to the following disclosures, please refer to
the other information contained in this report, including consolidated financial statements and the related notes, and information contained in our other SEC filings.

On
February 20, 2007, we filed a proxy statement with the SEC recommending that stockholders approve, among other proposals, the U.S. Sale, the Mexico Sale, and a plan of
liquidation and dissolution for the Company (the "Plan"). On March 28, 2007, our stockholders approved these proposals, and the U.S. Sale closed on March 30, 2007 and the Mexico Sale
closed on April 12, 2007. Also on June 11, 2007, we sold our Chile operations and now have no revenue generating operations. Prior to the closing of the U.S. Sale, the Mexico Sale and
the Chile Sale, our operating performance was subject to a variety of risks, which are more fully described in Item 1A of our Annual Report on Form 10-K for the fiscal year
ended November 30, 2006, and our proxy statement filed on February 20,

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2007.
As a result of the transactions described above, our risk factors have materially changed and should reflect the following:

The Board of Directors, in its fiduciary capacity, is considering not implementing the Company's plan of liquidation and dissolution, which will likely affect whether
stockholders receive distributions pursuant to the plan.

The
Plan provided for the complete liquidation and dissolution of the Company after the completion of the U.S. Sale, but subject to the ability of the Board of Directors to abandon the
Plan if it deems appropriate. Consistent with its fiduciary duties, the Board of Directors is now giving careful consideration to the strategic alternatives available to the Company, with a view to
maximizing stockholder value. Among other matters, the Board of Directors is reviewing potential acquisitions and the value of the Company's tax assets. If the Board determines that it is in the best
interest of the Company to pursue an acquisition, it will likely require the Company to obtain debt and/or equity financing. Even if we obtain access to the necessary capital, we may be unable to
identify suitable acquisition opportunities, negotiate acceptable terms or successfully acquire identified targets.

It
is unlikely the Board of Directors will make any further distributions to the Company's stockholders under the Plan while it considers the strategic alternatives available to the
Company. It is possible that the Board of Directors will, in the exercise of its fiduciary duty, elect to abandon the Plan for a strategic alternative that it believes will maximize stockholder value,
and that no further liquidating distributions will be made.

Because the Company has been in the process of liquidating its business, it is difficult to secure and retain qualified
employees.

During
the last three quarters of fiscal year 2007, the Company began reducing its employee base, consistent with the Company's plan to liquidate and dissolve. However, the Company still
requires the service of some employees for handling routine business matters. Retaining employees who are knowledgeable of the Company's business and background has proven to be difficult while the
Company has been winding down its business. Furthermore, it is difficult to hire and train new employees when the Company is already working with a reduced staff, and new employees may see little
incentive in working for a Company without operations.

We are experiencing significant risks related to information technology.

Although the Company has outsourced certain information technology ("IT") functions, the Company currently has no employees who are qualified to perform IT
services for the Company, nor does the Company have any plans to hire IT employees. Therefore, maintaining the Company's website and other IT-related information has proven to be
difficult, and there is a risk that such information may not be adequately maintained. Furthermore, during the period following the U.S. sale, email backup tapes were not properly protected, and as a
result historical email detail is limited. The Company has had difficulties restoring email records from Brightpoint when the Company has requested such information. Without access to these emails,
the Company may not have complete historical email records. These risks may adversely impact the Company's internal control environment.

We will be subject to the requirements of Section 404 of the Sarbanes-Oxley Act. If we are unable to timely comply with Section 404 or if the costs related to
compliance are significant, our profitability, stock price and results of operations and financial condition could be materially adversely affected.

We
will be required to comply with the provisions of Section 404 of the Sarbanes-Oxley Act of 2002 for our 2008 fiscal year. Section 404 requires that we document and test
our internal control over financial reporting and issue management's assessment of our internal control over financial reporting. This section also requires that our independent registered public
accounting firm opine on those internal controls and management's assessment of those controls. We have hired an outside consultant

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to
work with management in assessing our internal controls. During the course of our ongoing evaluation and integration of the internal control over financial reporting, we may identify areas
requiring improvement, and we may have to design enhanced processes and controls to address issues identified through this review.

We
believe that the out-of-pocket costs, the diversion of management's attention from running the day-to-day operations and operational
changes caused by the need to comply with the requirements of Section 404 of the Sarbanes-Oxley Act could be significant. If the time and costs associated with such compliance exceed our
current expectations, our profitability could be affected.

We
cannot be certain at this time that we will be able to successfully complete the procedures, certification and attestation requirements of Section 404 for our 2008 fiscal year
or that we or our auditors will not identify material weaknesses in internal control over financial reporting. If we fail to comply with the requirements of Section 404 or if we or our auditors
identify and report such material weakness, the accuracy and timeliness of the filing of our annual and quarterly reports may be negatively affected and could cause investors to lose confidence in our
reported financial information, which could have a negative effect on the trading price of our common stock. In addition, a material weakness in the effectiveness of our internal control over
financial reporting could result in an increased chance of fraud, reduce our ability to obtain financing and require additional expenditures to comply with these requirements, each of which could
negatively impact our business, profitability and financial condition.

Our common stock trades at low prices and low volumes and may be subject to certain fraud and abuse in the market.

Our
common stock trades at low prices and relatively low volumes and is not listed on an exchange. As such, the market for common stock such as ours may be subject to certain patterns of
fraud and abuse,
similar to common stock that is subject to the Securities and Exchange Commission's "penny stock" rule, including:



Although
we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being established with respect to our common stock.

We are subject to the risks of interest rate fluctuation.

Our
net interest income is affected by changes in market interest rates and other economic factors beyond our control. Interest rates for demand deposits and other short term cash
investments in the U.S. have dropped significantly in the past year. The Company's assets consist largely of cash. As a result, declines in such interest rates will reduce the Company's income and
directly and adversely affect the Company's budget.

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The Company has had difficulty collecting money it is due from some purchasers of its operations.

We
are owed amounts from the sales of our non-U.S. operations. Collection proceedings outside of the U.S. tend to be cumbersome and expensive. We believe we are owed as much
as $1.8 million from the sales of our non-U.S. operations; however, due to the difficulties of collecting monies from foreign businesses, we believe that it is more likely that we
could collect within the range of $500,000 to $1 million. The cost of collecting any amounts from these foreign businesses that we believe we are owed may be significant and may exceed the
value of the amount at issue.

Our stock is thinly traded, so you may be unable to sell at or near ask prices or at all.

The
shares of our common stock are traded on the Pink Sheets. Shares of our common stock are thinly-traded, meaning that the number of persons interested in purchasing our common shares
at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including:



As
a consequence, our stock price may not reflect an actual or perceived value. Also, there may be periods of several days or more when trading activity in our shares is minimal or
non-existent, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price.
A broader or more active public trading market for our common shares may not develop or if developed, may not be sustained. Due to these conditions, you may not be able to sell your shares at or near
ask prices or at all if you need money or otherwise desire to liquidate your shares.

Item 1B.    Unresolved Staff Comments

None.

Item 2.    Properties

In October 2007, we moved from our previous corporate headquarters located in Coppell, Texas to a temporary office located in Dallas, Texas, upon receipt of
notice from Brightpoint that we were required to vacate the Coppell office within thirty (30) days of such notice. We lease our current facility in Dallas, and such lease expires
March 31, 2008. We neither own nor lease any other properties at this time.

The
Company plans to find an office that more adequately suits its needs and is a more reasonable location before its current lease expires at the end of March.

Item 3.    Legal Proceedings

The Company has been informed of the existence of an investigation that may relate to the Company or its South American operations. Specifically, the Company
understands that authorities are reviewing allegations from unknown parties that remittances were made from South America to Company accounts in the United States in 1999. The Company does not know
the nature or subject of the investigation, or the potential involvement, if any, of the Company or its former subsidiaries. The Company does not know if allegations of wrongdoing have been made
against the Company, its former subsidiaries or any current or former Company personnel or if any of them are subjects of the investigation. However, the fact that the investigators are aware of an
allegation of transfers of money from South America to the United States and may have questioned witnesses about such alleged transfers means that the Company can not predict whether or not the
investigation will result in a material adverse effect on the consolidated financial condition or results of operations of the Company.

We
are party to various claims, legal actions and complaints arising in the ordinary course of business. Our management believes that the disposition of these matters will not have a
materially adverse effect on the consolidated financial condition or results of operations of the Company.

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

We did not submit any matters to a vote of security holders in the fourth quarter of 2007.

7

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PART II.

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company's common stock was delisted from the Nasdaq National Market effective with the open of business on June 10, 2005. The Company's common stock is
currently traded on the over-the-counter (OTC) market and is quoted on the Pink Sheets® under the symbol "CLHI."

The
following table sets forth, on a per share basis, high and low prices for our common stock for each quarter of fiscal years 2006 and 2007. Prices are the high and low bid quotations
per share for our common stock as reported on the OTC market, as compiled by Pink Sheets LLC. Such bid quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions.

High

LowFiscal Year ended November 30, 2007Quarter Ended:February 28, 2007

$
3.75

2.49May 31, 2007


2.66

2.50August 31, 2007


2.76

1.10November 30, 2007


1.17

0.40Fiscal Year ended November 30, 2006Quarter Ended:February 28, 2006

$
3.25

1.90May 31, 2006


5.05

2.35August 31, 2006


3.10

2.46November 30, 2006


4.11

2.80


As
of February 28, 2008, there were 218 stockholders of record, although we believe that the number of beneficial owners is significantly greater because a large number of shares
are held of record by CEDE & Co. As of February 28, 2008, the last reported price of our common stock on the OTC market was $0.36 per share.

Prior
to the Company's adoption of the Plan, our policy had been to reinvest earnings to fund future growth. Accordingly, we generally did not pay cash dividends on our common stock.
However, consistent with the Company's Plan, the Company paid the following cash distributions to the holders of its common stock in fiscal year 2007:

Date

Dividend AmountJuly 19, 2007

$
1.50November 1, 2007

$
0.60


The
distributions under the Plan totaled $2.10 per share or approximately $43.2 million. The Company has determined that 61.21% of the distribution will be considered a taxable
dividend in accordance with U.S. Federal income tax rules, and the remaining 38.79% will be considered a non-dividend distribution. This determination was a direct result of the Company's
earnings and profits of $26.3 million, requiring the first $26.3 million of distributions to be treated as taxable dividends. The Company's status did not affect the tax determination.
Stockholders are encouraged to contact their tax and financial advisors regarding implications and appropriate tax treatment of the distribution.

The
Board of Directors has the authority to abandon the Plan if it deems it appropriate. Consistent with its fiduciary duties, the Board of Directors is now giving careful consideration
to the strategic alternatives available to the Company, with a view to maximizing stockholder value. Among

8

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other
matters, the Board is reviewing potential acquisitions and the value of the Company's tax assets. If the Board determines that it is in the best interest of the Company to pursue an acquisition,
it will likely require the Company to obtain debt and/or equity financing. Even if we obtain access to the necessary capital, we may be unable to identify suitable acquisition opportunities, negotiate
acceptable terms or successfully acquire identified targets. It is unlikely the Board of Directors will make any further distributions to the Company's stockholders under the Plan while it considers
the strategic alternatives available to the Company. It is possible that the Board of Directors will, in the exercise of its fiduciary duty, elect to abandon the Plan for a strategic alternative that
it believes will maximize stockholder value, and that no further liquidating distributions will be made.

Issuer Purchases of Equity Securities

We have no programs to repurchase shares of our common stock. Furthermore, we did not repurchase any of our common stock during the fourth quarter of the last
fiscal year.

Equity Compensation Plan Information

The Company's former 1993 Long-Term Incentive Plan (the "1993 Plan") terminated on December 3, 2003. However, as disclosed in Item 11,
Executive Compensation, Mr. Kaiser currently has exercisable options that were granted under the 1993 Plan. At a meeting of the Board of Directors on September 25, 2007, our Board of
Directors unanimously resolved to terminate our 2003 Long-Term Incentive Plan (the "2003 Plan") due to the reduction in the Company's workforce. As a result of the termination of the 2003
Plan, all outstanding options to purchase the equity securities of the Company issued thereunder were terminated as well. Therefore, there are no currently outstanding options to purchase the
Company's securities under the 2003 Plan. We have no other equity compensation plans.

Item 6.    Selected Consolidated Financial Data

This information has been omitted as the Company qualifies as a smaller reporting company.

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

We have sold all of our major assets and only a small administrative staff remains to wind up our business. Our stockholders approved the U.S. Sale, the Mexico
Sale, the plan of dissolution, and the name change to CLST Holdings, Inc. on March 28, 2007, and we continue to follow the plan of dissolution. However, consistent with the plan of
dissolution and its fiduciary duties, our board of directors will continue to consider the proper implementation of the plan of dissolution and the exercise of the authority granted to it thereunder,
including the authority to abandon the plan of dissolution. Our board of directors has in the past year considered whether it is possible, and if it would be in the best interest of the Company, to
de-register with the Securities and Exchange Commission (the "SEC") and thereby eliminate the Company's responsibilities to file reports with the SEC. Our board of directors is not
currently considering de-registering with the SEC, but may reconsider doing so in the future.

In
the proxy statement filed on February 20, 2007, related to the Special Meeting of stockholders, we estimated that our stockholders would receive distributions in an aggregate
amount between $2.91 and $3.25 per share of common stock. As of July 6, 2007, the Company estimated that stockholders of the Company would receive distributions in an aggregate amount between
$2.91 and $3.03 per share of common stock. As of October 5, 2007, we estimated that the range in distributions to stockholders was between $2.39 and $2.99. The most recent change in the
estimated range resulted primarily from (i) management's estimates of the anticipated expenses that may be incurred as a result of claims relating to the Company's former Latin American
operations which were not contemplated by the

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Company's
former management and whose effect was thus not included in the former estimate range; (ii) claims asserted by Brightpoint in the amount of approximately $1.4 million for
indemnity under the agreement relating to the sale of the Company's U.S. business; (iii) failure by the buyer of the Company's Mexican business to remit amounts contemplated to be received,
with respect to profits from January 1, 2007, up to the consummation of the transaction; (iv) increased costs related to stockholder issues, including expenses associated with the filing
of our proxy statement for the Annual Stockholder's meeting held on July 31, 2007 and related solicitation expenses (approximately $0.9 million), and expenses of our current board
associated with the same meeting (approximately $0.3 million).

On
July 19, 2007, we paid a $1.50 per share dividend, resulting in the distribution to stockholders of approximately $30.8 million. On November 1, 2007 we paid an
additional $0.60 per share dividend to stockholders, which brings the cumulative dividends paid to stockholders to $2.10 per share or approximately $43.2 million.

On
December 21, 2007 we announced, consistent with its fiduciary duties, that the Board of Directors is now giving careful consideration to the strategic alternatives available to
the Company, with a view to maximizing stockholder value. Among other matters, the Board is reviewing potential acquisitions and the value of the Company's tax assets. If the Board determines that it
is in the best interest of the
Company to pursue an acquisition, it will likely require the Company to obtain debt and/or equity financing. Even if we obtain access to the necessary capital, we may be unable to identify suitable
acquisition opportunities, negotiate acceptable terms or successfully acquire identified targets. It is unlikely the Board of Directors will make any further distributions to the Company's
stockholders under the Plan while it considers the strategic alternatives available to the Company. As a result of the on-going evaluation, we are not giving any guidance to stockholders
regarding an expected range of cumulative distributions. It is possible that the Board of Directors will, in the exercise of its fiduciary duty, elect to abandon the plan of dissolution for a
strategic alternative that it believes will maximize stockholder value, and that no further liquidating distributions will be made.

As
stated in our proxy statement filed on February 20, 2007, related to the Special Meeting of stockholders, the estimated distributions are estimates only and not guarantees.
They do not reflect the total range of possible outcomes. The amount and timing of the distributions are subject to uncertainties and depend on the resolution of contingencies. We cannot assure that
available cash amounts received from the sale of assets will be adequate to provide for our obligations, liabilities, expenses and claims. Consequently, there can be no assurance that any further
amounts will be paid to stockholders or the timing of any such payments if they are made.

Discussion of Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in
accordance with accounting policies that are described in the Notes to the Consolidated Financial Statements. The preparation of the consolidated financial statements requires management to make
estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our
judgments and estimates in determination of our financial condition and operating results. Estimates are based on information available as of the date of the financial statements and, accordingly,
actual results could differ from these estimates, sometimes materially. Critical accounting policies and estimates are defined as those that are both most important to the portrayal of our financial
condition and operating results and require management's most subjective judgments. The most critical accounting policies and estimates are described below. The following is applicable to our
discontinued operations.

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Revenue Recognition

Revenue is recognized on product sales when delivery occurs, the customer takes title and assumes risk of loss, terms are fixed and determinable, and
collectibility is reasonably assured. The Company does not generally grant rights of return. In instances where right of return is granted at the time of sale, revenue is not recognized until
expiration of the right of return. For goods that were considered bill and hold, revenue is recognized when the product is shipped. Reserves for returns, price discounts and rebates are estimated
using historical averages, open return requests, channel inventories, recent product sell-through activity and market conditions. Allowances for returns, price discounts and rebates are
based upon management's best judgment and estimates at the time of preparing the financial statements.

In
accordance with contractual agreements with wireless service providers, the Company received an activation commission for obtaining subscribers for wireless services in connection
with the Company's retail operations. The agreements contained various provisions for additional commissions ("residual commissions") based on subscriber usage. The agreements also provided for the
reduction or elimination of activation commissions if subscribers deactivate service within stipulated periods. The Company recognized revenue for activation commissions when the subscriber activated
service less an allowance for estimated deactivations. The Company recognized residual commissions when received. The Company recognized service fee revenue when the service was completed and, if
applicable, upon shipment of the related product, whichever was later. The Company recognized revenue for reselling airtime from carriers upon its purchase by consumers. Revenues have been reclassed
to discontinued operations.

Vendor Credits and Allowances

The Company recognized price protection credits, sell-through credits, advertising allowances and volume discounts in the period the agreement was
made so long as the terms were supported by a written agreement. If not supported by a written agreement, the Company recognized the same when received.

Price
protection credits and other incentives were applied against inventory and cost of goods sold, depending on whether the related inventory was on-hand or had been
previously sold. Sell-through credits were recorded as a reduction in cost of goods sold as the products were sold. Advertising allowances were generally for the reimbursement of specific
incremental, identifiable costs incurred by the Company and were recorded as a reduction of the related cost. Allowances in excess of the specific costs incurred, if any, were recorded as a reduction
in cost of goods sold or inventory, depending on whether the related inventory was on-hand or had been previously sold.

Stock-Based Compensation

Prior to fiscal 2006, the Company accounted for its stock options under the recognition and measurement provisions of APB Opinion No. 25, "Accounting for
Stock Issued to Employees", and related interpretations. Effective December 1, 2005, the Company adopted the provisions of SFAS No. 123 (Revised 2004), "Share-Based Payments"
(SFAS 123(R)), and selected the modified prospective method to initially report stock-based compensation amounts in the consolidated financial statements. The Company used the Black-Scholes
option pricing model to determine the fair value of all option grants. The Company did not grant any options during the years ended November 30, 2007 and 2006.

During
2006, the Company granted shares of restricted stock to executive officers, directors and certain employees of the Company pursuant to the 2003 Plan. The shares of restricted
stock vested in thirds over a three-year period, beginning on the first anniversary of the grant date. The restricted stock was to become 100% vested if any of the following occurred:
(i) the participant's death; (ii) the

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termination
of participant's service as result of disability; (iii) the termination of the participant without cause; (iv) the participant's voluntary termination after the attainment of
age 65; or (v) a change in control. The total value of the awards, $2.6 million, was being expensed over the service period. The 2003 Plan permitted withholding of shares by the Company
upon vesting to pay withholding tax. These withheld shares were considered as treasury stock and were available to be re-issued under the 2003 Plan, prior to the termination of the 2003
Plan on September 25, 2007. Restricted stock issued under the 2003 Plan vested upon the completion of the U.S. Sale and no new shares will be issued.

Adoption of SAB 108

On September 13, 2006, the SEC issued Staff Accounting Bulletin No. 108 ("SAB 108"). SAB 108 expresses the SEC Staff's views regarding
the process of evaluating materiality of financial statement misstatements. SAB 108 addresses the diversity in evaluating materiality of financial statement misstatements and the potential
under current practice used by the Company for the build up of improper amounts on the balance sheet. SAB 108 is effective for the Company for the year ended November 30, 2006. As
allowed by SAB 108, the cumulative effect of the initial application of SAB 108 has been reported in the carrying amounts of assets and liabilities as of the beginning of fiscal 2006,
with the offsetting balance to retained earnings. Upon adoption, the Company recorded a decrease in accrued expenses of approximately $1.1 million for unspecified obligations and in the
allowance for doubtful accounts of approximately $1.0 million for excess general reserves and an increase in retained earnings of approximately $2.1 million to correct errors arising
prior to 2003 that were considered immaterial under the Company's previous method of evaluating materiality.

Sales Transactions

On December 18, 2006, we entered into a definitive agreement (the "U.S. Sale Agreement") with a wholly owned subsidiary of Brightpoint, Inc., an
Indiana corporation ("Brightpoint"), providing for the sale of substantially all of our United States and Miami-based Latin American operations and for the buyer to assume certain liabilities related
to those operations (the "U.S. Sale"). Our operations in Mexico and Chile and other businesses or obligations of the Company were excluded from the transaction.

Our
Boards of Directors and Brightpoint unanimously approved the proposed transaction set forth in the U.S. Sale Agreement. The purchase price was $88 million in cash, subject to
adjustment based on changes in net assets from December 18, 2006 to the closing date. The U.S. Sale Agreement also required the buyers to deposit $8.8 million of the purchase price into
an escrow account for a period of six months from the closing date.

Also
on December 18, 2006, we entered into a definitive agreement (the "Mexico Sale Agreement") with Soluciones Inalámbricas, S.A. de C.V. ("Wireless
Solutions") and Prestadora de Servicios en Administración y Recursos Humanos, S.A. de C.V. ("Prestadora"), two affiliated Mexican companies, providing for the sale of all of the
Company's Mexico operations (the "Mexico Sale"). The Mexico Sale was a stock acquisition of all of the outstanding shares of our Mexican subsidiaries, and includes our interest in
Comunicación Inalámbrica Inteligente, S.A. de C.V. ("CII"), our joint venture with Wireless Solutions. Under the terms of the transaction, we received
$20 million in cash, and were entitled to receive our pro rata share of CII profits from January 1, 2007, up to the consummation of the transaction, within 150 days from the
closing date. Our Board of Directors unanimously approved the proposed transaction set forth in the Mexico Sale Agreement. We have not received any pro-rata share of the CII profits and
other terms required as of 150 days from the closing date. A demand for payment of up to $1.7 million and other required terms of the agreement was sent to the purchasers on
September 11, 2007. While we believe that CII was profitable and therefore the purchasers owe the Company its pro rata share, the purchasers are disputing this claim. We anticipate further
negotiations to resolve the issue.

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We
filed a proxy statement with the SEC on February 20, 2007, which more fully describes the U.S. and Mexico Sale transactions. Both of the transactions were subject to customary
closing conditions and the approval of our stockholders, and the transactions were not dependent upon each other. The proxy statement also included a plan of dissolution, which provides for the
complete liquidation and dissolution of the Company after the completion of the U.S. Sale, and a proposal to change the name of the Company from CellStar Corporation to CLST Holdings, Inc.

On
March 28, 2007, our stockholders approved the U.S. Sale, the Mexico Sale, the plan of dissolution, and the name change to CLST Holdings, Inc. We continue to follow the
plan of dissolution. Consistent with the plan of dissolution and its fiduciary duties, our board of directors will continue to consider the proper implementation of the plan of dissolution and the
exercise of the authority granted to it thereunder, including the authority to abandon the plan of dissolution.

The
U.S. Sale closed on March 30, 2007. At closing, $53.6 million was received and $4.5 million is included in accounts receivableother in the
accompanying balance sheet for November 30, 2007. We recorded a pre-tax gain of $52.7 million on the transaction during the twelve months ended November 30, 2007. (See
footnote 2). The buyer of the Company's U.S. business previously asserted total claims for indemnity against the escrow of approximately $1.4 million, and the remainder, approximately
$7.6 million, including accrued interest, was distributed to the Company on October 4, 2007. On December 21, 2007, the Company and Brightpoint entered into a Letter Agreement
which settled the dispute concerning the additional escrow amount. All currently outstanding disputes between the parties regarding the determination of the purchase price under the U.S. Sale
Agreement have been resolved, and payments of funds have been made in accordance with the terms described in the Letter Agreement. In January 2008 the Company received approximately
$3.2 million from Brightpoint plus accrued interest and less transition expenses, and approximately $1.4 million from the escrow agent. These are the final amounts to be received under
the U.S. Sale Agreement.

The
Mexico Sale closed on April 12, 2007, and we recorded a loss on the transaction of $7.0 million primarily due to accumulated foreign currency translation adjustments as
well as expenses related to the transaction. We had approximately $9.1 million of accumulated foreign currency translation adjustments related to Mexico. As the proposed sale did not meet the
criteria to classify the operations as held for sale under SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", as of February 28, 2007, we
recognized the $9.1 million as a charge upon the closing of the Mexico Sale. We have not received any pro-rata share of profits and other terms required as of 150 days from
the closing date under the Mexico Sale. A demand for payment of up to $1.7 million and other required terms of the agreement was sent to the purchasers, and if such amounts are received an
additional gain will be recognized.

On
March 22, 2007, we signed a letter of intent to sell our operations in Chile (the "Chile Sale") to a group that includes local management for approximately book value. On
June 11, 2007, we completed the Chile Sale. The purchase price and cash transferred from the operations in Chile prior to closing totaled $2.5 million, and we recorded a gain of
pre-tax $0.6 million on the transaction during the quarter ending August 31, 2007. With the completion of the Chile Sale, we no longer have any operating locations.

On
December 2, 2007 the Company received approximately $95,000 from Muniz Ramirez Perez-Taiman representing the final payment due the Company from the 2002 sale of its operations
in Peru. The accounts receivable had been previously fully reserved.

Management and Board Changes

As a result of the U.S. Sale, executive officers and certain employees were entitled to payments under existing employment contracts and change of control
agreements. We recognized an expense of $6.6 million for the year ended November 30, 2007, related to payments under these agreements. In

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addition,
upon the closing of the Mexico Sale, an additional $0.3 million related to such payments was expensed for the year ended November 30, 2007.

Cautionary Statements

On February 20, 2007, we filed a proxy statement with the SEC recommending that stockholders approve the U.S. Sale, the Mexico Sale, and a plan of
liquidation and dissolution for the Company. On March 28, 2007, our stockholders approved these proposals, and the U.S. Sale closed on March 30, 2007 and the Mexico Sale closed on
April 12, 2007. Also on June 11, 2007, we sold our Chile operations and as a result, we no longer have any revenue generating operations. Prior to the closing of the U.S. Sale, the
Mexico Sale and the Chile Sale, our operating performance was subject to a variety of risks, which are more fully described in Item 1A of our Annual Report on Form 10-K for
the twelve months ended November 30, 2006, and our proxy statement filed February 20, 2007. The amount and timing of any distributions paid to stockholders in connection with the
liquidation and dissolution of the Company are subject to uncertainties and depend on the resolution of certain contingencies more fully described in the proxy statement and elsewhere in this
Form 10-K.

In
the plan of dissolution approved during our Special Meeting of stockholders on March 28, 2007, we stated that no distribution of proceeds from the U.S. and Mexico sales would
be made until the investigation by the SEC was resolved (see Part II, Item 1Legal Proceedings for more information). On June 26, 2007, we received a letter from the
staff of the SEC giving notice of the completion of their investigation with no enforcement action recommended to the SEC. On June 27, 2007, our Board declared a cash distribution of $1.50 per
share on common stock to stockholders of record as of July 9, 2007. On July 19, 2007, we issued the $1.50 per share dividend in the total amount of $30.8 million. On
November 1, 2007 we paid an additional $0.60 per share dividend to stockholders, which brings the cumulative dividends paid to stockholders to $2.10 per share or approximately
$43.2 million.

On
December 21, 2007 we announced, consistent with its fiduciary duties, that the Board of Directors is now giving careful consideration to the strategic alternatives available to
the Company, with a view to maximizing stockholder value. Among other matters, the Board is reviewing potential acquisitions and the value of the Company's tax assets. If the Board determines it is in
the best interest of the Company to pursue an acquisition, it will likely pursue debt financing or equity issuance in order to finance such
acquisition. It is unlikely the Board of Directors will make any further distributions to the Company's stockholders under the Plan while it considers the strategic alternatives available to the
Company. As a result of the on-going evaluation, we are not giving any guidance to stockholders regarding an expected range of cumulative distributions. It is possible that the Board of
Directors will, in the exercise of its fiduciary duty, elect to abandon the plan of dissolution for a strategic alternative that it believes will maximize stockholder value, and that no further
liquidating distributions will be made.

Fiscal 2007 Compared to Fiscal 2006

Selling, General and Administrative Expenses.Selling, general and administrative expenses for the twelve months ended
November 30, 2007 were approximately $15.2 million compared to approximately $12.8 million for the same period in 2006. There was an increase in payroll due to payments under
existing employment contracts and change of control agreements and vesting of restricted stock totaling $8.4 million, which such amounts were primarily as a result of the U.S. Sale. The
increase in payroll was partially offset by a decline in other selling and general administrative expenses as a result of the wind down of operations.

Interest Expense.Interest expense for the twelve months ended November 30, 2007 was approximately $0.2 million
compared to approximately $0.5 million for the same period in the prior year. We paid off all of our existing debt in March 2007 in conjunction with the U.S. Sale transaction.

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Interest
expense related to the Amended Facility and the Term Loan has been allocated to discontinued operations. In 2006 interest expense was allocated to discontinued operations based on working
capital and a percentage of revenues, by subsidiary, due to the large amount of borrowing activity. In 2007, it was decided that 90% of the interest expense would be allocated to discontinued
operations based on the small amount of borrowings in the four months before the sale. The total interest expense allocated to discontinued operations was $2.2 million in 2007 and
$3.4 million in 2006.

Settlement of note receivable related to the sale of Asia-Pacific.On March 5, 2007, we announced that we
had signed an agreement, effective February 27, 2007, with Fine Day and Mr. Horng, the Chairman and sole shareholder of Fine Day, and formerly an executive officer of the Company,
accepting a settlement of an outstanding note receivable related to the September 2005 sale of our Hong Kong and PRC operations.

From
September 2, 2005, Fine Day had made timely interest payments to us on the promissory note. However, Fine Day informed us in February 2007 that it would not be able to pay
quarterly interest
payments or the principal amount of the note at maturity. In settlement of the outstanding note, we agreed to accept a $650,000 cash payment, along with the transfer to the Company of all of
Mr. Horng's shares of our common stock, approximately 474,000 shares. The transaction closed on April 12, 2007. The shares of stock were valued at $2.56 per share based on the closing
price on April 12, 2007. The carrying value of the note, prior to the agreement, was $2.4 million. As a result of the settlement, we recorded a loss of $0.5 million for the twelve
months ended November 30, 2007. At November 30, 2007, the shares of stock previously owned by Mr. Horng were included in treasury stock.

Income Taxes.We have an income tax benefit from continuing operations of approximately $11.5 million for the twelve
months ended November 30, 2007 and approximately $4.2 million for the same period in 2006. Discontinued operations included in the consolidated statement of operations is shown net of
taxes of approximately $15.9 million for the twelve months ended November 30, 2007 reflecting a tax rate of 35% on gains on sales. Discontinued operations included in the statements of
operations is shown net of taxes of approximately $7.1 million for the twelve months ended November 30, 2006, reflecting a tax rate of 35%. The difference between these amounts and the
Company's consolidated provision has been included in as a tax benefit in continuing operations for the twelve months ended November 30, 2007. In 2007 and 2006, we used the loss from continuing
operations as well as net operating losses from prior years that previously had valuation allowances to offset income from discontinued operations except for certain minimum taxes, withholding taxes
and taxes related to CII. The benefit in 2007 was partially reduced by the closing of the Mexico Sale which increased the deferred income tax valuation allowance by approximately $2.7 million
as no future taxable income will be generated from the Mexico operations.

In
assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that the deferred income tax assets will be realized. For further
discussion, please see footnote 8.

Discontinued Operations.As discussed in footnote 2 to the Consolidated Financial Statements, during the second quarter of
2007, we sold our operations in the U.S., Miami and Mexico and during the third quarter of 2007 sold our operations in Chile. As a result of these transactions we no longer have any operations.
Results for these operations beginning December 1, 2006 and continuing through the respective sale date are recorded in Discontinued Operations. For 2007, the Company recorded earnings from
discontinued operations of $29.5 million compared to $13.1 million in 2006. During 2007 the Company recorded a pre-tax gain on sale of countries of $46.3 million.
There were no gains or losses on sales in 2006. Partially offsetting this gain in 2007 was a lower operating income amount. For 2007, the Company recorded operating income of $3.0 million
compared to $28.4 million in 2006, primarily due to substantially fewer months of operations.

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Liquidity and Capital Resources

The U.S. Sale closed on March 30, 2007. At closing, $53.6 million was received and $4.5 million is included in accounts
receivableother in the accompanying balance sheet for November 30, 2007; $8.8 million had been placed in an escrow account and subject to any indemnity claims by the buyers
of the Company's U.S. business. A portion of the proceeds from the sale was used to pay off the Company's bank debt (see footnote 7). We recorded a pre-tax gain of $52.7 million on
the transaction during the twelve months ended November 30, 2007. Brightpoint asserted total claims for indemnity against the escrow of approximately $1.4 million. The Company objected
to these claims. Brightpoint also proposed negative adjustments to the net working capital of approximately $1.4 million, which these claims for adjustment were largely the same as the claims
for indemnity asserted against the escrow account. As of November 30, 2007, we had received approximately $7.6 million of the amounts held in the escrow account, which such amount
included accrued interest. On December 21, 2007, we entered into a Letter Agreement (the "Letter Agreement") with Brightpoint which settled the dispute concerning the additional escrow amount.
All currently outstanding disputes between the parties regarding the determination of the purchase price under the U.S. Sale Agreement have been resolved, and payments of funds in respect thereof were
made in accordance with the terms described in the Letter Agreement. Pursuant to the Letter Agreement, in January 2008 we received approximately $3.2 million from Brightpoint plus accrued
interest and less transition expenses, and approximately $1.4 million from the escrow agent. These amounts were the final amounts received under the U.S. Sale Agreement.

Prior
to the sales of our operations, we were able to use funds generated from each of the respective operations, trade credit lines available from our suppliers, borrowings under our
revolving credit facility, factoring of accounts receivable, and sale of assets to meet our operating needs. Subsequent to the sale of our operations, we will meet our needs with existing funds and
interest and investment income generated by the Company's cash and cash equivalents. At November 30, 2007, we had cash and cash equivalents of $11.8 million.

Operating Activities

The net cash we received from and used in operating activities for the years ended November 30, 2006 and 2007 was $14.6 million and ($2.6) million,
respectively. The decrease in fiscal year 2007 is primarily a result of the sale of our U.S., Miami, Mexico and Chile operations.

Investing Activities

The net cash we received from investing activities for the years ended November 30, 2006 and 2007 was $0.4 million and $82.8 million,
respectively. The increase in fiscal year 2007 is primarily a result of the sale of our U.S., Miami, Mexico and Chile operations, for which we received proceeds of $83.0 million.

Financing Activities

On March 31, 2006, we entered into an Amended & Restated Loan and Security Agreement (the "Amended Facility") with a bank, which extended the term
of our previous facility until September 27, 2009. The borrowing rate under the revolver of the Amended Facility was prime for the prime rate option and London Interbank Offered Rate ("LIBOR")
plus 2.5% for the LIBOR option.

At
November 30, 2006, we had outstanding $1.9 million of 12% Senior Subordinated Notes (the "Senior Notes") due January 2007 bearing interest at 12%.

On
August 31, 2006, we entered into a Term Loan and Security Agreement (the "Term Loan") with a finance company for up to $12.3 million to refinance the Senior Notes. The
borrowing rate

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under
the Term Loan was LIBOR plus 7.5%, or a base rate plus an applicable margin. The Term Loan was to mature September 27, 2009. The Term Loan was to be amortized to an outstanding balance of
$10 million at the rate of approximately $1 million per year payable in quarterly installments beginning September 30, 2006, with interest-only payments thereafter
throughout the remainder of the Term Loan.

On
March 30, 2007, the outstanding balances, including accrued interest, under the Amended Facility of $13.1 million and Term Loan of $11.9 million were paid off
using the proceeds from the U.S. Sale. An early termination fee of $0.5 million was paid in conjunction with the pay off of the Amended Facility and was recognized as a charge to earnings in
the quarter ended May 31, 2007. As of November 30, 2007 the Company did not have any Term Loans, Notes or other forms of long-term debt. The historical Term Loans or Senior
Notes have been paid off.

The
net cash we received from financing activities for the years ended November 30, 2006 and 2007 decreased from $1.9 million to cash used of $89.0 million,
respectively. The decrease in fiscal year 2007 is largely due to payments we made on the Term Loan and Amended Facility as a result of the sale of
our U.S., Miami, Mexico and Chile operations. We also paid distributions to our stockholders of $2.10 per share or approximately $43.2 million, pursuant to the Plan.

Contractual Obligations

We have agreements with two employees to assist with the final wind down of our business. Under the agreements, the employees are to receive their base salary as
well as a bonus upon the completion of certain objectives during the liquidation process. The maximum payments remaining under these agreements at November 30, 2007 is $145,000, and we expect
to pay this amount out of our available cash.

Included
in accounts payable at November 30, 2007, is approximately $14.2 million associated with liabilities which may be resolved in the liquidation process. In the event
these liabilities are resolved for less than book value, net operating loss carryforwards will be used to offset any tax liability associated with reductions of the recorded liabilities.

New Accounting Pronouncements

Footnote 1 of the Notes to the Consolidated Financial Statements, included in the Company's Annual Report on Form 10-K for the year ended
November 30, 2006, includes a summary of the significant accounting policies and methods used in the preparation of our Consolidated Financial Statements. There were no changes during the year
ended November 30, 2007, to the significant accounting policies used in the preparation of our Consolidated Financial Statements.

Adoption of SAB 108

On September 13, 2006, the SEC issued Staff Accounting Bulletin No. 108 ("SAB 108"). SAB 108 expresses the SEC Staff's views regarding
the process of evaluating materiality of financial statement misstatements. SAB 108 addresses the diversity in evaluating materiality of financial statement misstatements and the potential
under current practice used by the Company for the build up of improper amounts on the balance sheet. SAB 108 is effective for the Company for the year ended November 30, 2006. As
allowed by SAB 108, the cumulative effect of the initial application of SAB 108 has been reported in the carrying amounts of assets and liabilities as of the beginning of fiscal 2006,
with the offsetting balance to retained earnings. Upon adoption, the Company recorded a decrease in accrued expenses of approximately $1.1 million for unspecified obligations and in the
allowance for doubtful accounts of approximately $1.0 million for excess general reserves and an increase in retained
earnings of approximately $2.1 million to correct errors arising prior to 2003 that were considered immaterial under the Company's previous method of evaluating materiality.

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Accounting Pronouncements Not Yet Adopted

In July 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in Income
Taxesan interpretation of FASB Statement No. 109", which clarifies the accounting for uncertainty in tax positions. This interpretation requires that we recognize in our financial
statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are
effective as of the beginning of the Company's 2008 fiscal year, with the cumulative effect of the change in accounting principle recorded as an adjustment to retained earnings. The Company is
currently evaluating the impact of adopting FIN 48 on our financial statements.

In
September 2006, the FASB issued FASB Statement No. 157, "Fair Value Measurements" ("SFAS 157"), which defines fair value, establishes a market-based framework or
hierarchy for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 is applicable whenever another accounting pronouncement requires or permits assets and
liabilities to be measured at fair value and, while not expanding or requiring new fair value measurements, the application of this statement may change current practices. The requirements of
SFAS 157 are effective for the fiscal year beginning December 1, 2008. However, in February 2008 the FASB decided that an entity need not apply this standard to nonfinancial assets and
liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis until the subsequent year. Accordingly, the adoption of this standard on
December 1, 2008 is limited to financial assets and liabilities. The Company is still in the process of evaluating this standard and therefore has not yet determined the impact that it will
have on our financial statements.

In
December 2007, the FASB released Statement No. 141 R, "Business Combinations" ("SFAS 141R"), which establishes principles for how the acquirer shall recognize acquired
assets, assumed liabilities and any noncontrolling interest in the acquiree, recognize and measure the acquired goodwill in the business combination, or gain from a bargain purchase, and determines
disclosures associated with financial statements. This statement replaces SFAS 141 but retains the fundamental requirements in SFAS 141 that the acquisition method of accounting (which
SFAS 141called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. The requirements of SFAS 141R apply to
business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Early application is not
permitted.

From
time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies which we adopt as of the specified effective date. Unless otherwise discussed,
our management believes the impact of recently issued standards which are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

Item 7(A).    Quantitative and Qualitative Disclosures About Market Risk

This information has been omitted as the Company qualifies as a smaller reporting company.

Item 8.    Consolidated Financial Statements and Supplementary Data

See Index to Consolidated Financial Statements on Page F-1 of this Form 10-K.

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Resignation of Grant Thornton LLP

As disclosed in our Form 8-K filed with the SEC on September 4, 2007, we received a letter from Grant Thornton LLP ("Grant
Thornton") on August 28, 2007 stating that Grant Thornton resigned as the independent registered public accounting firm of CLST Holdings, Inc.

18

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Grant
Thornton's reports on our consolidated financial statements for each of the fiscal years ended November 30, 2006 and 2005 did not contain an adverse opinion or disclaimer of
opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

During
the fiscal years ended November 30, 2006 and 2005 and through August 28, 2007, there were no disagreements with Grant Thornton on any matter of accounting principle
or practice, financial statement disclosure or auditing scope or procedure which, if not resolved to Grant Thornton's satisfaction, would have caused them to make references to the subject matter in
connection with their reports of our consolidated financial statements for such periods.

During
the fiscal years ended November 30, 2006 and 2005 and through August 28, 2007, there were no reportable events within the meaning of Item 304(a)(1)(v) of
Regulations S-K, except for the material weaknesses in internal control over financial reporting described in the following paragraph.

In
our Annual Report on Form 10-K for the year ended November 30, 2005, we reported that we had the following material weaknesses in our internal controls:



Grant
Thornton's report on the Company's internal control over financial reporting stated that based on the effect of these material weaknesses on the achievement of the objectives of the control
criteria, we had not maintained effective internal control over financial reporting as of November 30, 2005.

Engagement of Whitley Penn LLP

As further disclosed in our Form 8-K filed with the SEC on September 4, 2007, on August 31, 2007 we engaged Whitley
Penn LLP ("Whitley Penn") as our new principal independent registered public accounting firm to audit our financial statements for the fiscal year ended November 30, 2007. The decision
to engage Whitley Penn was approved by our Board of Directors. On the same date, Whitley Penn advised the Company that it was accepting the position as the Company's new principal independent
registered public accounting firm for the year ending November 30, 2007.

During
the last two fiscal years and through August 31, 2007, we did not consult with Whitley Penn regarding (i) the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements; or (ii) any matter that was either the subject of a disagreement or
reportable event per Item 304(a)(2)(ii) of Regulation S-K.

Item 9A(T).    Controls and Procedures

There were changes in our internal control over financial reporting during the year ended November 30, 2007 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting. We completed the U.S. Sale on March 30, 2007 and the Mexico Sale on April 12, 2007. In conjunction
with the U.S. and Mexico Sales, a substantial number of our employees either resigned or transferred to the acquiring entities. Also as a result of the U.S. Sale, the Chief Executive Officer, Chief
Administrative Officer, and Chief Financial Officer resigned. To supplement controls, we used consultants to perform reviews of certain key reconciliations and accounting records that were previously
performed by employees. Additionally on June 11, 2007, we completed the sale of our operations in Chile. We anticipate that changes will continue to be made to

19

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our
internal controls as a result of the reduction of employees and consolidation of functions to reflect our new size and on-going wind down of operations.

Our
Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e)) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer has concluded that the
Company's disclosure controls and procedures were effective at November 30, 2007.

The
Company is neither a large accelerated filer nor an accelerated filer as those terms are defined in SEC Rule 12b-2. Beginning with our filing deadline for our
Annual Report on Form 10-K for Fiscal 2008, we will have to include management's evaluation of internal control over financial reporting (Item 308T(a) of
Regulation S-K) and the full text-version of the CEO and CFO certifications referencing management's responsibility for internal controls. However, in this fiscal year
the Company will not have to include the auditor attestation on internal control required by Item 308(b) of Regulation S-K. Management's evaluation will have to disclose that
the annual report does not include such an auditor attestation and that it was not subject to attestation pursuant to temporary rules of the SEC with our Annual Report on Form 10-K
for Fiscal 2009, we will have to include both management's evaluation of internal control and the auditor attestation.

Item 9B.    Other Information

None.

20

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PART III

Item 10.    Directors, Executive Officers and Corporate Governance

The following table sets forth the names, ages, and titles of executive officers and directors of the Company as of November 30, 2007:

Robert A. Kaiser

54

Chairman of the Board, Director, Chief Executive Officer, President, Chief Financial Officer and TreasurerTimothy S. Durham

45

Director, SecretaryManoj Rajegowda

27

Director


Robert
A. Kaiser, 54, currently serves as the Company's Chairman of the Board, which he was elected to on August 7, 2007, and as Chief Executive Officer, President, Chief
Financial Officer and Treasurer,
which positions he was elected to on September 25, 2007. Mr. Kaiser has served as a director of the Company since May 2, 2005 and also previously served as Chairman of the Board
of Directors of the Company from May 2, 2005 until his resignation on April 17, 2007. Mr. Kaiser is currently serving a one year term as director. Mr. Kaiser also served as
Senior Vice President and Chief Financial Officer of the Company from December 21, 2001 until October 2, 2003, when the Board of Directors named him President and Chief Operating Officer
of the Company, which he served as until March 30, 2007, when he resigned in connection with the completion of the sale of substantially all of the Company's assets. Mr. Kaiser was also
promoted to Chief Executive Officer on May 1, 2004, with which he served consecutively as President and Chief Operating Officer until March 30, 2007.

Timothy
S. Durham, 45, is currently serving a three year term as director and was elected as Secretary of the Company on August 7, 2007. Mr. Durham is the Chairman and
Chief Executive Officer of Obsidian Enterprises, Inc. ("Obsidian"), a private holding company that invests in small and mid cap companies in basic industries such as manufacturing and
transportation. As Chief Executive Officer of Obsidian, Mr. Durham is responsible for strategic direction and financial issues. Mr. Durham also serves as Chairman of Fair
Holdings, Inc. ("Fair Holdings"), a financial services company, where his responsibilities include strategic direction and financial issues. He has held such positions with Obsidian and Fair
Holdings for more than five years. Mr. Durham also serves as a director of National Lampoon, Inc. and has done so since 2002.

Manoj
Rajegowda, 27, is currently serving a two year term as director. Mr. Rajegowda is a Senior Analyst at MC Investment Partners, LLC, a private equity/hedge fund firm,
and has held such position since September 2006. Prior to working for MC Investment Partners, LLC, Mr. Rajegowda worked as a contract consultant for Global Environment Fund, a private
equity fund, from June 2006 to August 2006 and as an Analyst at Bear, Stearns & Co., an investment banking firm, from June 2004 to December 2005. Prior to working for Bear,
Stearns & Co., Mr. Rajegowda received a B.A. from Princeton University in 2002 and a masters degree in bioscience from Keck Graduate Institute in 2004.

The
Company does not maintain key man insurance on the life of any officer of the Company. The loss or interruption of the continued full-time service of the Company's
executive officers and key employees could have a material adverse impact on the Company's business. The inability of the Company to retain such necessary personnel could also have a material adverse
effect on the Company.

Management and Board Changes

On March 30, 2007, in connection with the closing of the U.S. Sale, Mr. Robert Kaiser resigned as Chief Executive Officer and President of the
Company. Mr. Mike Farrell was named as Chief Executive

21

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Officer
and President, in addition to his existing capacity as Treasurer and Chief Administrative Officer. As a result of the closing of the U.S. Sale, on April 9, 2007, Mr. Mike Farrell
resigned as President, Chief Executive Officer, Chief Administrative Officer and Treasurer and Mr. Juan Martinez Jr. resigned as Vice President, Corporate Controller. On April 9, 2007,
Ms. Sherrian Gunn was named President and Chief Executive Officer of the Company. Also, on April 16, 2007, Mr. Raymond Durham resigned as Senior Vice President and Chief Financial
Officer, and on May 18, 2007, Ms. Elaine Rodriguez resigned as Senior Vice President, General Counsel, and Secretary of the Company. On April 16, 2007, Ms. Gunn was named
Chief Financial Officer in addition to her existing capacity as President and Chief Executive Officer. On August 31, 2007, Ms. Gunn resigned as President and Chief Executive and Chief
Financial Officer of the Company, and Robert Kaiser was subsequently elected on September 25, 2007 to replace her in each of those positions.

While
Ms. Rodriguez resigned from her previous positions as Senior Vice President, General Counsel, and Secretary of the Company and terminated her employment agreement, she
remained employed by the Company as an at-will employee without an employment agreement until her resignation on August 7, 2007. On July 5, 2007, the Board named
Ms. Rodriguez as Secretary of the Company. On August 7, 2007, the Board named Timothy S. Durham, a director, as Secretary of the Company and removed Ms. Rodriquez from that
position.

On
July 31, 2007, we held our annual stockholder meeting (the "Annual Meeting") in order to elect the board of directors (the "Board"). The Company's slate of director nominees
consisted of Jere W. Thompson as the Class I director for a term of one year, John L. Jackson as the Class II director for a term of two years, and Dale V. Kesler as the
Class III director for a term of three years, all of whom were current members of the Board. Timothy S. Durham, a significant stockholder in the Company, filed a definitive proxy statement with
the SEC on July 12, 2007 in opposition to the Company's proxy statement, whereby he urged the Company's stockholders to elect a different slate of directors consisting of Robert Kaiser as the
Class I director for a term of one year, Manoj Rajegowda as the Class II director for a term of two years, and Timothy S. Durham as the Class III director for a term of three
years. On August 7, 2007 the Annual Meeting was reconvened to announce the final results of the stockholder vote.

At
the Annual Meeting, the stockholders elected Timothy S. Durham as a Class III director for a term of three years and Manoj Rajegowda as a Class II director for a term of
two years, and reelected Robert Kaiser, who was a current member of the Company's Board but was not up for reelection on the Company's slate, as a Class I director for a term of one year. The
Board subsequently appointed Mr. Kaiser as Chairman of the Board and Mr. Durham as Secretary of the Company.

Section 16(A) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company's executive officers, directors, and persons who beneficially own more than 10% of a registered
class of the Company's equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of the Company's Common Stock and other equity securities of the Company.
Such persons are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms that they file.

Based
solely on the Company's review of such forms furnished to the Company, the Company believes that all filing requirements applicable to the Company's executive officers, directors,
and greater than 10% beneficial owners were complied with for the Company's 2007 fiscal year.

Code of Ethics

The information required by this item regarding the Company's code of ethics is provided under the heading "Available Information and Code of Ethics" in
Part I of this Form 10-K, which is incorporated herein by reference.

22

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Corporate Governance

There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors.

Audit Committee Financial Expert.The Company does not have an audit committee financial expert, as such term is defined in
Item 407(d)(5) of Regulation S-K. In light of our limited operations at this time, our board of directors has determined that it will postpone any decision on whether to
search for an audit committee financial expert until such time as the board can more accurately ascertain whether it will implement the Plan or pursue a strategic alternative with a view to maximizing
stockholder value.

Item 11.    Executive Compensation

Summary Compensation Table.

The following table sets forth certain information regarding compensation earned by or paid to all individuals serving as our Chief Executive Officer during
fiscal year 2007 and our two most highly compensated executive officers (other than the Chief Executive Officer) who served as executive officers during fiscal year 2007 (the "Named Executive
Officers"), for each of the last two fiscal years.

|Name and Principal Position                                                        |  | Year      |  | Salary ($)      |  | Bonus ($)
(*) |  | Stock Awards ($) |        | Option Awards
($) |  | Nonequity incentive plan compensation
($) |  | Nonqualified deferred compensation earnings ($) |  | All other compensation
($) |                 | Total ($)          
|---------------------------------------------------------------------------------- |  | --------- |  | --------------- |  | ------------- |  | ---------------- | ------ | ----------------- |  | ----------------------------------------- |  | ----------------------------------------------- |  | -------------------------- | --------------- | -------------------
|Robert A. Kaiser(6),
  Chairman and Chief
  Executive Officer                      |  | 2007
2006 |  | 295,250
650,000 |  | 
390,000     |  | 627,500
149,100  | (1)(1) | 5,300
29,590      |  | N/A
N/A                                   |  | N/A
N/A                                         |  | 3,823,500
22,660           | (2)(3)(4)(5)(2) | 4,751,550
1,241,350
|Michael Farrell(7),
  Chief Executive Officer                                      |  | 2007
2006 |  | 104,050
250,000 |  | 
90,000      |  | 82,350
38,730    | (1)(1) | 
               |  | N/A
N/A                                   |  | N/A
N/A                                         |  | 756,370
7,330              | (2)(4)(2)       | 942,770
386,060    
|Sherrian Gunn(8),
  Chief Executive Officer                                        |  | 2007
2006 |  | 191,890
128,550 |  | 
30,850      |  | 31,660
5,540     | (1)(1) | 460
1,660         |  | N/A
N/A                                   |  | N/A
N/A                                         |  | 16,430
5,625               | (2)(2)          | 240,440
172,225    
|Elaine F. Rodriguez(9),
  Senior Vice President,
  Secretary and
  General Counsel |  | 2007
2006 |  | 236,940
285,000 |  | 
79,800      |  | 81,100
27,670    | (1)(1) | 2,790
19,870      |  | N/A
N/A                                   |  | N/A
N/A                                         |  | 789,830
6,980              | (2)(4)(2)       | 1,110,660
419,320  
|Raymond Durham(10),
  Senior Vice President and
  Chief Financial Officer          |  | 2007
2006 |  | 95,930
200,000  |  | 
64,000      |  | 81,100
27,670    | (1)(1) | 1,760
9,220       |  | N/A
N/A                                   |  | N/A
N/A                                         |  | 534,780
5,815              | (2)(4)(2)       | 713,570
306,705    

---

23

---



The amounts reported in the Stock Awards and Option Awards columns reflect the dollar amount, without any reduction for risk of forfeiture,
recognized for financial reporting purposes for the fiscal year ended November 30, 2007 and 2006 of awards of stock options and restricted stock or restricted stock units to each of the Named
Executive Officers, calculated in accordance with the provisions of Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123(R)"), and were
calculated using certain assumptions, as set forth in footnote 1 to our audited financial statements for the fiscal year ended November 30, 2007 and 2006, included herein. These amounts may
include amounts from awards granted in and prior to 2005.

Outstanding Equity Awards at Fiscal Year End November 30, 2007.

The following table provides information concerning unexercised options, stock that has not vested and equity incentive plan awards for each of the Named
Executive Officers as of November 30, 2007.

|                                                                             |  | Option Awards (1) |        | Stock Awards
|---------------------------------------------------------------------------- |  | ----------------- | ------ | ------------
|
|Robert A. Kaiser,
Chairman and Chief Executive Officer                       |  | 80,000
50,000     | (2)(2) | 
         
|Michael Farrell,
Chief Executive Officer(2)                                  |  |                  |        |            
|Sherrian Gunn,
Chief Executive Officer(2)                                    |  |                  |        |            
|Elaine F. Rodriguez,
Senior Vice President, Secretary and General Counsel(2) |  |                  |        |            
|Raymond Durham,
Senior Vice President and Chief Financial Officer(2)         |  |                  |        |            

---

Compensation of Executive Officers.

Employment Contracts and Termination of Employment and Change in Control Arrangements.The Company maintained employment
agreements with Mr. Kaiser, Mr. Farrell, and Ms. Rodriguez and severance agreements with Mr. Raymond Durham and Ms. Gunn (collectively, the "Agreements" or
individually, an "Agreement"). In connection with the sale of the Company's United States and Miami-

24

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based
Latin American operations, the related sale agreement required as a condition of closing that the Company pay all amounts due Mr. Kaiser under his Agreement with the Company, including
payments due as a result of a change in control of the Company resulting from the sale. To receive those payments, Mr. Kaiser's employment with the Company had to be terminated. Although
Mr. Kaiser would have preferred to remain as Chief Executive Officer and President of the Company after the closing until he believed he had fulfilled the responsibilities of those positions,
he agreed to resign on March 30, 2007, so that the closing could be completed. Mr. Kaiser continued to serve on the Board of Directors throughout 2007, including after his election to
the Board of Directors on August 7, 2007. On August 7, 2007, Mr. Kaiser was appointed Chairman of the Board. On August 28, 2007, the Board authorized the retention of
Mr. Kaiser as a consultant to the Company for a sum of $20,000 a month on a month to month basis, terminable at will by either party. On September 25, 2007, in addition to his duties as
Chairman, he was appointed Chief Executive Officer, Chief Financial Officer, and Treasurer.

Mr. Farrell,
Ms. Rodriguez, and Mr. Raymond Durham, resigned after the closing of the sale of the Company's United States and Miami-based Latin American operations
and the sale of the Company's Mexico operations to reduce the costs to the Company and to receive payments due them under their Agreements, including payments due as a result of a change in control of
the Company. Mr. Farrell's, Ms. Rodriguez's, and Mr. Raymond Durham's Agreements were terminated on April 9, 2007, May 18, 2007, and April 16, 2007,
respectively. In connection with the resignations, the Company paid Mr. Kaiser, Mr. Farrell, Mr. Raymond Durham, and Ms. Rodriguez $3.6 million, $680,000, $528,000,
and $729,600, respectively. Furthermore, on March 30, 2007, any Restricted Stock Awards held by such persons vested in connection with the sale of the Company's United States and Miami-based
Latin American operations.

On
April 5, 2007, the Board of Directors unanimously approved the election of Sherrian Gunn as Chief Executive Officer and Chief Financial Officer of the Company, effective upon
the resignation of Mike Farrell and Raymond Durham, Sr. Mr. Farrell resigned April 9 2007, and Mr. Raymond Durham resigned on April 16, 2007. On April 17, 2007, the
Board unanimously approved the election of Ms. Gunn as Chief Financial Officer and Treasurer, in addition to her role as Chief Executive Officer and President. Ms. Gunn, who is
51 years old, joined the Company in 2001 as ControllerU.S. Region. In August of 2002, she was given the title of Director of Investor Relations, and in January of 2006, she was
promoted to Vice President, Investor Relations and Treasury.

Ms. Gunn
entered into an employment agreement on April 9, 2007, whereby Ms. Gunn agreed to remain employed by the Company to provide wind-down services
to the Company in connection with the dissolution and liquidation of the Company. Pursuant to the terms of the agreement, Ms. Gunn agreed to continue her employment with the Company for twelve
months at an annual salary of $160,688, which could be extended by mutual agreement of the parties. In addition, Ms. Gunn was entitled to receive $257,100 following her termination without
cause by the Company, or $266,100 upon her resignation following a change in control of the Company, as such term is defined in the agreement, plus, in each case, any remaining salary that would have
been paid through the end of the term of her employment agreement, conditioned upon Ms. Gunn's execution of a supplemental release. Ms. Gunn was also entitled to receive a closing bonus
upon completion of the term, plus one extension of the term, if necessary. On August 31, 2007, Ms. Gunn resigned from the Company and ceased to provide wind-down services to
the Company. Included in her resignation was a demand of the Company to pay the severance depicted in her agreement due to a change in control. The Company disagrees with her position and to date has
not paid to her the severance amounts of her agreement. On October 30, 2007, Ms. Gunn filed suit against the Company seeking severance payments and other amounts, totaling approximately
$365,000 plus attorney fees and interest. The Company is vigorously defending the claim.

25

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While
Ms. Rodriguez resigned from her previous positions as Senior Vice President, General Counsel, and Secretary of the Company and terminated her Employment Agreement, she
remained employed by the Company as an at-will employee without an employment agreement through August 7, 2007.

Compensation of Directors.

The following table provides information concerning compensation of the Company's directors for the fiscal year ended November 30, 2007.

|Name                     |  | Fees earned or paid in cash ($) |  | Stock awards
($)(1) |  | Option awards
($) |  | Non-equity incentive plan compensation ($) |  | Nonqualified deferred compensation earnings ($) |  | All other compensation
($) |  | Total ($)
|------------------------ |  | ------------------------------- |  | ------------------- |  | ----------------- |  | ------------------------------------------ |  | ----------------------------------------------- |  | -------------------------- |  | ---------
|Timothy S. Durham        |  | 5,580                           |  |                    |  |                  |  | N/A                                        |  | N/A                                             |  |                           |  | 5,580    
|Manoj Rajegowda          |  | 5,080                           |  |                    |  |                  |  | N/A                                        |  | N/A                                             |  |                           |  | 5,080    
|Dale V. Kesler           |  | 75,630                          |  | 25,180              |  |                  |  | N/A                                        |  | N/A                                             |  |                           |  | 100,810  
|Jere W. Thompson         |  | 56,880                          |  | 25,180              |  |                  |  | N/A                                        |  | N/A                                             |  |                           |  | 82,060   
|John L. ("J.L.") Jackson |  | 74,880                          |  | 25,180              |  |                  |  | N/A                                        |  | N/A                                             |  |                           |  | 100,060  
|Dr. Da Hsuan Feng        |  | 53,880                          |  | 25,180              |  |                  |  | N/A                                        |  | N/A                                             |  |                           |  | 79,060   

---

During the last completed fiscal year and prior to July 17, 2007, each director of the Company who was not an officer or other employee of
the Company received an annual retainer fee of $25,000, plus $1,500 for each meeting of the Board of Directors or committee of the Board of Directors that he attended and $750 for each telephonic
Board of Directors or committee meeting that he attended. To the extent that any committee meeting was held on the same day as a full Board of Directors meeting or another committee meeting, only one
$1,500 or $750 fee (as applicable) was paid. The Company also paid a per diem fee of $1,500 to each non-employee director for each day such director performed additional services for the
Company at the request of the Chief Executive Officer. From Mr. Kesler's election as Chairman of the Board on April 17, 2007, the Company paid him $300 per hour for his services as
Chairman.

From
July 17, 2007 through November 30, 2007, each director of the Company who was not an officer or other employee of the Company received an annual retainer fee of
$10,000, plus $750 for each meeting of the Board of Directors or committee of the Board of Directors that he attended and $500 for each telephonic Board of Directors or committee meeting that he
attended. Effective September 2007, the board eliminated the $300 per hour fee for the services of the Chairman.

Historically,
we issued shares of restricted stock to our employees and executive officers pursuant to our 2003 Plan. The number of shares to be granted under the 2003 Plan was
determined by the Board of Directors at the time of the grant based upon the pool of shares then available for grant. The awarded shares vested at the rate of 331/3% per year on each
anniversary date of grant and were subject to such other terms and conditions as may be contained in the form of restricted stock award agreement generally used by the Company at the time of grant. As
disclosed in Part II of this Form 10-K, under the heading "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
SecuritiesEquity Compensation Plan Information," the Company's 2003 Plan was cancelled on September 25, 2007. From November 30, 2006 until September 25, 2007, each
non-employee director who was then serving as such
received a grant of 4,500 shares of restricted stock. No options were granted to directors during fiscal year 2007.

26

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As
of November 30, 2007, directors who were also employees of the Company received no additional compensation for serving as directors. All directors of the Company are entitled
to reimbursement of their reasonable out-of-pocket expenses in connection with their travel to, and attendance at, meetings of the Board of Directors or committees thereof.
There were no other arrangements pursuant to which any director was compensated for any service provided as a director during fiscal 2007, other than as set forth above.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners

The following table sets forth information with respect to the number of shares of Common Stock beneficially owned as of February 28, 2008, by each person
known by the Company to beneficially own more than 5% of the outstanding shares of Common Stock. Unless otherwise noted, the persons named in the table have sole voting and investment power with
respect to all shares of Common Stock beneficially owned by them.

Name and Address of Beneficial Owner

Amount and Nature
of
Beneficial Ownership

Percent
of
Class(1)Michael A. Roth and Brian J. Stark
c/o Stark Investments
3600 South Lake Drive
St. Francis, Wisconsin 53235

3,267,254
(2)
15.9
%S. Nicholas Walker
Deltec House
Lyford Cay
P.O. Box N1717
Nassau NP, Bahamas

1,383,170
(3)
6.7
%


---

27

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Security Ownership of Management

The following table sets forth information with respect to the number of shares of Common Stock beneficially owned as of February 28, 2008, by
(i) each Named Executive Officer of the Company for whom compensation was reported under Item 11, Executive Compensation; (ii) each current director of the Company and
(iii) all directors and executive officers of the Company as a group. Unless otherwise noted, the persons named in the table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them.

Title of Class

Name of Beneficial Owner

Amount and Nature of Beneficial Ownership

Percent of Class (1)Common Stock

Robert A. Kaiser

327,423
(2)
1.6
%Michael Farrell


(3)

%Sherrian Gunn

9,534
(4)
*
%Elaine F. Rodriguez


(5)

%Raymond Durham


(6)

%Timothy S. Durham

753,394
(7)
3.7
%Manoj Rajegowda


(8)Directors and Named Executive Officers as a Group



1,090,351

5.3
%


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Equity Compensation Plan Information

The Company's equity compensation plan information is provided in Part II of this Form 10-K, under the heading "Market for Registrant's
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesEquity Compensation Plan Information," and is incorporated herein by reference.

Changes in Control.

To management's knowledge, there are no arrangements the operation of which may at a subsequent date result in a change in control of the Company.

28

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Item 13.    Certain Relationships and Related Transactions, and Director Independence

None.

The
Company's board of directors has adopted the independence standards of NASDAQ as its independence standards. In assessing the independence of its directors, the board has determined
that Mr. Rajegowda is an independent director of the Company and that Messrs. Durham and Kaiser are not independent directors.

Item 14.    Principal Accounting Fees and Services

The following table summarizes the fees billed by Grant Thornton LLP for services rendered for the fiscal years ended November 30, 2007 and
November 30, 2006 (in thousands).

2007

2006Audit Fees(1)

$
852

2,331Audit-Related Fees(2)


26

19Tax Fees(3)




72All Other Fees


20

TOTAL

$
898

2,422


---

The
following table summarizes the fees billed by Whitley Penn LLP for services rendered for the fiscal years ended November 30, 2007 and November 30, 2006 (in
thousands).

2007

2006Audit Fees(1)

$
31

Audit-Related Fees(2)




Tax Fees




All Other Fees




TOTAL

$
31




---

29

---



The
Audit Committee has considered whether the provision of non-audit services by Whitley Penn is compatible with maintaining the principal accountant's independence, and has
determined that it is. The Audit Committee has sole authority to engage and determine the compensation of the Company's independent auditor. Pre-approval by the Audit Committee is required
for any engagement of Whitley Penn, subject to certain de minimis exceptions. Annually, the Audit Committee pre-approves services to be provided by Whitley Penn.

30

---





PART IV.

Item 15.    Exhibits, Financial Statement Schedules





An
index identifying the exhibits to be filed with this Form 10-K is provided below.

|Exhibit No. |  | Description                                                                                                                                                                                                                                             |  | Previously Filed as an Exhibit to and
Incorporated by Reference From |  | Date Filed       
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------- |  | -----------------
|2.1         |  | Asset Purchase Agreement, dated December 18, 2006, related to the U.S. Sale (Schedules and exhibits have been omitted, and the Company agrees to furnish to the Commission supplementally a copy of any omitted
schedules and exhibits upon request).   |  | Current Report on Form 8-K.                                          |  | December 19, 2006
|2.2         |  | Stock Purchase Agreement, dated December 18, 2006, related to the Mexico Sale (Schedules and exhibits have been omitted, and the Company agrees to furnish to the Commission supplementally a copy of any omitted schedules and exhibits upon
request). |  | Current Report on Form 8-K.                                          |  | December 19, 2006
|3.1         |  | Amended and Restated Certificate of Incorporation of CellStar Corporation (the "Certificate of Incorporation").                                                                                                                                         |  | Form 10-Q for the quarter ended August 31, 1995.                     |  | October 13, 1995 
|3.2         |  | Certificate of Amendment to Certificate of Incorporation.                                                                                                                                                                                               |  | Form 10-Q for the quarter ended May 31, 1998.                        |  | July 14, 1998    
|3.3         |  | Certificate of Amendment to Certificate of Incorporation dated as of February 20, 2002.                                                                                                                                                                 |  | Form 10-K for the fiscal year ended November 30, 2002.               |  | February 28, 2003
|3.4         |  | Certificate of Amendment to the Amended and Restated Certificate of Incorporation dated as of March 30, 2007.                                                                                                                                           |  | Form 10-Q for the quarter ended February 28, 2007.                   |  | April 9, 2007    
|3.5         |  | Amended and Restated Bylaws of CellStar Corporation, effective as of May 1, 2004.                                                                                                                                                                       |  | Form 10-Q for the quarter ended May 31, 2004.                        |  | July 15, 2004    

31

---



|4.1  |  | Exhibits 3.1, 3.2, 3.3, 3.4 and 3.5 are incorporated into this item by reference.                                                                                                                                                                                                                                                                          |  | See above.                                         |  |                  
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------- |  | -----------------
|4.2  |  | Specimen Common Stock Certificate of CLST Holdings, Inc.                                                                                                                                                                                                                                                                                                   |  |                                                    |  | Filed herewith.  
|10.1 |  | Amended and Restated Loan and Security Agreement, dated as of March 31, 2006, by and among CellStar Corporation and each of CellStar Corporation's subsidiaries signatory thereto, as borrowers, the lenders signatory thereto, as lenders, and Wells
Fargo Foothill, Inc. (f/k/a Foothill Capital Corporation), as the arranger and administrative agent. |  | Form 10-Q for the quarter ended February 28, 2006. |  | April 10, 2006   
|10.2 |  | Consent, dated as of May 25, 2006, by and among CellStar Corporation and each of CellStar Corporation's subsidiaries signatory thereto, as borrowers, Wells Fargo Foothill, Inc., as agent and a lender, and Bank of America, N.A., and Textron
Financial Corporation, as lenders.                                                                         |  | Current Report on Form 8-K.                        |  | May 31, 2006     
|10.3 |  | First Amendment to Amended and Restated Loan Agreement, dated as of July 12, 2006, by and among CellStar Corporation and each of CellStar Corporation's subsidiaries signatory thereto, as borrowers, Bank of America, N.A., and Wells Fargo Foothill,
 Inc.                                                                                               |  | Current Report on Form 8-K.                        |  | July 12, 2006    
|10.4 |  | Second Amendment to Amended and Restated Loan Agreement, dated August 31, 2006, by and among CellStar Corporation and each of CellStar Corporation's subsidiaries signatory thereto, as borrowers, Wells Fargo Foothill, Inc., as agent and a
lender, and Bank of America, N.A., and Textron Financial Corporation, as lenders.                            |  | Current Report on Form 8-K.                        |  | September 1, 2006

32

---



|10.5 |  | Waiver, effective as of October 4, 2006, executed by and among CellStar Corporation and each of CellStar Corporation's subsidiaries signatory thereto, as borrowers, Wells Fargo Foothill, Inc., as agent and a lender, and Bank of America,
N.A., and Textron Financial Corporation, as lenders.                               |  | Form 10-Q for the quarter ended August 31, 2006. |  | October 5, 2006  
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------ |  | -----------------
|10.6 |  | Waiver and Consent, as of October 26, 2006, by and among CellStar Corporation and each of CellStar Corporation's subsidiaries signatory thereto, as borrowers, Wells Fargo Foothill, Inc., as agent and a lender, and Bank of America, N.A., and
Textron Financial Corporation, as lenders.                                     |  | Current Report on Form 8-K.                      |  | November 1, 2006 
|10.7 |  | Third Amendment to Amended and Restated Loan Agreement, dated October 31, 2006, by and among CellStar Corporation and each of CellStar Corporation's subsidiaries signatory thereto, as borrowers, Wells Fargo Foothill, Inc., as agent and a
lender, and Bank of America, N.A., and Textron Financial Corporation, as lenders. |  | Current Report on Form 8-K.                      |  | November 1, 2006 
|10.8 |  | Term Loan and Security Agreement, dated August 31, 2006, by and among CellStar Corporation and each of CellStar Corporations' subsidiaries signatory thereto, as borrowers, and CapitalSource Finance LLC, as agent and lender.                                                                                                 |  | Current Report on Form 8-K.                      |  | September 1, 2006
|10.9 |  | First Amendment to Term Loan and Security Agreement, dated October 31, 2006, by and among CellStar Corporation and each of CellStar Corporation's subsidiaries signatory thereto, as borrowers, and CapitalSource Finance LLC, as agent and
lender.                                                                             |  | Current Report on Form 8-K.                      |  | November 1, 2006 

33

---



|10.10 |  | Letter Agreement dated as of August 31, 2006, by and between CellStar Corporation and Quattro Global Capital LLC.                                                                            |  | Current Report on Form 8-K.                            |  | September 7, 2006
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------ |  | -----------------
|10.11 |  | Form of Restricted Stock Award Agreement under the CellStar Corporation 2003 Long-Term Incentive Plan.*                                                                                      |  | Current Report on Form 8-K.                            |  | November 21, 2005
|10.12 |  | Form of Amendment to Restricted Stock Award Agreement under the CellStar Corporation 2003 Long-Term Incentive Plan.*                                                                         |  | Annual Report on Form 10-K                             |  | February 12, 2007
|10.13 |  | First Amendment to Amended and Restated Employment Agreement, executed May 2, 2005, by and among CellStar, Ltd., CellStar Corporation and Robert Kaiser.*                                    |  | Current Report on Form 8-K.                            |  | May 6, 2005      
|10.14 |  | CellStar Corporation Restricted Stock Award Agreement and Tandem Grant of Stock Appreciation Rights, effective as of May 2, 2005, by and between CellStar Corporation and Robert A. Kaiser.* |  | Form 10-Q for the quarter ended August 31, 2005.       |  | October 11, 2005 
|10.15 |  | Employment Agreement, executed on April 27, 2005, and effective as of April 30, 2005, by and among CellStar, Ltd., CellStar Corporation and Terry S. Parker.*                                |  | Current Report on Form 8-K.                            |  | May 3, 2005      
|10.16 |  | Agreement, dated March 30, 2005, by and between CellStar, Ltd. and Raymond L. Durham.*                                                                                                       |  | Form 10-K for the fiscal year ended November 30, 2004. |  | September 6, 2005
|10.17 |  | Agreement, dated March 30, 2005, by and between CellStar, Ltd. and Juan Martinez.*                                                                                                           |  | Form 10-K for the fiscal year ended November 30, 2004. |  | September 6, 2005
|10.18 |  | Employment Agreement by and among CellStar, Ltd., CellStar Corporation and Michael J. Farrell, dated as of November 15, 2005.*                                                               |  | Current Report on Form 8-K.                            |  | November 21, 2005

34

---



|10.19 |  | Employment Agreement, effective as of January 14, 2007, by and among CellStar, Ltd., CellStar Corporation, and Elaine Flud Rodriguez.*                                    |  | Current Report on Form 8-K.                              |  | November 21, 2006
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------- |  | -----------------
|10.20 |  | Employment Agreement, effective as of April 9, 2007, by and among CLST-NAC, Ltd., formerly known as CellStar, Ltd., and Sherrian Gunn.*                                   |  | Current Report on Form 8-K.                              |  | April 13, 2007   
|10.21 |  | Indemnification Agreement, effective as of July 5, 2007, by and between CLST Holdings, Inc. and Sherrian Gunn.*                                                           |  | Current Report on Form 8-K.                              |  | August 1, 2007   
|10.22 |  | Form of CellStar Corporation Indemnification Agreement.*                                                                                                                  |  | Current Report on Form 8-K.                              |  | July 13, 2005    
|10.23 |  | Stock Purchase Agreement, dated August 21, 2005, by and among CellStar International Corporation/Asia, Newco and An-Hsien Horng.                                          |  | Current Report on Form 8-K.                              |  | August 25, 2005  
|10.24 |  | Amended and Restated Stock Purchase Agreement, dated August 24, 2005, by and among CellStar International Corporation/Asia, Fine Day Holdings Limited and An-Hsien Horng. |  | Current Report on Form 8-K.                              |  | August 25, 2005  
|10.25 |  | Letter Agreement executed on September 1, 2005, by and between Fine Day Holdings Limited and CellStar International Corporation/Asia.                                     |  | Form 10-K for the fiscal year ended November 30, 2004.   |  | September 6, 2005
|10.26 |  | Agreement and Mutual Release, entered into on September 2, 2005, by and among CellStar (Asia) Corporation Limited, CellStar Corporation, and Hong An-Hsien.               |  | Form 10-K for the fiscal year ended November 30, 2004.   |  | September 6, 2005
|10.27 |  | Industrial Lease Agreement, executed December 9, 2003, by and between Texas Dugan Limited Partnership and CellStar, Ltd.                                                  |  | Form 10-K/A for the fiscal year ended November 30, 2005. |  | March 30, 2006   

35

---



|10.28 |  | Lease, effective as of March 1, 2006, by and between Americas' Gateway Business Center, Inc., and National Auto Center, Inc., d/b/a CellStar Latin America.                                                                                    |  | Form 10-K/A for the fiscal year ended November 30, 2005. |  | March 30, 2006   
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------- |  | -----------------
|10.29 |  | Master Distribution Agreement, made as of November 20, 2006, by and between Motorola, Inc. and CellStar, Ltd.**                                                                                                                                |  | Current Report on Form 8-K.                              |  | December 20, 2006
|10.30 |  | Regional Amendment for the Sale of Products Between Motorola and CellStar in North America, made as of November 20, 2006, by and between Motorola, Inc. and CellStar, Ltd.**                                                                   |  | Current Report on Form 8-K.                              |  | December 20, 2006
|10.31 |  | Settlement Agreement, effective as of February 27, 2007, by and between CellStar International Corporation\Asia, CellStar Corporation, CellStar, Ltd., Fine Day Holdings Limited, CellStar (Asia) Corporation Limited, and Mr. Horng
An-Hsien. |  | Current Report on Form 8-K.                              |  | March 5, 2007    
|21.1  |  | Subsidiaries of the Company.                                                                                                                                                                                                                   |  |                                                          |  | Filed herewith.  
|31.1  |  | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                            |  |                                                          |  | Filed herewith.  
|32.1  |  | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                             |  |                                                          |  | Filed herewith.  

---

36

---





SIGNATURES

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

| |  | CLST HOLDINGS, INC.
| |  | -------------------
| |  | By:                
| |  |                    

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

|By |  | /s/ROBERT A. KAISERRobert A. Kaiser
Chairman of the Board and Chief Executive Officer and Chief Financial Officer |  | Date: March 11, 2008
|-- |  | ----------------------------------------------------------------------------------------------------------------- |  | --------------------
|By |  | /s/TIMOTHY S. DURHAMTimothy S. Durham
Director                                                                    |  | Date: March 11, 2008
|By |  | /s/MANOJ RAJEGOWDAManoj Rajegowda
Director                                                                        |  | Date: March 11, 2008

37

---





CLST HOLDINGS, INC. AND SUBSIDIARIES        Index to Consolidated Financial Statements



|Report of Independent Registered Public Accounting Firm                                                                        |  | F-2
|------------------------------------------------------------------------------------------------------------------------------ |  | ---
|Report of Independent Registered Public Accounting Firm                                                                        |  | F-3
|Consolidated Balance Sheets as of November 30, 2007 and 2006                                                                   |  | F-4
|Consolidated Statements of Operations for the years ended November 30, 2007 and 2006                                           |  | F-5
|Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) for the years ended November 30, 2007 and 2006 |  | F-6
|Consolidated Statements of Cash Flows for the years ended November 30, 2007 and 2006                                           |  | F-7
|Notes to Consolidated Financial Statements                                                                                     |  | F-8

F-1

---





Report of Independent Registered Public Accounting Firm

To
the Board of Directors and Stockholders of
CLST Holdings, Inc.

We
have audited the accompanying consolidated balance sheet of CLST Holdings, Inc. and subsidiaries, as of November 30, 2007, and the related consolidated statements of operations,
changes in stockholders' equity and comprehensive income, and cash flows for the year ended November 30, 2007. These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating
the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of CLST Holdings, Inc. and subsidiaries at
November 30, 2007, and the consolidated results of their operations and their cash flows for the year ended November 30, 2007 in conformity with accounting principles generally accepted
in the United States of America.

We
also have audited the adjustments to the November 30, 2006 consolidated financial statements related to the presentation of discontinued operations resulting from the divestiture of the
Company's operations as described in Note 2. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to
the November 30, 2006 consolidated financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance
on the November 30, 2006 consolidated financial statements taken as a whole.

/s/
Whitley Penn LLP
Dallas, Texas
March 11, 2008

F-2

---





Report of Independent Registered Public Accounting Firm

To
the Board of Directors and Stockholders of
CLST Holdings, Inc.

We
have audited the accompanying consolidated statement of financial condition of CLST Holdings, Inc. (formerly CellStar Corporation) and subsidiaries as of November 30,
2006, and the related consolidated statements of income and comprehensive income, stockholders' equity, and cash flows for the year then ended before the effects of the adjustments to retrospectively
reflect the discontinued operation discussed in Note 2. The November 30, 2006 consolidated financial statements before the effects of the adjustments discussed in Note 2 are not
presented herein. 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 audit.

We
conducted our audit, before the effects of the adjustments described above, in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements of CLST Holdings, Inc. (formerly CellStar Corporation), before the effects of the adjustments to retrospectively reflect the
discontinued operation discussed in Note 2, present fairly, in all material respects, the financial position of CLST Holdings, Inc. (formerly CellStar Corporation) as of
November 30, 2006, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

We
were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively reflect the discontinued operations discussed in Note 2 and, accordingly, we do
not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by other auditors.

/s/
Grant Thornton LLP
Dallas, Texas
February 12, 2007

F-3

---





CLST HOLDINGS, INC. AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS  November 30, 2007 and 2006  (In thousands, except share and per share data)

|                                                                                                                                                                     |  | 2007 |          | 2006 |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -------- | ---- | -
|ASSETS                                                                                                                                                               |  |      |          |      |  
|Current assets:                                                                                                                                                      |  |      |          |      |  
|Cash and cash equivalents                                                                                                                                            |  | $    | 11,799   |      | $
|Accounts receivableother                                                                                                                                            |  |      | 5,697    |      |  
|Deferred income taxes                                                                                                                                                |  |      |         |      |  
|Prepaid expenses and other current assets                                                                                                                            |  |      | 556      |      |  
|Assets of discontinued operationsU.S., Miami, Mexico and Chile operations                                                                                           |  |      |         |      |  
|                                                                                                                                                                     |  |      |          |      |  
|Total current assets                                                                                                                                                 |  |      | 18,052   |      |  
|Property and equipment, net                                                                                                                                          |  |      | 1        |      |  
|Deferred income taxes                                                                                                                                                |  |      | 4,786    |      |  
|Other assets                                                                                                                                                         |  |      | 1,136    |      |  
|                                                                                                                                                                     |  |      |          |      |  
|                                                                                                                                                                     |  | $    | 23,975   |      | $
|                                                                                                                                                                     |  |      |          |      |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                 |  |      |          |      |  
|Current liabilities:                                                                                                                                                 |  |      |          |      |  
|Notes payable                                                                                                                                                        |  | $    |         |      | $
|Current portionTerm loan                                                                                                                                            |  |      |         |      |  
|Accounts payable                                                                                                                                                     |  |      | 14,244   |      |  
|Accrued expenses                                                                                                                                                     |  |      | 868      |      |  
|Income taxes payable                                                                                                                                                 |  |      |         |      |  
|Liabilities of discontinued operationsU.S., Miami, Mexico and Chile                                                                                                 |  |      |         |      |  
|                                                                                                                                                                     |  |      |          |      |  
|Total current liabilities                                                                                                                                            |  |      | 15,112   |      |  
|12% Senior subordinated notes                                                                                                                                        |  |      |         |      |  
|Term loan                                                                                                                                                            |  |      |         |      |  
|                                                                                                                                                                     |  |      |          |      |  
|Total liabilities, commitments and contingencies                                                                                                                     |  |      | 15,112   |      |  
|                                                                                                                                                                     |  |      |          |      |  
|Commitments and contingencies                                                                                                                                        |  |      |         |      |  
|Stockholders' equity:                                                                                                                                                |  |      |          |      |  
|Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued                                                                                            |  |      |         |      |  
|Common stock, $.01 par value, 200,000,000 shares authorized; 21,187,229 and 21,188,129 shares issued, and 20,553,205 and 21,158,740 shares outstanding, respectively |  |      | 212      |      |  
|Additional paid-in capital                                                                                                                                           |  |      | 126,034  |      |  
|Accumulated other comprehensive income (loss)foreign currency translation adjustments                                                                               |  |      | 217      |      |  
|Accumulated deficit                                                                                                                                                  |  |      | (115,953 | )    |  
|                                                                                                                                                                     |  |      |          |      |  
|                                                                                                                                                                     |  |      | 10,510   |      |  
|Less: Treasury stock (634,024 and 29,389 shares at cost, respectively)                                                                                               |  |      | (1,647   | )    |  
|                                                                                                                                                                     |  |      |          |      |  
|                                                                                                                                                                     |  |      | 8,863    |      |  
|                                                                                                                                                                     |  | $    | 23,975   |      | $
|                                                                                                                                                                     |  |      |          |      |  

See accompanying notes to consolidated financial statements.

F-4

---



CLST HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
November 30, 2007 and 2006
(In thousands, except share and per share data)

CLST HOLDINGS, INC. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF OPERATIONS  Years ended November 30, 2007 and 2006  (In thousands, except per share data)

|                                                                                                        |                   | 2007 |         | 2006   |  
|------------------------------------------------------------------------------------------------------- | ----------------- | ---- | ------- | ------ | -
|Revenues                                                                                                |                   | $    |        |        | $
|Cost of sales                                                                                           |                   |      |        |        |  
|                                                                                                        |                   |      |         |        |  
|Gross profit                                                                                            |                   |      |        |        |  
|Selling, general and administrative expenses                                                            |                   |      | 15,198  |        |  
|                                                                                                        |                   |      |         |        |  
|Operating loss                                                                                          |                   |      | (15,198 | )      |  
|                                                                                                        |                   |      |         |        |  
|Other income (expense):                                                                                 |                   |      |         |        |  
|Interest expense                                                                                        |                   |      | (247    | )      |  
|Loss on settlement of note receivable related to sale of Asia-Pacific                                   |                   |      | (537    | )      |  
|Gain on retirement of 12% Senior subordinated notes                                                     |                   |      |        |        |  
|Gain on sale of building                                                                                |                   |      |        |        |  
|Other, net                                                                                              |                   |      | 1,243   |        |  
|                                                                                                        |                   |      |         |        |  
|Total other income                                                                                      |                   |      | 459     |        |  
|                                                                                                        |                   |      |         |        |  
|Loss from continuing operations before income taxes                                                     |                   |      | (14,739 | )      |  
|Income tax benefit                                                                                      |                   |      | (11,526 | )      |  
|                                                                                                        |                   |      |         |        |  
|Loss from continuing operations                                                                         |                   |      | (3,213  | )      |  
|Discontinued operations, net of taxes of $15.9 million and $7.1 million for 2007 and 2006, respectivley |                   |      | 29,513  |        |  
|                                                                                                        |                   |      |         |        |  
|Net income                                                                                              |                   | $    | 26,300  |        | $
|                                                                                                        |                   |      |         |        |  
|Net income (loss) per share:                                                                            |                   |      |         |        |  
|Basic and diluted:                                                                                      |                   |      |         |        |  
|Loss from continuing operations                                                                         |                   | $    | (0.16   | )      | $
|Discontinued operations, net of taxes                                                                   |                   |      | 1.44    |        |  
|                                                                                                        |                   |      |         |        |  
|Net income per share                                                                                    |                   | $    | 1.28    |        | $
|                                                                                                        |                   |      |         |        |  
|Weighted average number of shares:                                                                      |                   |      |         |        |  
|                                                                                                        | Basic and diluted |      |         | 20,557 |  
|                                                                                                        |                   |      |         |        |  

See
accompanying notes to consolidated financial statements.

F-5

---





CLST HOLDINGS, INC. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND  COMPREHENSIVE INCOME (LOSS)  Years ended November 30, 2007 and 2006  (In thousands)

|                                                    |                       | Common Stock                                     |                            | Treasury Stock |     |  |      |   |   |        |   |         |  
|--------------------------------------------------- | --------------------- | ------------------------------------------------ | -------------------------- | -------------- | --- |  | ---- | - | - | ------ | - | ------- | -
|
|
|
|Balance at November 30, 2005                        |                       | 20,827                                           |                            | $              | 208 |  |     |   | $ |       |   | 123,554 |  
|SAB 108 adoption                                    |                       |                                                 |                            |                |    |  |     |   |   |       |   |        |  
|                                                    |                       |                                                  |                            |                |     |  |      |   |   |        |   |         |  
|Balance at November 30, 2005 after SAB 108 adoption |                       | 20,827                                           |                            |                | 208 |  |     |   |   |       |   | 123,554 |  
|                                                    | Comprehensive income: |                                                  |                            |                |     |  |      |   |   |        |   |         |  
|                                                    |                       | Net income                                       |                            |               |     |  |     |   |  |        |   |        |  
|                                                    |                       | Foreign currency translation adjustment          |                            |               |     |  |     |   |  |        |   |        |  
|                                                    |                       |                                                  |                            |                |     |  |      |   |   |        |   |         |  
|                                                    |                       |                                                  | Total comprehensive income |                |     |  |      |   |   |        |   |         |  
|Grant of restricted stock                           |                       | 434                                              |                            |                | 4   |  |     |   |   |       |   | (4      | )
|Cancellation of restricted stock                    |                       | (73                                              | )                          |                |    |  |     |   |   |       |   | (3      | )
|Amortization of restricted stock                    |                       |                                                 |                            |                |    |  |     |   |   |       |   | 669     |  
|Stock option expense                                |                       |                                                 |                            |                |    |  |     |   |   |       |   | 130     |  
|Treasury stock                                      |                       |                                                 |                            |                |    |  | (29  | ) |   | (94    | ) |        |  
|                                                    |                       |                                                  |                            |                |     |  |      |   |   |        |   |         |  
|Balance at November 30, 2006                        |                       | 21,188                                           |                            |                | 212 |  | (29  | ) |   | (94    | ) | 124,346 |  
|                                                    | Comprehensive income: |                                                  |                            |                |     |  |      |   |   |        |   |         |  
|                                                    |                       | Net income                                       |                            |               |     |  |     |   |  |        |   |        |  
|                                                    |                       | Foreign currency translation adjustment          |                            |               |     |  |     |   |  |        |   |        |  
|                                                    |                       | Realized foreign currency translation adjustment |                            |               |     |  |     |   |  |        |   |        |  
|                                                    |                       |                                                  |                            |                |     |  |      |   |   |        |   |         |  
|                                                    |                       |                                                  | Total comprehensive income |                |     |  |      |   |   |        |   |         |  
|Cancellation of restricted stock                    |                       | (1                                               | )                          |                |    |  |     |   |   |       |   |        |  
|Amortization of restricted stock                    |                       |                                                 |                            |                |    |  |     |   |   |       |   | 1,677   |  
|Stock option expense                                |                       |                                                 |                            |                |    |  |     |   |   |       |   | 11      |  
|Cash dividends ($2.10 per common share)             |                       |                                                 |                            |                |    |  |     |   |   |       |   |        |  
|Treasury stock                                      |                       |                                                 |                            |                |    |  | (605 | ) |   | (1,553 | ) |        |  
|                                                    |                       |                                                  |                            |                |     |  |      |   |   |        |   |         |  
|Balance at November 30, 2007                        |                       | 21,187                                           |                            | $              | 212 |  | (634 | ) | $ | (1,647 | ) | 126,034 |  
|                                                    |                       |                                                  |                            |                |     |  |      |   |   |        |   |         |  

See accompanying notes to consolidated financial statements.

F-6

---



CLST HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND
COMPREHENSIVE INCOME (LOSS)
Years ended November 30, 2007 and 2006
(In thousands) (Continued)

CLST HOLDINGS, INC. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS  Years ended November 30, 2007 and 2006  (In thousands)

|                                                                                                           |                                                                                            | 2007 |                                                                   | 2006                                      |                                                    
|---------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | ---- | ----------------------------------------------------------------- | ----------------------------------------- | ---------------------------------------------------
|Cash flows from operating activities:                                                                      |                                                                                            |      |                                                                   |                                           |                                                    
|                                                                                                           | Net income                                                                                 |      | $                                                                 | 26,300                                    |                                                    
|                                                                                                           | Adjustments to reconcile net income to net cash provided by (used in) operating activities |      |                                                                   |                                           |                                                    
|                                                                                                           |                                                                                            |      | Stock based compensation                                          |                                           |                                                    
|                                                                                                           |                                                                                            |      | Depreciation and amortization                                     |                                           |                                                    
|                                                                                                           |                                                                                            |      | Fixed assets impairment                                           |                                           |                                                    
|                                                                                                           |                                                                                            |      | Deferred income taxes                                             |                                           |                                                    
|                                                                                                           |                                                                                            |      | Gain on retirement of 12% Senior subordinated notes               |                                           |                                                    
|                                                                                                           |                                                                                            |      | Gain on sale of building                                          |                                           |                                                    
|                                                                                                           |                                                                                            |      | Changes in operating assets and liabilities:                      |                                           |                                                    
|                                                                                                           |                                                                                            |      |                                                                   | Accounts receivableother                 |                                                    
|                                                                                                           |                                                                                            |      |                                                                   | Prepaid expenses and other current assets |                                                    
|                                                                                                           |                                                                                            |      |                                                                   | Other assets                              |                                                    
|                                                                                                           |                                                                                            |      |                                                                   | Accounts payable                          |                                                    
|                                                                                                           |                                                                                            |      |                                                                   | Accrued expenses                          |                                                    
|                                                                                                           |                                                                                            |      |                                                                   | Income taxes payable                      |                                                    
|                                                                                                           |                                                                                            |      | Discontinued operationsU.S., Miami, Mexico, and Chile operations |                                           |                                                    
|                                                                                                           |                                                                                            |      |                                                                   |                                           |                                                    
|                                                                                                           |                                                                                            |      |                                                                   |                                           | Net cash provided by (used in) operating activities
|                                                                                                           |                                                                                            |      |                                                                   |                                           |                                                    
|Cash flows from investing activities:                                                                      |                                                                                            |      |                                                                   |                                           |                                                    
|                                                                                                           | Purchases of property and equipment                                                        |      |                                                                   | (3                                        | )                                                  
|                                                                                                           | Proceeds from sale of U.S., Miami, Mexico and Chile operations                             |      |                                                                   | 82,950                                    |                                                    
|                                                                                                           | Proceeds from sale of fixed assets                                                         |      |                                                                   | 6                                         |                                                    
|                                                                                                           | Proceeds from sale of building                                                             |      |                                                                   |                                          |                                                    
|                                                                                                           | Discontinued operationsU.S., Miami, Mexico, and Chile operations                          |      |                                                                   | (150                                      | )                                                  
|                                                                                                           |                                                                                            |      |                                                                   |                                           |                                                    
|                                                                                                           |                                                                                            |      |                                                                   |                                           | Net cash provided by investing activities          
|                                                                                                           |                                                                                            |      |                                                                   |                                           |                                                    
|Cash flows from financing activities:                                                                      |                                                                                            |      |                                                                   |                                           |                                                    
|                                                                                                           | Borrowings on notes payable                                                                |      |                                                                   | 190,225                                   |                                                    
|                                                                                                           | Payments on notes payable                                                                  |      |                                                                   | (223,694                                  | )                                                  
|                                                                                                           | Borrowings on Term Loan                                                                    |      |                                                                   | 1,890                                     |                                                    
|                                                                                                           | Payments on Term Loan                                                                      |      |                                                                   | (12,050                                   | )                                                  
|                                                                                                           | Purchase of treasury stock                                                                 |      |                                                                   | (340                                      | )                                                  
|                                                                                                           | Redemption of 12% Senior Subordinated Notes                                                |      |                                                                   | (1,915                                    | )                                                  
|                                                                                                           | Dividend                                                                                   |      |                                                                   | (43,162                                   | )                                                  
|                                                                                                           | Additions to deferred loan costs                                                           |      |                                                                   | (2                                        | )                                                  
|                                                                                                           | Discontinued operationsU.S., Miami, Mexico, and Chile operations                          |      |                                                                   |                                          |                                                    
|                                                                                                           |                                                                                            |      |                                                                   |                                           |                                                    
|                                                                                                           |                                                                                            |      |                                                                   |                                           | Net cash provided by (used in) financing activities
|                                                                                                           |                                                                                            |      |                                                                   |                                           |                                                    
|Net increase (decrease) in cash and cash equivalents                                                       |                                                                                            |      | (8,874                                                            | )                                         |                                                    
|Cash and cash equivalents at beginning of period                                                           |                                                                                            |      | 20,673                                                            |                                           |                                                    
|                                                                                                           |                                                                                            |      |                                                                   |                                           |                                                    
|Cash and cash equivalents at end of period                                                                 |                                                                                            | $    | 11,799                                                            |                                           |                                                    
|                                                                                                           |                                                                                            |      |                                                                   |                                           |                                                    
|Non-Cash Investing Activityaccounts receivable other proceeds not yet received from U.S. Sale transaction |                                                                                            | $    | 4,531                                                             |                                           | $                                                  
|                                                                                                           |                                                                                            |      |                                                                   |                                           |                                                    
|Non-Cash Financing ActivityTreasury Stock                                                                 |                                                                                            | $    | 1,213                                                             |                                           | $                                                  
|                                                                                                           |                                                                                            |      |                                                                   |                                           |                                                    
|Cash paid during the period for:                                                                           |                                                                                            |      |                                                                   |                                           |                                                    
|                                                                                                           | Income taxes                                                                               |      | $                                                                 | 1,104                                     |                                                    
|                                                                                                           |                                                                                            |      |                                                                   |                                           |                                                    

See accompanying notes to consolidated financial statements.

F-7

---





CLST HOLDINGS, INC. AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Summary of Significant Accounting Policies



CLST
Holdings, Inc., formerly CellStar Corporation, and subsidiaries (the "Company"), prior to the sale of its operations was a leading provider of distribution and value-added
logistics services to the wireless communications industry, with operations in the North American and Latin American Regions. The Company had operations in the European Region until October 2003 and
in the Asia-Pacific Region until November 2005. The Company provided comprehensive logistics solutions and facilitated the effective and efficient distribution of handsets, related
accessories and other wireless products from leading manufacturers to network operators, agents, resellers, dealers and retailers. In some of its markets, the Company provided activation services that
generated new subscribers for its wireless carrier customers. All significant intercompany balances and transactions have been eliminated in consolidation.

The
Company has reclassified to discontinued operations, for all periods presented, the results and related charges for the North American and Latin American Regions. (See footnote 2.)



The
preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of any contingent assets and liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an
on-going basis, the Company reviews its estimates and assumptions. The Company's estimates were based on its historical experience and various other assumptions that the Company believes
to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions.



The
Company considers all investments with a remaining maturity of three months or less at date of purchase to be equivalent. The Company places its cash and temporary investments with
banks and other institution that it believes have a high credit quality. The Company's cash and cash equivalents are not subject to any restriction.



In
determining the adequacy of the allowance for doubtful accounts, management considers a number of factors including the aging of the receivable portfolio, customer payment trends,
financial condition of the customer, economic conditions in the customer's country, and industry conditions. Actual results could differ from those estimates. The Company writes off fully reserved
accounts receivable when we have exhausted all collection efforts. Trade accounts receivable are included in assets of discontinued operations.



Inventories
are stated at the lower of cost (primarily on a moving average basis) or market and are comprised of finished goods. In determining the adequacy of the reserve for inventory
obsolescence, management considers a number of factors including the aging of the inventory, recent sales trends, industry market conditions, and economic conditions. In assessing the reserve, our
management also considers price protection credits or other incentives the Company has received from the vendor.

F-8

---



CLST HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(1) Summary of Significant Accounting Policies (Continued)

Actual
results could differ from those estimates. Inventories are included in assets of discontinued operations.



Property
and equipment are recorded at cost. Depreciation of equipment is provided over the estimated useful lives of the respective assets, which range from three to thirty years, on a
straight-line basis. Leasehold improvements are amortized over the shorter of their useful life or the related lease term. Major renewals are capitalized, while maintenance, repairs and
minor renewals are expensed as incurred. Property and equipment related to discontinued operations is included in assets of discontinued operations.



Long-lived
assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability
of assets to be held and used is measured by a comparison of the carrying amount of an asset to future
net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets
exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.



Revenue
is recognized on product sales when delivery occurs, the customer takes title and assumes risk of loss, terms are fixed and determinable, and collectibility is reasonably
assured. The Company does not generally grant rights of return. In instances where right of return is granted at the time of sale, revenue is not recognized until expiration of the right of return.
For goods that were considered bill and hold, revenue is recognized when the product is shipped. Reserves for returns, price discounts and rebates are estimated using historical averages, open return
requests, channel inventories, recent product sell-through activity and market conditions. Allowances for returns, price discounts and rebates are based upon management's best judgment and
estimates at the time of preparing the financial statements.

In
accordance with contractual agreements with wireless service providers, the Company receives an activation commission for obtaining subscribers for wireless services in connection
with the Company's retail operations. The agreements contain various provisions for additional commissions ("residual commissions") based on subscriber usage. The agreements also provide for the
reduction or elimination of activation commissions if subscribers deactivate service within stipulated periods. The Company recognizes revenue for activation commissions when the subscriber activates
service less an allowance for estimated deactivations. The Company recognizes residual commissions when received. The Company recognizes service fee revenue when the service is completed and, if
applicable, upon shipment of the related product, whichever is later. The Company recognizes revenue for reselling airtime from carriers upon its purchase by consumers. Revenues have been reclassed to
discontinued operations.



The
Company recognized price protection credits; sell-through credits, advertising allowances and volume discounts in the period the agreement was made so long as the terms
are supported by a written agreement. If not supported by a written agreement, the Company recognizes when received.

F-9

---



CLST HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(1) Summary of Significant Accounting Policies (Continued)

Price
protection credits and other incentives are applied against inventory and cost of goods sold, depending on whether the related inventory is on-hand or has been
previously sold. Sell-through credits are recorded as a reduction in cost of goods sold as the products are sold. Advertising allowances are generally for the reimbursement of specific
incremental, identifiable costs incurred by the Company and are recorded as a reduction of the related cost. Allowances in excess of the specific costs incurred, if any, are recorded as a reduction in
cost of goods sold or inventory, depending on whether the related inventory is on-hand or has been previously sold.



Assets
and liabilities of the Company's foreign subsidiaries have been translated at the rate of exchange at the end of each period. Revenues and expenses have been translated at the
weighted average rate of exchange in effect during the respective period. Gains and losses resulting from translation are accumulated as other comprehensive loss in stockholders' equity as the
functional currency is the local currency in all locations. The Company manages the risk of foreign currency devaluation by attempting to increase prices of products sold at or above the anticipated
rate of local currency devaluation relative to the U.S. dollar, by indexing certain of its receivables to exchange rates in effect at the time of their payment, by denominating transactions in U.S.
dollars, and by entering into non-deliverable foreign currency forward contracts. Gains and losses resulting from translation were reclassed to discontinued operations. Other comprehensive
income amounts related to discontinued operations have been realized as a result of the sale of the respective operations.



Basic
net income (loss) per common share is based on the weighted average number of common shares outstanding for the relevant period. Diluted net income (loss) per common share is based
on the weighted average number of common shares outstanding plus the dilutive effect of potentially issuable common shares pursuant to vesting of restricted stock, stock options, warrants, and
convertible instruments. Because of the loss in the years ended November 30, 2007 and 2006 from continuing operations in each year, no potentially issuable common shares were included in the
diluted per share computation.

Outstanding
options to purchase 0.1 million and 0.5 million shares of common stock at November 30, 2007 and 2006, respectively, were not included in the computation
of diluted earnings per share because their inclusion would have been anti-dilutive as the exercise price was higher than the average market price.

F-10

---



CLST HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(1) Summary of Significant Accounting Policies (Continued)

Restricted
stock of 0.7 million shares were not included in the computation of diluted earnings per share for 2006 as the Company had a loss from continuing operations.

2007

2006Basic and diluted:Loss from continuing operations

$
(3,213
)
$
(8,267
)Discontinued operations


29,513


13,103Net income

$
26,300

$
4,836Weighted average number of shares outstanding


20,557


20,415Loss from continuing operations

$
(0.16
)
$
(0.40
)Discontinued operations


1.44


0.64Net income per share

$
1.28

$
0.24




Income
taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to
(i) differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and (ii) operating loss and tax credit carryforwards.
Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or
settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of
deferred income tax assets, management considers whether it is more likely than not that the deferred income tax assets will be realized. A valuation allowance is provided when the realization of the
deferred tax asset is not likely.



The
Company's former 1993 Long-Term Incentive Plan (the "1993 Plan") terminated on December 3, 2003. However, Mr. Kaiser, as disclosed in the following
footnote, currently has exercisable options that were granted under the 1993 Plan. At a meeting of the Board of Directors on September 25, 2007, our Board of Directors unanimously resolved to
terminate our 2003 Long-Term Incentive Plan (the "2003 Plan") due to the reduction in the Company's workforce. As a result of the termination of the 2003 Plan, all outstanding options to
purchase the equity securities of the Company issued thereunder were terminated as well. Therefore, there are no currently outstanding options, warrants or other rights to purchase the Company's
securities under the 2003 Plan. We have no other equity compensation plans.

Mr. Kaiser
was granted options under the 1993 Plan to purchase 80,000 shares of the Company's common stock on December 12, 2001, and 50,000 shares of the Company's common
stock on January 22, 2003. Each of these options vested with respect to 25% of the shares covered thereby on each of the first four anniversaries of the date of grant and expires ten years
following the date of grant. The exercise price of each option was equal to the fair market value of the Common Stock on the date of grant. Unexercised options held by Mr. Farrell,
Ms. Gunn, Ms. Rodriguez and Mr. Durham pursuant to the 1993 Plan, if any, would have expired upon the termination of the executive officer's employment with the Company.

F-11

---



CLST HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(1) Summary of Significant Accounting Policies (Continued)

As
of November 30, 2006, the Company had stock option plans covering 1.1 million shares of its common stock. Stock options were only granted pursuant to the 2003 Plan.
Options under the 2003 Plan generally would expire ten years from the date of grant unless earlier terminated due to the death, disability, retirement or other termination of service of the optionee.
Options generally had vesting schedules ranging from 100% on the first anniversary of the date of grant to 25% per year commencing on the first anniversary of the date of grant. From time to time, the
Company had granted options that contained provisions that accelerated the vesting periods if certain events occurred. The exercise price was equal to the fair market value of the common stock on the
date of grant.

Most
options vested over a four year period and had an exercise price equal to the fair market value of the Company's common stock as of market close on the date of grant. There were no
stock option grants issued in 2007 and 2006.

Stock
option activity during the years ended November 30, 2007 and 2006 was as follows:

2007

2006Number of Shares

Weighted-average Exercise prices

Number of Shares

Weighted-average Exercise pricesBeginning balance

467,098



666,098Forfeited

(336,598
)
12.95

(199,000
)
18.44Outstanding, end of year

130,500

4.94

467,098

10.72Exercisable, end of year

130,500

4.94

388,423

11.50Reserved for future grants





163,069


For
options that were outstanding and exercisable as of November 30, 2007, the exercise prices and remaining lives were as follows:

Number Outstanding

Remaining Life (in years)

Exercise Prices

Number Exercisable

Exercise Prices80,000

4.03

$
4.60

80,000

$
4.6050,000

5.14

$
5.45

50,000

$
5.45500

3.15

$
9.38

500

$
9.38130,500

4.45

$
4.94

130,500

$
4.94


Prior
to fiscal 2006, the Company accounted for its stock options under the recognition and measurement provisions of APB Opinion No. 25, "Accounting for Stock Issued to
Employees", and related interpretations. Effective December 1, 2005, the Company adopted the provisions of SFAS No. 123 (Revised 2004), "Share-Based Payments" (SFAS 123(R)), and
selected the modified prospective method to initially report stock-based compensation amounts in the consolidated financial statements.
The Company used the Black-Scholes option pricing model to determine the fair value of all option grants. The Company did not grant any options during the years ended November 30, 2007 and
2006.

For
the years ended November 30, 2007 and 2006, the Company recorded $11,000 and $130,000, respectively, for stock-based compensation expense related to stock option grants made
in prior years. This amount is included in selling, general and administrative expenses.

F-12

---



CLST HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(1) Summary of Significant Accounting Policies (Continued)

On
May 2, 2005, Robert A. Kaiser, the Company's Chief Executive Officer, received a grant of 142,025 shares of restricted stock in tandem with the same number of stock
appreciation rights pursuant to the terms and conditions of the Plan and a related award agreement. The stock appreciation rights expired on December 31, 2005. The shares of restricted stock
vested in thirds over a three-year period, beginning on the first anniversary of the grant date and vesting could accelerate upon the occurrence of events specified in the grant agreement.
On May 2, 2006, 47,342 shares vested, of which 12,521 were withheld by the Company to pay withholding tax. The total value of the award, $0.3 million, was being expensed over the service
period.

During
2006, the Company granted shares of restricted stock to executive officers, directors and certain employees of the Company pursuant to the 2003 Plan. The shares of restricted
stock vested in thirds over a three-year period, beginning on the first anniversary of the grant date. The restricted stock was to become 100% vested if any of the following occurred:
(i) the participant's death; (ii) the termination of participant's service as result of disability; (iii) the termination of the participant without cause; (iv) the
participant's voluntary termination after the attainment of age 65; or (v) a change in control. The total value of the awards, $2.6 million, was being expensed over the service period.
The Plan permitted withholding of shares by the Company upon vesting to pay withholding tax. These withheld shares were considered as treasury stock and were available to be re-issued
under the 2003 Plan. During the year ended November 30, 2007 and 2006, 675,700 and 144,025 shares, respectively, vested, of which 130,635 and 29,389 shares, respectively, were withheld by the
Company to pay withholding tax.

The
following table summarizes the restricted stock activity for the years ended November 30, 2007 and 2006:

2007

2006Balance at beginning of year

676,600

460,025Shares granted



434,300Shares vested

(675,700
)
(144,025
)Shares forfeited

(900
)
(73,700
)Balance at end of year



676,600


The
balance of unearned compensation related to the unearned portion of the restricted stock awards was eliminated against additional paid-in capital upon our adoption of
SFAS 123R as of the beginning of fiscal 2006.

For
the year ended November 30, 2006, the Company recognized $0.7 million of expense related to the restricted stock grants, which is included in selling, general and
administrative expenses. As a result of the U.S. Sale, the balance of unearned compensation related to the restricted stock awards of $1.7 million was expensed in 2007 and is included in
selling, general and administrative expenses.



The
Company expenses advertising costs as incurred.



For
purposes of the consolidated statements of cash flows, the Company considers all investments with an original maturity of 90 days or less to be cash equivalents.

F-13

---



CLST HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(1) Summary of Significant Accounting Policies (Continued)

The
Company paid approximately $2.0 million and $5.2 million of interest for the years ended November 30, 2007 and 2006, respectively. Most of the interest expense
during the years ended 2007 and 2006 were reclassified to discontinued operations. In 2006 interest expense was allocated to discontinued operations based on working capital and a percentage of
revenues, by subsidiary, due to the large amount of borrowing activity. In 2007, it was decided that 90% of the interest expense would be allocated to discontinued operations based on small amount of
borrowings in the four months before the sale. The total interest expense allocated to discontinued operations was $2.2 million in 2007 and $3.4 million in 2006. The Company paid
approximately $1.1 million and $2.2 million of income taxes for the years ended November 30, 2007 and 2006, respectively.

At
November 30, 2007 and 2006, the Company had included in cash and accounts payable $0.1 million and $0.4 million, respectively, of outstanding checks that have not
yet been presented to the bank.



On
September 13, 2006, the SEC issued Staff Accounting Bulletin No. 108 ("SAB 108"). SAB 108 expresses the SEC Staff's views regarding the process of
evaluating materiality of financial statement misstatements. SAB 108 addresses the diversity in evaluating materiality of financial statement misstatements and the potential under current
practice used by the Company for the build up of improper amounts on the balance sheet. SAB 108 is effective for the Company for the year ended November 30, 2006. As allowed by
SAB 108, the cumulative effect of the initial application of SAB 108 has been reported in the carrying amounts of assets and liabilities as of the beginning of fiscal 2006, with the
offsetting balance to retained earnings. Upon adoption, the Company recorded a decrease in accrued expenses of approximately $1.1 million for unspecified obligations and in the allowance for
doubtful accounts of approximately $1.0 million for excess general reserves and an increase in retained earnings of approximately $2.1 million to correct errors arising prior to 2003
that were considered immaterial under the Company's previous method of evaluating materiality.



In
July 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxesan
interpretation of FASB Statement No. 109", which clarifies the accounting for uncertainty in tax positions. This interpretation requires that we recognize in our financial statements the impact
of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective as of the
beginning of the Company's 2008 fiscal year, with the cumulative effect of the change in accounting principle recorded as an adjustment to retained earnings. The Company is currently evaluating the
impact of adopting FIN 48 on its financial statements.

In
September 2006, the FASB issued FASB Statement No. 157, "Fair Value Measurements" ("SFAS 157"), which defines fair value, establishes a market-based framework or
hierarchy for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 is applicable whenever another accounting pronouncement requires or permits assets and
liabilities to be measured at fair value and, while not expanding or requiring new fair value measurements, the application of this statement may change current practices. The requirements of
SFAS 157 are effective for the fiscal year beginning December 1, 2008. However, in February 2008 the FASB decided that an entity need not apply this standard to nonfinancial assets and
liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis until the subsequent year. Accordingly, the adoption of

F-14

---



CLST HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(1) Summary of Significant Accounting Policies (Continued)

this
standard on December 1, 2008 is limited to financial assets and liabilities. The Company is still in the process of evaluating this standard and therefore has not yet determined the impact
that it will have on our financial statements.

In
December 2007, the FASB released Statement No. 141 R, "Business Combinations" ("SFAS 141R"), which establishes principles for how the acquirer shall recognize acquired
assets, assumed liabilities and any noncontrolling interest in the acquiree, recognize and measure the acquired goodwill in the business combination, or gain from a bargain purchase, and determines
disclosures associated with financial statements. This statement replaces SFAS 141 but retains the fundamental requirements in SFAS 141 that the acquisition method of accounting (which
SFAS 141called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. The requirements of SFAS 141R apply to
business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Early application is not
permitted.

From
time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies which we adopt as of the specified effective date. Unless otherwise discussed,
our management believes the impact of recently issued standards which are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

(2) Discontinued Operations

On December 18, 2006, we entered into a definitive agreement (the "U.S. Sale Agreement") with a wholly owned subsidiary of Brightpoint, Inc., an
Indiana corporation ("Brightpoint"), providing for the sale of substantially all of the Company's United States and Miami-based Latin American operations and for the buyer to assume certain
liabilities related to those operations (the "U.S. Sale"). Our operations in Mexico and Chile and other businesses or obligations of the Company were excluded from the transaction.

Our
Board of Directors and Brightpoint unanimously approved the proposed transaction set forth in the U.S. Sale Agreement. The purchase price was $88 million in cash, subject to
adjustment based on changes in net assets from December 18, 2006 to the closing date. The U.S. Sale Agreement also required the buyers to deposit $8.8 million of the purchase price into
an escrow account for a period of six months from the closing date. As of November 30, 2007, we had received approximately $7.6 million of the amounts held in the escrow account, which
such amount includes accrued interest. In January 2008, we received approximately $3.2 million from Brightpoint plus accrued interest and less transition expenses, and approximately
$1.4 million from the escrow agent. These amounts were the final amounts received under the U.S. Sale Agreement.

Also
on December 18, 2006, we entered into a definitive agreement (the "Mexico Sale Agreement") with Soluciones Inalámbricas, S.A. de C.V. ("Wireless
Solutions") and Prestadora de Servicios en Administración y Recursos Humanos, S.A. de C.V. ("Prestadora"), two affiliated Mexican companies, providing for the sale of all of the
Company's Mexico operations (the "Mexico Sale"). The Mexico Sale was a stock acquisition of all of the outstanding shares of the Company's Mexican subsidiaries, and includes our interest in
Comunicación Inalámbrica Inteligente, S.A. de C.V. ("CII"), our joint venture with Wireless Solutions. Our Board of Directors unanimously approved the proposed
transaction set forth in the Mexico Sale Agreement. Under the terms of the transaction, we received $20 million in cash, and are to receive our pro rata share of CII profits from
January 1, 2007, up to the

F-15

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CLST HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2) Discontinued Operations (Continued)

consummation
of the transaction, within 150 days from the closing date. We have not received any pro-rata share of the CII profits and other terms required as of 150 days
from the closing date. A demand for payment of up to $1.7 million and other required terms of the agreement was sent to the purchasers on September 11, 2007. While we believe that CII
was profitable and therefore the purchasers owe the Company its pro rata share, the purchasers are disputing this claim. We continue to pursue the amounts we believe we are due, but at this time the
purchasers are not responding to or cooperating with our demands. Currently we cannot make any estimates regarding future amounts we may be able to collect or the timing of any collections on this
matter.

We
filed a proxy statement with the SEC on February 20, 2007, which more fully describes the U.S. and Mexico Sale transactions. Both of the transactions were subject to customary
closing conditions and the approval of our stockholders, and the transactions were not dependent upon each other. The proxy statement also included a plan of dissolution, which provides for the
complete liquidation and dissolution of the Company after the completion of the U.S. Sale, and a proposal to change the name of the Company from CellStar Corporation to CLST Holdings, Inc.

On
March 22, 2007, we signed a letter of intent to sell our operations in Chile to a group that includes local management for approximately book value.

On
March 28, 2007, our stockholders approved the U.S. Sale, the Mexico Sale, the plan of dissolution, and the name change to CLST Holdings, Inc. We continue to follow the
plan of dissolution. Consistent with the plan of dissolution and its fiduciary duties, our board of directors will continue to consider the proper implementation of the plan of dissolution and the
exercise of the authority granted to it thereunder, including the authority to abandon the plan of dissolution.

The
U.S. Sale closed on March 30, 2007. At closing, $53.6 million was received and $4.5 million is included in accounts receivableother in the
accompanying balance sheet for November 30, 2007; $8.8 million had been placed in an escrow account and subject to any indemnity claims by the buyers of the company's U.S. business. A
portion of the proceeds from the sale was used to pay off the Company's bank debt (see footnote 7). We recorded a pre-tax gain of $52.7 million on the transaction during the twelve
months ended November 30, 2007. Brightpoint asserted total claims for indemnity against the escrow of approximately $1.4 million. The Company objected to these claims. Brightpoint also
proposed negative adjustments to the net working capital of
approximately $1.4 million, which these claims for adjustment were largely the same as the claims for indemnity asserted against the escrow account. As of November 30, 2007, we had
received approximately $7.6 million of the amounts held in the escrow account, which such amount included accrued interest. On December 21, 2007, we entered into a Letter Agreement (the
"Letter Agreement") with Brightpoint which settled the dispute concerning the additional escrow amount. All currently outstanding disputes between the parties regarding the determination of the
purchase price under the U.S. Sale Agreement have been resolved, and payments of funds in respect thereof were made in accordance with the terms described in the Letter Agreement. Pursuant to the
Letter Agreement, in January 2008 we received approximately $3.2 million from Brightpoint plus accrued interest and less transition expenses, and approximately $1.4 million from the
escrow agent. These amounts were the final amounts received under the U.S. Sale Agreement.

The
Mexico Sale closed on April 12, 2007, and we recorded a loss on the transaction of $7.0 million primarily due to accumulated foreign currency translation adjustments as
well as expenses related to the transaction. We had approximately $9.1 million of accumulated foreign currency

F-16

---



CLST HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2) Discontinued Operations (Continued)

translation
adjustments related to Mexico. As the proposed sale did not meet the criteria to classify the operations as held for sale under SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", as of February 28, 2007, we recognized the $9.1 million as a charge upon the closing of the Mexico Sale. Again, as described above, we have
sent a demand for payment of up to $1.7 million and other required terms of the agreement to the purchasers, and if such amounts are received an additional gain will be recorded.

On
June 11, 2007, we completed the sale of our operations in Chile. The purchase price and cash transferred from the operations in Chile prior to closing totaled
$2.5 million, and we recorded a pre-tax gain of $0.6 million on the transaction as of November 30, 2007. With the completion of the sale of our operations in Chile, we
no longer have any operating locations.

In
2005, the Company decided to exit the Asia-Pacific Region and on September 2, 2005, the Company sold its People's Republic of China (the "PRC") and Hong Kong
operations to Fine Day Holdings Limited, a company formed by Mr. A.S. Horng, who was the Chairman and Chief Executive Officer of CellStar (Asia) Corporation Limited and effectively the head of
the Company's Asia-Pacific Region. As part of the transaction, the Company retained rights against certain manufacturers and during the second quarter of 2006 the Company recovered
$0.7 million against those claims. The amount is recorded in cost of goods sold within discontinued operations.

The
results of discontinued operations for U.S., Miami, Mexico, Chile and Asia-Pacific for the years ended November 30, 2007 and 2006, as previously reported are as
follows (in thousands):

2007

2006Revenues

$
276,334

943,140Cost of sales


258,234

877,046Gross profit


18,100

66,094Selling, general and administrative expenses


15,057

37,740Operating income


3,043

28,354Other income (expense):Interest expense


(2,201
)
(3,425
)Loss on sale of accounts receivable


(670
)
(2,578
)Minority interest


(1,420
)
(2,390
)Gain on sale


46,334

Other, net


319

197Total other income (expense)


42,362

(8,196
)Income before income taxes


45,405

20,158Provision for income taxes


15,892

7,055Discontinued operations

$
29,513

13,103


F-17

---



CLST HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2) Discontinued Operations (Continued)

|
|

November 30,
2006Current assets



$
196,626Non-current assets




6,538Total assets




203,164Current liabilities




152,839Non-current liabilities




Total liabilities




152,839Net



$
50,325


(3) Dividends

Prior to the Company's adoption of the Plan, our policy had been to reinvest earnings to fund future growth. Accordingly, we generally did not pay cash dividends
on our common stock. However, consistent with the Company's Plan, the Company paid the following cash distributions, per share, to the holders of its common stock in fiscal year 2007:

Date

Dividend AmountJuly 19, 2007

$
1.50November 1, 2007

$
0.60


The
distributions under the Plan totaled $2.10 per share or approximately $43.2 million. The Company has determined that 61.21% of the distribution will be considered a taxable
dividend in accordance with U.S. Federal income tax rules, and the remaining 38.79% will be considered a non-dividend distribution. This determination was a direct result of the Company's
earnings and profits of $26.3 million, requiring the first $26.3 million of distributions to be treated as taxable dividends. The Company's status did not affect the tax determination.

(4) Settlement of note receivable related to the sale of Asia-Pacific

On March 5, 2007, we announced that we had signed an agreement, effective February 27, 2007, with Fine Day Holdings Limited ("Fine Day") and
Mr. Horng An-Hsien ("Mr. Horng"), the Chairman and sole shareholder of Fine Day, and formerly an executive officer of the Company, accepting a settlement of an outstanding
note receivable related to the September 2005 sale of our Hong Kong and People's Republic of China ("PRC") operations.

Since
September 2, 2005, Fine Day had made timely interest payments to us on the promissory note. However, Fine Day informed us in February 2007 that it would not be able to pay
quarterly interest payments or the principal amount of the note at maturity after the March 1, 2007 interest payment. In settlement of the outstanding note, we agreed to accept a $650,000 cash
payment, along with the transfer to the Company of all of Mr. Horng's shares of our common stock, approximately 474,000 shares. The carrying value of the note, prior to the agreement, was
$2.4 million. As a result of the settlement, we recorded a loss of $0.5 million for the quarter ended February 28, 2007. The shares of stock were valued at $2.56 per share based
on the closing price on April 12, 2007. The transaction closed on April 12, 2007, and we recorded an additional loss of $43,000 during the quarter ended

F-18

---



CLST HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(4) Settlement of note receivable related to the sale of Asia-Pacific (Continued)

May 31,
2007 to reflect the change in the value of the stock up to the time of closing. At November 30, 2007, the shares of stock previously owned by Mr. Horng are included in
treasury stock.

(5) Related Party Transactions



Motorola
purchased 0.4 million shares of the Company's common stock in July 1995 and had been a major supplier of handsets and accessories to the Company. During 2007 and 2006 our
discontinued operations purchased handsets from Motorola.



Alan
H. Goldfield is the founder and former Chairman and Chief Executive Officer of the Company. In July 2001 the Company entered into a Consulting Agreement with him, which was
terminated during 2005. No payments were made to Mr. Goldfield pursuant to this agreement in 2007 and 2006.

Also
in July 2001, the Company entered into a Separation Agreement and release with Mr. Goldfield. Included in the terms of the agreement was a provision whereby if
Mr. Goldfield provided certain services he would receive certain payments. No payments were made to Mr. Goldfield for services pursuant to this agreement in 2007 and 2006. Also included
in the agreement was a requirement of the Company to provide Mr. Goldfield with certain life and disability insurance through July 5, 2006, and to provide Mr. Goldfield and his
spouse certain medical insurance coverage throughout their lifetime. For the years ended 2007 and 2006, the Company paid less than $12,000, respectively, under this agreement.

On
May 31, 2007, the Company entered a Release Agreement with Mr. Goldfield in which Mr. Goldfield and his spouse released the Company from all future medical
insurance obligations after July 31, 2007, in exchange for all the Company's rights, title and interest in Texas Stadium Suite No. 172, including any options to become a suite owner in
any new stadium. This release concludes all medical obligations of the Company to Mr. Goldfield and his spouse under his separation agreement.



On
August 28, 2007, the Board authorized the retention of Mr. Kaiser as a consultant to the Company for the sum of $20,000 per month, on a month to month basis, terminable
at will by either party. For the year ended November 30, 2007, Mr. Kaiser had received $84,000 in consultant payments. As of January 1, 2008, Mr. Kaiser is now an employee
of the Company.

(6) Fair Value of Financial Instruments

The carrying amounts of accounts receivable, accounts payable, notes payable and term loan as of November 30, 2007 and 2006 approximate fair value due to
the short maturity of these instruments, as well as the variable rates on the notes payable and term loan. The fair value of the Company's 12% Senior Subordinated Notes, $1.9 million at
November 30, 2006, is the same as carrying value and is consistent with the amounts for which the notes were retired.

F-19

---



CLST HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(7) Property and Equipment

Property and equipment consisted of the following at November 30, 2007 and 2006 (in thousands):

2007

2006Furniture, fixtures and equipment (useful life3 to 5 years)

$
1

1281

128Less accumulated depreciation and amortization




(96
)$
1

32


In
the fourth quarter of 2005, the Company decided to sell its corporate headquarters building. The Company completed the sale of the building in February 2006 for net sale proceeds of
$1.7 million.

(8) Debt

Debt consisted of the following at November 30, 2007 and 2006 (in thousands):

2007

2006Revolving Credit Facility

$


33,469Term loan




10,16012% Senior subordinated notes




1,915Total debt

$


45,544


On
March 31, 2006, we entered into an Amended & Restated Loan and Security Agreement (the "Amended Facility") with a bank, which extended the term of the previous facility
until September 27, 2009. The borrowing rate under the Amended Facility was prime for the prime rate option and London Interbank Offered Rate ("LIBOR") plus 2.5% for the LIBOR option.

At
November 30, 2006, we had outstanding $1.9 million of 12% Senior Subordinated Notes (the "Senior Notes") due January 2007 bearing interest at 12%.

On
August 31, 2006, we entered into a Term Loan and Security Agreement (the "Term Loan") with a finance company for up to $12.3 million to refinance the Senior Notes. The
borrowing rate under the Term Loan was LIBOR plus 7.5%, or a base rate plus an applicable margin. The Term Loan was to mature September 27, 2009. The Term Loan was to be amortized to an
outstanding balance of $10 million at the rate of approximately $1 million per year payable in quarterly installments beginning September 30, 2006, with interest-only
payments thereafter throughout the remainder of the Term Loan.

On
March 30, 2007, the outstanding balances, including accrued interest, under the Amended Facility of $13.1 million and Term Loan of $11.9 million were paid off
using the proceeds from the U.S. Sale. An early termination fee of $0.5 million was paid in conjunction with the payoff of the Amended Facility and was recognized as a charge to earnings in the
year ended November 30, 2007.

F-20

---



CLST HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(8) Debt (Continued)

(9) Income Taxes

The Company's loss from continuing operations before income taxes was comprised of the following for the years ended November 30, 2007 and 2006 (in
thousands):

2007

2006United States

$
(14,739
)
(12,512
)International




Total

$
(14,739
)
(12,512
)


Provision
(benefit) for income taxes for the years ended November 30, 2007 and 2006 consisted of the following (in thousands):

Current

Deferred

TotalYear ended November 30, 2007United States:Federal




(11,658
)
(11,658
)State


132



132International






Total

$
132

(11,658
)
(11,526
)Year ended November 30, 2006United States:Federal

$




State


132

(4,377
)
(4,245
)International






Total

$
132

(4,377
)
(4,245
)


Provision
(benefit) for income taxes differed from the amounts computed by applying the U.S. Federal income tax rate of 35% to income before income taxes as a result of the following for
the years ended November 30, 2007 and 2006 (in thousands):

2007

2006Expected tax benefit

$
(5,159
)
(4,379
)State income taxes, net of federal benefits


86

86Current year losses not benefited


5,159

4,190Utilization of deferred tax assets (including NOLs) previously offset with valuation allowance


(11,612
)
(4,142
)Actual tax expense

$
(11,526
)
(4,245
)


F-21

---



CLST HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(9) Income Taxes (Continued)

The
tax effect of temporary differences underlying significant portions of deferred income tax assets and liabilities at November 30, 2007 and 2006 is presented below (in
thousands):

2007

2006Deferred income tax assets:Net operating loss carryforwards

$
43,722

45,757Foreign tax credit carryforwards




60743,722

46,364Valuation allowance


(38,936
)
(38,792
)$
4,786

7,572


In
assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that the deferred income tax assets will be realized. At
November 30, 2007, the Company has deferred income tax assets, net of valuation allowances, of $4.8 million, which relates to net operating loss carryforwards. The ultimate realization
of deferred income tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences are deductible. The valuation allowance for deferred
income tax assets as of November 30, 2007 and 2006 was $38.9 million and $38.8 million, respectively. The net change in the total valuation allowance for the years ended
November 30, 2007 and 2006 was an increase of $0.1 million and a decrease of $0.1 million, respectively. Management considers the scheduled reversal of deferred income tax assets,
projected future taxable income, and tax planning strategies in determining the amount of the valuation allowance. Based on the level of historical taxable income and projections for future taxable
income over the periods in which the deferred income tax assets are deductible, management determines if it is more likely than not that the Company will realize the benefits of these deductible
differences. The most significant factor considered in determining the realizability of the deferred tax asset was projected profitability, including taxable income generated from tax planning
strategies, over the next three to five years. The Company needs to generate $13.7 million in pre-tax income over this period to fully utilize the net deferred tax asset.

The
amount of the deferred income tax asset considered realizable, however, could change in the near term if estimates of future taxable income during the relevant carry-forward period
change or if the number of years considered for these projections change. At November 30, 2007, the Company had U.S. Federal net operating loss carryforwards of approximately
$125.1 million, which will begin to expire in 2020.

The
Company was deemed to have undergone an ownership change for purposes of the Internal Revenue Code as a result of its bond exchange in 2002. Accordingly, the Company may have
limitations on the yearly utilization of its U.S. tax carry-forwards in accordance with Section 382 of the Internal Revenue Code.

Because
many types of transactions are susceptible to varying interpretations under foreign and domestic income tax laws and regulations, the amounts recorded in the accompanying
consolidated financial statements may be subject to change on final determination by the respective taxing authorities. Management believes it has made an adequate tax provision.

F-22

---



CLST HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(10) Leases

The Company leases certain office facilities and equipment operating leases. Rental expense for operating leases related to continuing operations was $53,000 and
$50,000 for the years ended November 30, 2007 and 2006, respectively.

(11) Stockholders' Equity



The
Company had a Stockholder Rights Plan (the "Rights Plan"), which provides that the holders of the Company's common stock receive five-thirds of a right ("Right"), as
adjusted for prior stock splits, for each share of the Company's common stock they own. Each Right entitles the holder to buy one one-thousandth of a share of Series A Preferred
Stock, par value $.01 per share, at a purchase price of $80.00, subject to adjustment. The Rights would become exercisable if
certain events occurred relating to a person or group acquiring or attempting to acquire 15% or more of the outstanding shares of common stock of the Company. Under those circumstances, the holders of
Rights would be entitled to buy shares of the Company's common stock or stock of an acquirer of the Company at a 50% discount. However, in certain circumstances, the Board could make a determination
that such an acquisition is made inadvertently, in which case the Rights Plan would not be triggered. The Rights Plan expired on January 9, 2007.

(12) Commitments and Contingencies



We
have agreements with two employees to assist with the final wind down of our business. Under the agreements the employees are to receive their base salary as well as a bonus upon the
completion of certain objectives during the liquidation process. The estimated commitment remaining under the agreements at November 30, 2007 is $145,000.

In
February 2006, we received from the SEC a subpoena requiring production of certain documents relating to the Company's Asia-Pacific Region, which the Company exited in
September 2005. The subpoena was issued in connection with a fact-finding inquiry under a formal order of investigation issued by the SEC. On June 26, 2007, we received a letter
from the staff of the Securities and Exchange Commission giving notice of the completion of their investigation with no enforcement action recommended to the Commission.

We
are party to various other claims, legal actions and complaints arising in the ordinary course of business. Our management believes that the disposition of these matters will not have
a materially adverse effect on our consolidated financial condition or results of operations.

The
Company has been informed of the existence of an investigation that may relate to the Company or its South American operations. Specifically, the Company understands that authorities
in a foreign country are reviewing allegations from unknown parties that remittances were made from South America to Company accounts in the United States in 1999. The Company does not know the nature
or subject of the investigation, or the potential involvement, if any, of the Company or its former subsidiaries. The Company does not know if allegations of wrongdoing have been made against the
Company, its former subsidiaries or any current or former Company personnel or if any of them are subjects of the investigation. However, the fact that the Company is aware of an allegation of
transfer

F-23

---



CLST HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(12) Commitments and Contingencies (Continued)

of
money from South America to the United States and may have questioned witnesses about such alleged transfers means that the Company cannot rule out the possibility of involvement.

On
October 30, 2007, Ms. Sherrian Gunn, the former Chief Executive Officer, filed an Original Petition asserting a claim for breach of Employment Agreement. Ms. Gunn
seeks approximately $365,000, plus attorney fees and interest. The Company has accrued approximately $365,000 related to the litigation.



The
Company established a savings plan for employees in 1994. Employees are eligible to participate upon completing 90 days of service. The plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974. Under provisions of the plan, eligible employees are allowed to contribute as much as 50% of their compensation, up to the annual maximum allowed
by the Internal Revenue Service. The Company may make a discretionary matching contribution based on the Company's profitability. The Company made contributions of approximately $0.1 million
and $0.3 million, respectively, to the plan for each of the years ended November 30, 2007 and 2006.

(13) Subsequent Events

On December 2, 2007 the Company received approximately $95,000 from Muniz Ramirez Perez-Taiman representing the final payment due the Company from the 2002
sale of its operations in Peru. The accounts receivable had been previously fully reserved.

F-24

---