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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   -----------

                                   FORM 10-KSB

(Mark One)



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|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15() OF THE SECURITIES EXCHANGE
      ACT OF 1934
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  FOR THE FISCAL YEAR ENDED JUNE 30, 2002

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|_|   TRANSITION REPORT UNDER SECTION 13 OR 15() OF THE SECURITIES EXCHANGE
      ACT OF 1934
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   FOR THE TRANSITION PERIOD FROM                    TO
                                        ------------    ------------

   COMMISSION FILE NUMBER

                                 CELLPOINT INC.

                 (Name of small business issuer in its charter)

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NEVADA                                             52-2032380
(State or other jurisdiction of                    (I.R.S. Employer
incorporation or organization)                     Identification No.)
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KRONBORGSGRAND 7                                   (Zip Code)
SE-164 46 KISTA
SWEDEN
(Address of principal executive offices)
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     468 633 2700
     (Issuer's telephone number, including area code)

     Securities registered under Section 12(b) of the Exchange Act: None.
     Securities registered under Section 12(g) of the Exchange Act:

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TITLE OF EACH CLASS                                NAME OF EACH EXCHANGE
-------------------                                ON WHICH REGISTERED
                                                   ---------------------
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Common Stock, $.001 par value                     OTC BB
                                                  Stockholmsborsen
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     Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for past 90 days. Yes |X| No |_|

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |_|

     State issuer's revenues for its most recent fiscal year: $1,114,716 for the
fiscal year ended June 30, 2002.

     State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as of
a specified date within the past 60 days: $ 4,311,535 as of October 8, 2002. The
aggregate market value was based upon the closing price for the Common Stock,
par value $.001 per share, as quoted by the Over the Counter Market commonly
referred to as the OTC Bulletin Board.

     (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PAST FIVE YEARS)

     Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes |_| No |_|

     (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of October 1, 2002,
19,489,804 of Common Stock, par value $.001 per share.

     DOCUMENTS INCORPORATED BY REFERENCE

     If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). None.

     Transitional Small Business Disclosure Format (check one): Yes |_| No |X|


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                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS


GENERAL INFORMATION

          The Company was organized on February 28, 1997, as Technor
International, Inc. pursuant to the provisions of the Corporation Law of the
State of Nevada. The Company amended its charter to change its name to CellPoint
Inc. on October 4, 1999. The Company maintains its executive offices at
Kronborgsgrand 7, 164 46 Kista, Sweden, telephone +46 (0)8 633 27 00, facsimile
+46 (0)8 35 87 90. The Company maintains a website at www.cellpoint.com.
Information contained on the Company's website is not a part of this Annual
Report. The Company, CellPoint Inc. is commonly referred to as "CellPoint".


LOCATION SERVICES

          We focus on the worldwide development, marketing, distribution, sales,
implementation and support of mobile location software technology and platforms
for digital cellular networks. Our positioning technology, location services
platforms are collectively marketed under the name the "CellPoint System". The
company's two core products are marketed under the names Mobile Location System
("MLS") and Mobile Location Broker ("MLB")

          The CellPoint System enables users to determine the position of a
cellular telephone or mobile device, such as a Personal Digital Assistant (PDA),
for use in a broad range of consumer and business applications. The primary
location service application areas today include resource management of mobile
workforce personnel, friend-finding relative to one's own location, personal
security services, information and entertainment services. In the resource and
fleet management application, companies can view and track their mobile service
personnel over the Internet. Information and entertainment services include
location-sensitive traffic reports, weather, and concierge information services
such as the location of the nearest hotel, cinema, restaurant, bank machine or
repair shop. Emergency applications could include locating persons making
emergency calls, roadside assistance in the event of vehicle breakdown or
location of a disabled or impaired person who may be lost or missing.
Friend-finding allows users to maintain buddy lists and view the location of
pre-defined, consenting individuals relative to their own location, send
messages to these people or call them. Personal security services offer added
security to people in higher risk occupations such as night security guards,
chauffeurs, tax collectors, health care personnel, postal delivery persons and
couriers.

 Industry Overview

          We believe that location services will play a key role in the mobile
Internet and mobile commerce, and that the location component will be a
cornerstone in the majority of mobile Internet use. There has been an explosive
growth of wireless communications and the Internet, with mobile telephony being
the fastest growing technology of all time. Mobile Internet access will offer
corporate and mass-market utility in saving time and money. Most experts agree
that more people will access the Internet from mobile devices than from fixed
computers before 2005. Location-based services are projected to be worth US$38
billion in consumer spending in 2005 and location services are projected to
represent 9% of all mobile operator revenues in Western Europe in 2005
(Interactive Entertainment: Delivering Revenues in the Broadband Era, Schema,
July 2001).

         Mobile operators are facing increased competition, lower revenues per
user through falling prices and churn among subscribers from one operator to
another. Voice services alone have become a commodity service. We believe the
key to unlocking further value in the operators' investments in network
infrastructure is through offering unique value-added services or by enhancing
existing value-added service by adding personalized location information to
them. Doing so will attract more customers and more airtime use per customer,
improve subscriber loyalty and reduce churn of subscribers. Services such as
voice mail, pre-paid subscriptions and short message service (SMS) are
value-added service



                                       3

<PAGE>

offerings beyond voice that have become commonplace. Location services can offer
operators new value-added services to unlock new revenue potential and
differentiate operators from their competitors.

         The industry for mobile location services is still very much in its
infancy, but new wireless services are an explosive growth area. It has taken
longer than we expected for this industry to "take off", but most experts agree
that growth is about to accelerate to massive proportions. We believe that 70% -
80% of mobile phone users will employ location services by 2005, and that the
location component is key to using the Internet from mobile devices. Location
services for mobile users offer broad utility, and can be grouped into four
categories: management and tracking, information, entertainment and security.
While the industry is very new, we expect that commercial services with a strong
business case for management and service applications will be the first to enter
the market, but the mass-market services including information and entertainment
services will be much larger over time.

 Company History

         Effective February 28, 1999, We acquired technology and intellectual
property rights from Novel Electronic Systems & Technologies ("Novel") for the
core GSM positioning technology originally developed in South Africa. We own the
original core positioning technology, and have the right to use it worldwide,
with the exception of sub-Saharan Africa for vehicle tracking applications,
which are owned by Matrix Vehicle Tracking (Pty) Ltd., a corporation organized
under the laws of South Africa ("Matrix"). The GSM positioning technology was
originally commercialized by Wasp SA (Pty) Limited ("Wasp") and Matrix, and has
been in commercial use in South Africa for more than five years. There are more
than 28,000 commercial users of the original technology in South Africa. We have
entered into a cooperation agreement with Matrix whereby Matrix has made
available to us its knowledge and know-how regarding GSM positioning
applications, strategies and service delivery.

         CellPoint has subsequently developed Mobile Location System ("MLS"), a
third generation location platform that works with all mobile phones in all
networks, Global System for Mobile Communications ("GSM"), Code Division
Multiple Access ("CDMA"), General Packet Radio Service ("GPRS") and Universal
Mobile Telecommunications System ("UMTS") regardless of network infrastructure,
and without overlays or modifications to the network.

         CellPoint developed a middleware platform in order to support 3rd party
applications as well as trusted applications, Mobile Location Broker ("MLB")
handling anonymity, end-user privacy management and geo-server support with
centralized map rendering, routing, geo-coding and reverse geo-coding. This
platform can be placed in a separate security zone to the positioning platform,
giving flexible support for operator security requirements.

 Core Business

         Our mission is to be the global leader in providing location-enabling
solutions toward mobile operators and service providers throughout the world.

         Our core business is to provide location system software, including
location platforms and selective location technology. Core operations are
Product Portfolio Management, Systems Management, Product/Systems Development,
Systems Verification, 2nd and 3rd line support, marketing and direct
touch/partner sales and sales support. Non-core operations are supply and
support of hardware (e.g. computer platforms), 1st line support and systems
integration.

         The clear requirement for third generation/UMTS terminals to operate in
GSM and CDMA networks and the need for a combination of high-accuracy
positioning methods coupled to technologies offering high-position availability
has lead us to develop a location platform offering a powerful combination of
Assisted Global Positioning System ("A-GPS") and Cell-based positioning for
trusted clients at a very competitive price to the operator. The solutions offer
full support for inter-network roaming.

         In order to support 3rd party applications as well as trusted
applications, we offer a middleware platform, MLB handling anonymity, end-user
privacy management and geo-server support with centralized map rendering,
routing, geo-coding and reverse geo-


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<PAGE>

coding. This platform can be placed in a separate security zone to the
positioning platform, giving flexible support for operator security
requirements.

         Progressive mobile operators are already launching location-based
services, opening up the market and motivating others to invest in a competitive
environment. Most are looking at location as a core business and will require
the type of carrier-grade, high-capacity and secure systems which fall within
CellPoint's product roadmap.

 Location Technology Platform

         Evolving GSM, CDMA and UMTS standards will open up competition between
providers for system layers in location-based systems, creating a clear division
between location platforms and location applications.

Network-Based Location Platform. In September 2000, we announced a new location
platform, Mobile Location System (MLS), capable of locating any subscriber in a
GSM network. MLS is a network-based solution that works across multi-vendor GSM,
CDMA and UMTS infrastructures and does not require any network upgrades or
overlays. MLS is the central software node in a location services system. It has
open APIs and integrates location technologies with applications, services,
mapping, content terminals and browsers.

         With our MLS platform, mobile operators will be able to move
transparently from GSM or CDMA to UMTS. MLS provides seamless migration from
second generation GSM networks to third generation ("3G") UMTS networks; this
allows 3G operators to offer location services in an effective manner during the
build-up phase of their networks, considerably enhancing the initial service
offering for 3G operators.

         In September 2002, we announced that our MLS platform was capable of
working on the CDMA standard with little to no modification to the network.

         Our first commercial agreement was signed in April 1999 with Tele2, a
GSM network operator in Sweden, for positioning services for GSM mobile phones.
A similar system was delivered to France Telecom Mobiles and announced on July
13, 2000 where France Telecom Mobiles licensed CellPoint's location platform and
one location services application, Resource Manager.

         On October 9, 2000, we announced a commercial agreement with EuroTel
Praha spol sro. of the Czech Republic for our MLS platform and applications.
EuroTel, using CellPoint's latest location-based service technology, is able to
offer its customers our Resource Manager service based on their current mobile
phones and SIM cards.

         In March 2001, we announced our first installation of MLS with E-Plus,
one of the leading mobile operators in Germany. E-Plus demonstrated new location
services using MLS at the CeBIT technology exhibition in Germany in March 2001.

         On July 3, 2001, CellPoint announced the frame agreement for a group
license of CellPoint's Mobile Location System (MLS) for operators within the
KPN-Group. The contract covers the German operator E-Plus Mobilfunk GmbH & Co.
KG and has an option for all operators in the KPN Mobile N.V. group.



 Standards

         All GSM phones support our MLS technology today. As GSM standards open
up for competition between system layers in location-based systems, a clear
division between location platforms and location applications will develop over
time. We provide systems in all layers-the positioning technology, the
middleware and the location applications-and provides open interfaces for third
party development. Operating entirely within GSM, Internet and WAP standards,
our location technology and services platform require no network add-on or
overlay and work in any GSM network


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<PAGE>

regardless of infrastructure, vendor or vendors, allowing for worldwide roaming
capabilities.

         CDMA networks require switch upgrades to comply with the J-STD-036A
standard, involving the support of two new interfaces, specific to the Mobile
Positioning Center (MPC). The MPC plays the role of a gateway towards the
location requests generated by either the CDMA switch (for instance when a call
is made to 9-1-1 from a mobile device in that network) or when an application
requests a location (like Friend-Finder or Resource Manager). Any CDMA network
doing this  upgrade  will  comply  with E-911  Phase II.  Both MPC and  Position
Determining  Equipment  (PDE),  are standardized to E-911 Phase II compliance by
the J-STD-036A standard.  Incremental standardization is provided for commercial
services by IS-881  (prior known as PN-4747).  The  Telecommunications  Industry
Association (TIA) issues these standards.  In order to support Cell-ID, the CDMA
switch  software  needs the support of the IS-881  standard that specifies a new
interface towards the Cell-ID PDE.

         We contribute to the setting of standards through our membership and
participation in the WAP Forum (we also hold the Secretary position for Location
Services), ETSI (European Telecommunications Standards Institute, "ETSI") and
the Location Interoperability Forum ("LIF") where we chair the Mobile Location
Protocol/Application Programming Interface (MLP/API) definition group.

         The United States Federal Communications Commission (the "FCC") adopted
a ruling in June 1996 (Docket No. 94-102) that mandated all cellular telephone
carriers to provide location information on all 911 calls by October 2001;
however no carriers were in compliance with the mandate as of October 1, 2001.
We believe that other countries may mandate similar requirements in the future.
Even without such additional regulations, we believe that many cellular carriers
are interested in providing new value-added services incorporating cellular
location such as the services available from CellPoint.

System Components

         We are an end-to-end developer, supplier and enabler of mobile location
software technology and platforms. We provide systems in the location technology
and the middleware. We have entered into numerous partnerships with application
providers to ultimately deliver the best possible end-to-end solution to the
customer. Our location technologies utilize standard GSM and CDMA functionality
that is already supported by all major infrastructure suppliers today. The main
components of the technology are MLS and MLB. These third generation location
platforms support our location technology, provide open interfaces aligned with
third generation standards and are designed to support all or most location
technologies expected to reach commercial success in the future. It is through
theses platforms that all operations and services run.

         MLS provides a generic location and messaging platform. In order to
support third party applications as well as trusted applications, we offer a
middleware platform, MLB, which handles anonymity, end-user privacy management
and geo-server support with centralized map rendering, routing, geo-coding and
reverse geo-coding. This platform can be placed in a separate security zone to
the MLS positioning platform, giving flexible support for operator security
requirements. The application servers utilize the Mobile Location System through
an Application Programmers Interface (API), which enables location of a mobile
terminal using a uniform protocol that is independent of the type of location
provider used. We also make the API available to other application developers
who can then deliver their location-based services through our platform. There
are a number of third party developers already doing this, which will provide us
with even more applications which the operators can offer to their subscribers.
A positioning server is attached to MLS, as are the map servers, dedicated
terminal servers and other databases.

       The CellPoint System utilizes:

o      A standard GSM, GPRS , CDMA or UMTS cellular network;

o      Proprietary server system, the CellPoint Mobile Location System, (server
hardware and software) interacting with the cellular network operator's system,
placed at the operator's site, at CellPoint's premises or third party premises;


                                       6
<PAGE>


o      A standard cellular phone, WAP phone or other mobile device;

o      Application software; and

o      The Internet.

       The server consists of a number of computers that manage the traffic
between the network and the application software. It is designed to handle large
quantities of messages used in complex applications. The Mobile Location System
manages the communication processes, including routing of messages, calculation
of positions, database management and bi-directional message confirmation.
Remote billing features are also integrated. The CellPoint Mobile Location
System is a high-capacity platform that is fully scaleable and provides
carrier-grade availability.

        Application software has been developed based on market and customer
driven principles. Normally these applications provide a graphical or text
interface to display positions on a computer terminal or mobile phone and can
also present information relative to another person's position. Tracking
features are also supported as well as remote updating of message text for
defined users. Information services relative to a user's location are also
supported through application software.

 Business Strategy and Commercial Applications

         Our business strategy is to provide mobile location software technology
and platforms enabling location service applications in target markets around
the world. We begin with installing the CellPoint location services platform
with a cellular network operator. The network operator, or a third party, will
then market selected location services as value-added services offered to the
end-users of the cellular network. We can potentially earn revenues through (i)
sale of functionality licenses to network operators for our platforms with a
fixed price for the first capacity level and subsequent increases for additional
capacity, (ii) percentage or fixed price participation in the revenue streams
resulting from the new services offered by the network operator, (iii) usage
revenues from service providers, based on transaction volumes or time frames,
(iv) sale of the CellPoint System to strategic partners where partners are
licensed to operate the technology in a specified geographic area, (v)
maintenance and upgrade fees, (vi) consulting and professional services, and
(vii) programming interfaces.

         We are currently running pilot projects and technology evaluations with
cellular network providers for mobile location services. Additionally, we are
negotiating with strategic partners to license our technology. We cannot assure
our stockholders that any of these pilot projects or strategic partners will
result in the execution of definitive contracts for our products and services.
We cannot rely on the anticipated revenue from these projects to meet our
current growth and expense projections. There can be no assurance that the
CellPoint System will achieve a significant degree of market share, and that
such acceptance, if achieved, will be sustained for any significant period or
that life cycles of that technology will be sufficient (or substitute products
available) to permit us to recover start-up and other associated costs.

         We are also cooperating with numerous companies of all sizes in the
areas of marketing and sales, distribution, application development, standards
setting, systems integration and installation and support.

 Competition

         The wireless industry continues to undergo rapid change, and
competition is intense and is expected to increase. We are aware that other
companies and businesses market, promote and develop technologies and products
that could be competitive with or are functionally equivalent to those that we
have. We expect that companies or businesses that may have developed or are
developing such technologies and products, as well as other companies and
businesses that have the expertise which could encourage them to develop and
market competitive products and technologies, may attempt to develop
technologies and products directly competitive with ours. Many of these
competitors have greater financial and other resources than we have.


                                       7
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         Although we believe that the CellPoint System is unique, there can be
no assurances that other companies will not introduce similar or more advanced
technologies. The location services market can be divided into three parts, (i)
the location technology, (ii) the location platform and (iii) the applications

 Technology. There are two different types of positioning technologies:
handset-based and network-based. Our technology was originally handset-based
positioning technology, but we have also developed MLS which is a unique
integrated network-based solution. Our positioning technologies are all
software-based and when installed in a GSM network require no hardware overlays
or add-ons to an operator's network. CDMA networks require limited hardware
overlay for our MLS product.

         Network-based solutions can be divided into overlay systems and
integrated solutions. Most competitors have pursued overlay systems. These
systems are very costly and time-consuming to implement, since they require
hardware changes and/or add-ons to the network. We are not aware of the
implementation of a commercial overlay system to date. Most companies in the
industry pursued network-based overlay system location technology solutions
subsequent to a mandate by the FCC in the United States in 1996. The FCC mandate
required that all mobile phones be positioned by October 2001, irrespective of
the type or vintage of phone. This led companies to pursue network-based overlay
location technologies.

         In November 1998, we announced the capability to position normal
cellular phones. The technology from the special terminals could now be utilized
in normal mobile phones with a standard SIM card containing a program developed
by CellPoint, which opened up a vast market for us for new location services.
Location services for normal mobile phones are the focus of our developments and
service offerings today.

         In September 2000, we announced a network-based solution to position
any cellular phone in a GSM network, regardless of age of the phone or network
infrastructure supplier. This new technology developed by us is called MLS and
is an integrated software-only solution for network-based positioning and now
extends our location service applications to all mobile GSM users.

         In September 2002, we announced a network-based solution to position
any cellular phone in a CDMA network.

         Handset-based solutions may require new model phones, programmed SIM
cards or use of WAP phones to be positioned. Our positioning technology was
originally developed out of the need to track stolen cars. The concept was to
utilize information that was already in existence in a GSM network and have a
"smart terminal' that could gather sufficient information from the network and
allow a server system to calculate the location very quickly.

         We believe that the technology we offer has distinct advantages over
other systems currently being marketed by other companies. For instance, another
handset-based solution is built on Global Positioning System (GPS), which uses
satellites to determine an X,Y position. GPS requires free line of sight to a
minimum of three satellites. We view GPS not as a competing technology but
rather complementary to our offerings. GPS provides excellent location
coordinates, but our engineers' research has shown that it is insufficient as a
stand-alone solution for location services for mobile phones.

         A-GPS is a relatively new system that improves the functionality and
performance of GPS by integrating the classic GPS information with sophisticated
geographic software and mobile/cellular network information. We believe network
operators will implement A-GPS solutions over time as the technology becomes
commercially available. A-GPS is a complementary positioning technology to
today's enhanced Cell-identification technology and our MLS platform is designed
to work with A-GPS when it is commercially available.

         Network-assisted GPS enhances GPS availability but it is widely
accepted that it will not be not sufficient for mass commercial location
services because users demand location functionality 100% of the time.
GPS-equipped mobile phones have limited commercial availability in 2002, albeit
as a very limited percentage of the total mobile device market and more of a
niche offering. This is primarily due to the excessive power consumption and
price points of most phones


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<PAGE>

containing this technology. We support GPS and A-GPS today and we view A-GPS as
an excellent complement to the CellPoint System. We believe that a roadmap that
involves our enhanced Cell-ID solution in the short-term, and then when A-GPS
handsets are more widely available, a combination of enhanced Cell-ID/A-GPS will
be the ideal solution for mobile operators and end-users of location-based
services.

Location Services Platform. We view ourselves primarily as enablers of location
technology and services. Our location services platforms are the "middleware" in
the total solution. MLS and MLB are fully GSM and CDMA-compliant, thus work with
all GSM and CDMA networks, regardless of infrastructure supplier, and also work
in multi-vendor infrastructure environments. We believe that there will be
multiple positioning technologies available in the future and no single one will
be most suitable in all cases. Consequently, our Location Services Platform will
support all or most positioning technologies expected to reach commercial
success. Middleware vendors, such as OpenWave and Ericsson have already brought
location platform solutions to market. Many others are expected to come to
market in the future, but we believe that our ability to offer an end-to-end
solution to both GSM and CDMA operators will give us a significant advantage in
deploying our platform.

Applications. Today, we are focusing on mobile location software technology and
platforms. We have open APIs (Application Programmers Interfaces) available to
partners that are developing location-based applications through our Location
Developers' Zone. We expect that, in the next few years, hundreds of
applications will be delivered via our platform, with the majority being
developed by other companies using our APIs.

RESEARCH AND DEVELOPMENT

         In Fiscal 2002, we spent approximately $4,079,000 on development
activity, of which approximately $1,359,000 has been capitalized. We spent
approximately $5,000,000 on research and development activities in Fiscal 2001.
Our personnel have substantial experience in the areas of GSM and UMTS
architecture, SS7 signaling, positioning technologies, WAP, Mobile Internet,
Unix and Windows. We have recently acquired and may need to acquire more
expertise in the CDMA area, due to increased demand for and the recent
adaptation of our core technology to the CDMA standard.

         Development projects are carried out in-line with the time-to-market
process that span from pre-studies to first customer application and roll-out.
The process provides activity and documentation guidelines, management decision
points, configuration management, testing and release control. No product or
application development is finalized without a commitment from at least one
operator or customer.

EMPLOYEES

         At October 8, 2002, we had 51 full-time employees.

TRADEMARKS AND PATENTS

         We are maintaining and building a patent portfolio within our defined
target markets in order to maximize competitiveness and to avoid infringements
on other parties' technical solutions. The existing portfolio consists of
approved location technology patents and a number of filed location technology,
middleware and application patents. Since 1997, the Company has applied for
several patents for the CellPoint System; most of which are currently pending.
In addition, we have applied for more than 20 additional patents with respect to
our technologies.

         We believe that the complexity involved in developing these
technologies offers considerable protection against similar developments. Our
technologies have been under development for more than five years and are
continually being refined and improved.




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<PAGE>

ITEM 2. DESCRIPTION OF PROPERTY

We maintain our executive offices and headquarters for CellPoint Inc and
CellPoint AB, consisting of 10,720 square feet of leased office space located at
Kronborgsgrand 7, 164 46 Kista, Sweden. We occupy those facilities on a lease
basis and pay the equivalent of $12,000 per month in rent for those facilities.
The facilities are leased until October 2002. The leased property is covered by
a comprehensive insurance policy covering property, fire, theft, business
interruption, general and liability, legal and litigation. We are currently
relocating to a smaller premise which should be adequate for our ongoing
operations.

ITEM 3. LEGAL PROCEEDINGS

         On August 21, 2002, Castle Creek Technology Partners LLC ("Castle
Creek") filed a lawsuit in the United States District Court for the Southern
District of New York against CellPoint Inc., and on September 19, 2002, filed an
amended complaint in this lawsuit, seeking (1) a declaratory judgment that
events of default have occurred under the Convertible Notes of CellPoint Inc.
held by Castle Creek (the "Notes"), that as a result of the events of default
Castle Creek is entitled to demand conversion of the Notes at an adjusted
conversion price, and that CellPoint Inc. is required to deliver to Castle Creek
additional shares from prior conversion requests of Castle Creek; (2) specific
performance of CellPoint's obligations under the Notes and, specifically, the
issuance of shares (up to an additional 889,894 shares) at the adjusted
conversion price; (3) judgment against CellPoint Inc. for all sums owed under
the Notes; and (4) an injunction mandating CellPoint to deliver the required
number of shares based on the adjusted conversion price. Castle Creek has also
filed an order to show cause for a preliminary injunction. Castle Creek bases
its allegations on the original December 2000 agreement, which CellPoint alleges
has been superceded by the March 13, 2002 term sheet agreement with Castle Creek
containing different terms. CellPoint is defending this action, and intends to
counterclaim against and seek damages from Castle Creek.


         The Company believes that these litigations (including defense costs)
could have a material effect on the Company's financial condition or results of
operations if the court rules that all sums owed under the Notes must be paid
currently.

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

None.
                                     PART II


ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Common Stock commenced trading on the NASDAQ Electronic Bulletin
Board on January 7, 1998. The Company began trading on the Nasdaq National
Market on July 12, 2000. The Company's ceased trading on the Nasdaq National
Market on June 26, 2002. As of June 26, 2002, the Company's common stock has
been trading on the Over the Counter Market , commonly referred to as the OTC
Bulletin Board. The Company's fiscal year ends on June 30 of each year. The
Company believes that there are approximately 2,500 beneficial owners of its
Common Stock. Set forth below are the high and low closing prices for the
Company's Common Stock for each fiscal quarter during fiscal year 2002 and
fiscal year 2001:

<TABLE>
<CAPTION>
  ---------------------------------------------------------------------
  FISCAL QUARTER                                 HIGH       LOW
  --------------                                 ----       ---
  ---------------------------------------------------------------------
                                                 COMMON STOCK
                                                 ------------
                                                 PRICES ($)
                                                 ----------
  ---------------------------------------------------------------------
<S>                                              <C>        <C>
   1st Qtr 01                                    44.500     15.250
  -------------------------------------------------------------------
   2nd Qtr 01                                    21.625     5.250
  ---------------------------------------------------------------------
   3rd Qtr 01                                    10.250     5.375
  ---------------------------------------------------------------------
   4th Qtr 01                                    8.010      2.800
  ---------------------------------------------------------------------
   1st Qtr 02                                    3.200      0.86

</TABLE>


                                       10
<PAGE>


<TABLE>

<S>                                              <C>        <C>
  ---------------------------------------------------------------------
   2nd Qtr 02                                    1.89       0.88
  ---------------------------------------------------------------------
   3rd Qtr 02                                    1.23       0.35
  ---------------------------------------------------------------------
   4th Qtr 02                                    0.60       0.01
</TABLE>


Securities Authorized for Issuance under Equity Compensation Plans

         The following table sets forth information with respect to our common
stock issued and available to be issued under outstanding options, warrants and
rights.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                (a)                          (b)                          (c)
----------------------------------------------------------------------------------------------------------------------
<S>                             <C>                          <C>                          <C>
Plan category                   Number of securities to      Weighted-average             Number of securities
                                be issued upon exercise      exercise price of            remaining available for
                                of outstanding options,      outstanding options,         future issuance under
                                warrants and rights          warrants and rights          equity compensation
                                                                                          plans(excluding
                                                                                          securities reflected in
                                                                                          column (a))
----------------------------------------------------------------------------------------------------------------------
Equity compensation plans                   NA                           NA                           NA
approved by security holders
----------------------------------------------------------------------------------------------------------------------

Equity compensation plans not
approved by security holders
----------------------------------------------------------------------------------------------------------------------
Total                                     1,703,900                     $6.53                       1,296,100
----------------------------------------------------------------------------------------------------------------------
</TABLE>


RECENT SALES OF UNREGISTERED SECURITIES


                                       11
<PAGE>


         On September 25, 2001, the Company closed a private placement for $3.25
million, pursuant to which it issued 3,250,000 shares of Common Stock plus
1,625,000 warrants to purchase shares of Common Stock at an exercise price of
$2.25 per share, exercisable for two years. The units were sold to accredited
investors pursuant to Regulation 506 under the Securities Act of 1933, as
amended (the "Securities Act"). The proceeds from the sale of these units were
used to repurchase a portion of the convertible notes held by Castle Creek.

         On September 25, 2001, the Company also completed an offering pursuant
to Regulation S under the Securities Act, in which non-U.S. Persons (as such
term is defined in Regulation S), purchased 1,066,606 shares of Common Stock and
784,071 warrants to purchase shares of Common Stock, exercisable at $2.36 per
share for two years. The proceeds from the Regulation S offering aggregated
$1,211,838, and were used for working capital.

         On October 5, 2001, the Company completed a private placement of shares
of Common Stock and warrants to purchase Common Stock for $1,300,000. Such
offering was made to accredited investors pursuant to Regulation 506 under the
Securities Act. In connection with such offering, the Company issued 1,238,097
shares of Common Stock, and 619,048 warrants to purchase shares of Common Stock,
half of which are exercisable at $3.50 per share for twelve months and the other
half of which are exercisable at $5.00 per share for twenty-four months.



         On January 31, 2002, the Company closed a private placement for Common
Stock and Warrants, pursuant to which it issued an aggregate of 848,939 shares
of Common Stock for proceeds of $655,000. In addition, the Company issued in
this placement warrants to purchase 424,072 shares of Common Stock at an
exercise price of $1.50 per share for a term of two years.


                                       12

<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL

         Except for historical information, the material contained in this
Management's Discussion and Analysis or Plan of Operation includes,
forward-looking statements, which involve risks and uncertainties. The Company's
actual results could differ materially from the results discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences are discussed below. These risks and uncertainties include the rate
of market development and acceptance of location services technology, the
unpredictability of the Company's sales cycle, the limited revenues and
significant operating losses generated to date, and the possibility of
significant ongoing capital requirements. For the purposes of the safe harbor
protection for forward-looking statements provided by the Private Securities
Litigation Reform Act of 1995, readers are urged to review the list of certain
important factors set forth in "Cautionary Statement for Purposes of the "Safe
Harbor" Provisions of the Private Securities Litigation Reform Act of 1995".

         For purposes of the discussion contained herein, unless otherwise
stated, all information is reported on a consolidated basis for CellPoint Inc.
and its wholly-owned subsidiaries ("the Company").

         The Company will require additional capital to implement its business
strategies, including cash for (i) payment of operating expenses such as
salaries for employees, and (ii) further implementation of those business
strategies. Such additional capital may be raised through additional public or
private financing, as well as borrowings and other resources. To the extent that
additional capital is raised through the sale of equity or equity-related
securities, the issuance of such securities could result in dilution to the
Company's stockholders. No assurance can be given, however, that the Company
will have access to the capital markets in the future, or that financing will be
available on acceptable terms to satisfy the Company's cash requirements to
implement its business strategies. If the Company is unable to access the
capital markets or obtain acceptable financing, its future results of operations
and financial condition could be materially and adversely affected. The Company
may be required to raise substantial additional funds through other means. If
adequate funds are not available to the Company, it may be required to curtail
operations significantly or to obtain funds through entering into arrangements
with collaborative partners or others that may require us to relinquish rights
to certain of its technologies or product candidates that the Company would not
otherwise relinquish. While the Company has begun to receive commercial
revenues, there can be no assurances that its existing commercial agreements
will provide adequate cash to sustain its operations. If the Company decides to
expand its business faster, or to geographic areas outside of Europe during the
next twelve months, it may need to raise further capital. As a result of the
uncertainty of the Company's ability to continue as a going concern, our
auditors have included a modification in their opinion on our June 30, 2002
consolidated financial statements expressing substantial doubt about our ability
to continue as a going concern for the June 30, 2002 consolidated financial
statements.

GENERAL

Critical Accounting Policies and Estimates

         Financial Reporting Release No. 60, which was recently released by the
Securities and Exchange Commission, requires all companies to include a
discussion of critical accounting policies or methods used in the preparation of
financial statements. Note 1 of the consolidated financial statements, included
elsewhere in this annual report on Form 10-KSB, includes a summary of the
significant accounting policies and methods used in the preparation of the
Company's consolidated financial statements.

         The Company believes the following critical accounting policies affect
the significant judgments and estimates used in the preparation of the
Company's financial statements:

Revenue Recognition

         Sales of Mobile Location System (MLS) and Mobile Location Broker (MLB)
licenses are recognized when the operating system has been delivered, installed
and tested by the Company and accepted by the customer. Support services are
recorded on a straight-line basis over the term of the support agreements. Sales
related to MLS licenses where the Company maintains and monitors the operating
system are based on the number of subscribers and recorded on a monthly basis
for actual services provided.

Management's Estimates

         The discussion and analysis of the Company's financial condition and
results of operations are based upon the Company's consolidated financial
statements. The preparation of these financial statements requires the Company
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an ongoing basis, the Company evaluates estimates, including
those related to sales provisions, as described above, bad debts, intangible
assets and contingencies. The Company bases it estimates on historical data,
when available, experience, and on various other assumptions that are believed
to be reasonable under the circumstances, the combined results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates.

Acquired technology

         Acquired technology arising on an acquisition of a subsidiary
undertaking is an allocation of the difference between the value of the
consideration paid and the value of the assets and liabilities acquired.
Purchased technology is stated at cost. All acquired technology is amortized
through the statement of operations over a period of seven years, which is the
Company's best estimate of its useful economic life.

Software development costs

         Software development costs for products and certain product
enhancements are capitalized subsequent to the establishment of their
technological feasibility (as defined in Statement of Financial Accounting
Standards ("SFAS") No. 86) based upon the existence of working models of the
products which are ready for initial customer testing. Costs incurred prior to
such technological feasibility or subsequent to a product's general release to
customers are expensed as incurred. Capitalized software development costs shall
be amortized on a product-by-product basis. The annual amortization shall be the
greater of the amount computed using (a) the ratio that current gross revenues
for a product bear to the total of current and anticipated future gross revenues
for that product or (b) the straight-line method over the remaining estimated
economic life of the product including the period being reported on.
Amortization shall start when the product is available for general release to
customers.


Impairment of long-lived assets

         The Company periodically evaluates potential impairment of long-lived
assets based upon cash flows. A loss relating to an impairment of assets occurs
when the aggregate of the estimated undiscounted future cash inflows to be
generated by the Company's asset groups (including any salvage values) are less
than the related assets' carrying value. Impairment is measured based on the
difference between the fair value of the assets and the assets' carrying value.

RECENT DEVELOPMENTS

BUSINESS DEVELOPMENTS

         On November 8, 2001, we announced results of an extensive performance
testing program for the Company's network-based location services platform,
Mobile Location System (MLS). Stringent tests were carried out on an entry-level
location platform configuration to measure and capture the performance data that
is most important to GSM carriers. MLS was loaded to simulate 2,500 users doing
504,000 requests over a 60-minute period. This load reflects a capacity of 140
location transactions per second. Management also announced the Company was
ready to accept challenges by any location platform vendor in any GSM
environment.

         On November 26, 2001, we announced that E-Plus had ordered CellPoint's
Mobile Location Broker (MLB) as its location middleware platform. The MLB will
be used for external access to location data, empowering Mobile Virtual Network
Operators, independent Service Providers, and other partners when creating value
added services. MLB is an integral component enabling new revenue streams for
mobile operators and their Service Provider partners to deliver
location-specific mobile Internet services. CellPoint's Mobile Location System
(MLS) was already installed at E-Plus and


                                       13
<PAGE>

can position users irrespective of whether they are actively engaged in a call
or not; MLB completes the full solution for location service provision.

         On March 4, 2002, we announced that Mobile Location Broker had been
selected and installed for the European i-mode portal architecture. The
combination of the mobile location capability provided by CellPoint's location
platforms coupled with the new European i-mode Portal, with its more than 60
major content providers, is expected to open new revenue streams for mobile
operators throughout Europe.

         On March 25, 2002, we announced the launch of the world's first
commercial location-based services across a live General Packet Radio Service
(GPRS) or `2.5G' network. Using commercially available GPRS handsets from NEC
with CellPoint's Mobile Location System (MLS) platform and Mobile Location
Broker (MLB) middleware, these new services were launched at CeBIT2002 in
Hanover and are available to consumers as part of the successful introduction of
i-mode(TM) by E-Plus and NTT DoCoMo in Germany.

SUMMARY OF DEVELOPMENTS SUBSEQUENT TO JUNE 30, 2002

         On July 26, 2002, the Company announced that it had developed new
product lines to address early market demand for mobile presence network
information. The new product line is marketed as the Mobile Presence Solution.
It consists of the Mobile Presence Agent (MPA) and Mobile Presence Broker (MPB),
and is part of the Mobile Location Server (MLS) and Mobile Location Broker (MLB)
platforms. The concept of Mobile Presence allows end-users to have their instant
messaging profiles automatically updated. It provides companies utilizing fleet
management or security applications with the ability to automatically determine
the availability of mobile units.

         On September 17, 2002, the Company announced that it has evolved its
Mobile Location System (MLS) location product to operate in the Code Division
Multiple Access (CDMA) environment. This development enables CellPoint's MLS
solution to operate in CDMA environments addressing a market containing over 100
million mobile subscribers worldwide.

         On September 26, 2002, we received a purchase order for a complete
location system with an initial value of over $2 million dollars. The "CellPoint
System" is to be installed in the EMEA region before February of 2003. The terms
and conditions of the purchase order and contract do not allow CellPoint to
disclose the exact location or purchaser of the CellPoint System. The CellPoint
System is being supplied through a reseller based in the UK.


CHANGE IN OUR BOARD OF DIRECTORS

         On December 12, 2001, Mats Jonnerhag term as a director of CellPoint's
board expired. Mr. Jonnerhag did not run for reelection.

         On March 18, 2002, the Company announced that Jan Rynning would replace
Peter Henricsson as Chairman of the Board.

         On June 13, 2002, the Company announced that Stephen Childs would
replace Jan Rynning as Chairman of the Board.

         On June 18, 2002, the Company accepted the resignations of Lynn
Duplessis, Peter Henricsson and Jan Rynning from the Board of Directors. The
Company then appointed Henrik Andersson, Donald Lilly and Carl Johan Tornell to
the Board of Directors.

         In September, Lars Persson resigned from the Board of Directors. Mr.
Persson indicated that he had a newly formed conflict of interest between his
employer and his position on CellPoint's Board of Directors. This conflict was a
result of a recent acquisition by Mr. Persson's employer. Mr. Persson served as
President of CellPoint Europe Ltd during



                                       14
<PAGE>

2002 and part of 2001.


CHANGE IN OUR MANAGEMENT

         On November 2, 2002, the Company appointed Stephen Childs to be the
President of CellPoint Inc.

         On March 18, 2002, the Company announced that Stephen Childs, President
of CellPoint Inc., would replace Peter Henricsson, as Chief Executive Officer.

         On June 13, 2002, the Company announced that Carl Johan Tornell would
replace Stephen Childs as President and that Stephen Childs would continue as
the Company's Chief Executive Officer.


LONG-TERM DEBT

         On December 6, 2000, the Company entered into an agreement whereby it
issued to Castle Creek Technology Partners LLC ("Castle Creek") convertible
notes in the aggregate principal amount of $10,000,000, which were originally
due and payable on September 30, 2002. Interest on the debt is 6% per annum,
compounded semi-annually and payable semi-annually on each June 30 and December
31. Prior to June 5, 2001, the notes were convertible, in whole or in part, at a
fixed conversion price of $25 per share at the option of the holder of the debt
and could be converted in exchange for all or part of the outstanding debt plus
the accrued interest at the conversion date. Subsequent to June 5, 2001, the
notes were convertible at the lower of $25 or 90% of the average of the five
lowest volume weighted average prices during the period of twenty consecutive
trading days ending on the trading day immediately prior to the date of
determination. The conversion of the notes contained certain limitations as set
forth in the agreement. The Company has reserved 2,000,000 shares for the
purpose of possible future conversions.

         In connection with the convertible notes, the Company issued a warrant
that was immediately exercisable and which expires on December 5, 2005. The
warrant grants granted Castle Creek the right to purchase 210,526 shares of the
Company's common stock at an exercise price per share of $11.40, subject to
adjustment.

         On July 25, 2001, the Company entered into a note purchase,
modification and forebearance agreement with Castle Creek concerning the above
mentioned notes. Under the agreement, the outstanding notes were to be
repurchased by the Company. The Company agreed to buy back the outstanding
principal of the notes over 90 days for 86% of the remaining principal, plus
accrued interest, and issued a warrant with 500,000 shares issuable upon
exercise of the warrant at an exercise price of $3.14 per share and exercisable
after one year for a period of four years (subject to specified anti-dilution
adjustments). In addition, the Company granted to Castle Creek a security
interest in its assets (including the assets of its subsidiaries), including its
intellectual property. Castle Creek agreed not to trade in the Company's stock
effective July 25, 2001 until the note repurchase is completed, in consideration
for which Castle Creek was paid $1,000,000 as a non-refundable deposit against
the final note purchase payment. The fixed conversion price of the Notes was
changed to $4.00 with no floating conversion price if the notes are purchased on
a timely basis and the Company complies with all its other obligations to Castle
Creek in all material respects. The Company also agreed to certain limitations
on the terms of future debt and equity financings, which limitations would not
apply to a financing that provided the proceeds for the final purchase of the
Notes.

         On September 26, 2001, the Company and Castle Creek entered into an
amendment of the July 25, 2001 agreement, wherein the outstanding convertible
notes were to be repurchased at 100% of the remaining principal and subject to a
fixed conversion price of $4.00. The Company paid $2,250,000 to Castle Creek on
September 26, 2001 for principal and accrued interest and was scheduled to make
a final payment on October 1, 2002 for $6,105,100 plus accrued interest (subject
to specified adjustments upon a material breach by the Company). The outstanding
notes are prepayable in part or in whole at any time without penalty. However,
if the Company is in non-compliance of the limitations on the terms of future
debt and equity financing, there will be a $2,000,000 penalty and the notes will
become



                                       15

<PAGE>

convertible at the lower of 1) the average closing price during the ten day
period beginning five days prior to the date of the non-compliance event or (2)
the lowest price of common stock or common stock equivalents sold from September
25, 2001 to the non-compliance event. The July agreement, except as modified by
the amendment and the Stipulation and Order discussed below, remains in effect.

         On November 15, 2001, the Company was served with a suit by Castle
Creek, and on December 13, 2001, Castle Creek filed an amended complaint, to
have its debt of in excess of $6.1 million principal plus interest declared due
and payable, for a default payment of $2 million and other damages and relief.
The principal issue in dispute in the litigation was the antidilution adjustment
applicable to the number of shares that Castle Creek is entitled to purchase
under the warrant issued in the July 25, 2001 restructuring with Castle Creek to
purchase 500,000 shares of common stock (see "Legal Proceedings").

         On December 19, 2001, the Company entered into a Stipulation and Order
with Castle Creek providing that Castle Creek agreed to stay prosecution of this
case until February 28, 2002, provided that the Company makes required
prepayments on its Notes to Castle Creek of $200,000 by January 31, 2002, which
payment was timely made, and an additional $550,000 by February 28, 2002 and
provided, further, that the Company does not breach its agreements and
instruments with Castle Creek subsequent to the date of the Stipulation and
Order. In addition, the Stipulation and Order specified an adjustment in the
exercise price of the December 2000 warrant from $11.40 to $7.75 and the July
2001 warrant that carried anti-dilution provisions was amended to give Castle
Creek the right to purchase 1,500,000 shares at an adjusted exercise price of
$1.20 per share. 50% of the 1,500,000 shares are exercisable immediately and the
balance are exercisable beginning July 25, 2002 with all shares expiring on July
25, 2006. The anti-dilution feature was further modified such that the number of
shares that Castle Creek is entitled to purchase under the July 2001 Warrant was
fixed at 1,500,000 (subject to adjustment for stock splits, stock dividends and
combinations of shares, and like events, but not subject to adjustment due to a
decrease in the exercise price of the warrant). Procedures clarifying the manner
of calculating the manner of the calculating adjustments to the exercise price
of the July 2001 Warrant were incorporated in the Stipulation and Order. The
Company is also required to make prepayments of the Notes in an amount equal to
25% of the gross proceeds of each financing the Company closes; provided, that
the maximum aggregate amount of prepayments that the Company is required to make
under the Stipulation and Order prior to October 1, 2002 (the due date of the
Notes) is $3,000,000.

         On January 31, 2002 the Company made payment of $200,000 to Castle
Creek for principal and accrued interest in accordance with the December 19,
2001 Stipulation and Order.

         On February 28, 2002, the Company satisfied the second required payment
of $550,000, in accordance with the Stipulation and Order, through the delivery
of 705,128 shares of our common stock to Castle Creek, who agreed that this was
in accordance with the Stipulation and Order and therefore withdrew its lawsuit
without prejudice.

         On March 13, 2002 the Company entered into a Loan Restructuring
Agreement with Castle Creek Technology Partners LLC ("Castle Creek") pursuant to
which one-half (50%) of the then outstanding principal amount of Castle Creek's
convertible note (approx. $5.4 million), plus interest of approximately
$400,000, or approximately $2.9 million in total, would be converted into shares
of convertible preferred stock of CellPoint, each share of which would be
convertible into common stock (the reference conversion price for the principal
amount and interest so converted is $.78 per share of common stock). The only
anti-dilution adjustments applicable to the preferred stock would be for stock
splits, stock dividends and the like. To restructure one-half of Castle Creek's
short-term debt into equity, the Company is required to obtain stockholder
approval to authorize a new class of convertible preferred stock to effectuate
this aspect of this Agreement with Castle Creek. There is no assurance that the
Company will be able to obtain authorization from its stockholders for this new
class of convertible preferred stock. At CellPoint's annual meeting of
stockholders, held on December 12, 2001, the Company's proposal to authorize a
new class of preferred stock did not receive the necessary number of stockholder
votes for authorization.

         The other 50% of the outstanding principal amount of the convertible
note (approximately $2.9 million) would be represented by a new convertible
note, due April 2004, with interest at the rate of 6% per annum, no principal or
interest


                                       16
<PAGE>


payments under which would be due until maturity. CellPoint can prepay at any
time all or part of the amounts outstanding under the new convertible note,
without premium or penalty. The new convertible note would be convertible into
common stock at a conversion price of $.78. The only anti-dilution adjustments
applicable to the new convertible note would be for stock splits, stock
dividends and the like, except that (1) if any portion of the first $950,000
raised by CellPoint is at a price less than $.50 per share for common stock
(without reference to any warrants issued in the financing), Castle Creek will
have the right to convert the same principal amount of the new convertible note
into common stock at that price within five (5) days of when they are notified
of the closing of the financing; and (2) if any subsequent financings by
CellPoint are at a price less than $.70 per share for common stock (without
reference to any warrants issued in the financing), Castle Creek will have the
right to convert the same principal amount of the new convertible note into
common stock at that price within five (5) days of when they are notified of the
closing of the financing. CellPoint would covenant not to issue equity or
equity-equivalent securities at a discount of more than twenty (20%) percent of
the lesser of: (i) the closing market price on the NASDAQ of the CellPoint
common stock on the trading day immediately preceding the date of issuance of
such equity or equity-equivalent securities or (ii) the average of the daily
volume weighted average prices for the preceding five (5) trading days
immediately preceding the date of issuance of such equity of equity-related
securities.

         Following each of the debt modifications, the Company applied the rules
of Emerging Issues Task Force ("EITF") 96-19: "Debtor's Accounting for a
Modification or Exchange of Debt Instruments." Based on the provisions of EITF
96-19 it was determined that through December 19, 2001 there was not a
substantial change from the original debt agreement and as such, the modified
debt continues to be presented at fair value using the new effective interest
rate. Legal fees associated with the modifications were expensed in the periods
in which they were incurred. Since the modifications related to the March 13,
2002 amendment have not been finalized, the related accounting effect has not
been determined.

         Due to the beneficial conversion features associated with the
financing, the Company applied EITF 00-27: Application of EITF No. 98-5
"Accounting for Convertible Securities with Beneficial Conversion Features or
Contingently Adjustable Conversion Ratios", to the convertible instruments. In
accordance with EITF 00-27 the value of the beneficial conversion feature was
recorded as a reduction to the carrying amount of the convertible debt and an
addition to paid-in-capital. The fair value of the warrants granted in
connection with the financing and the amendments thereto was calculated using
the Black Scholes pricing model and recorded as a further reduction to the
carrying amount and an addition to paid-in-capital.

         As a result of the private placements at the end of the first quarter
the anti-dilution provision attached to the warrants issued on July 25, 2001
became effective. As such, the Company recalculated and adjusted the exercise
price and therefore adjusted the number of shares issuable upon exercise of the
warrants. This resulted in an adjusted exercise price of $1.42 and additional
shares of 608,235 issuable upon exercise of the warrants. The adjustment to the
exercise price of the warrants increased the value of the warrants recorded as
debt discount by $263,553. The terms of this warrant were further modified by
the Stipulation and Order discussed above. As a result of the changes provided
by the Stipulation and Order, a further discount of $370,256 was recorded. The
effects of the proposed terms set out in the March 13, 2002 amendment have not
yet been determined.

         The Company has therefore recorded a total debt discount of
approximately $4,192,000 and is amortizing the discount over the term of the
debt. Amortization is accelerated when necessary for conversions of the debt
principal. Amortization for the year ended June 30, 2002 was approximately
$2,732,000, and is recorded as a component of financial items.

         See "Item 3. Legal Proceedings" for the description of a suit recently
filed against the Company by Castle Creek.


RESTRUCTURING PROGRAM

         On March 14, 2002 the Company concluded preliminary agreements to
eliminate short-term debt held by Castle



                                       17
<PAGE>

Creek Technology Partners and all other debt holders. The terms negotiated with
the major debt holders, half of the principal and interest on all outstanding
debt, which equates to $5.5 million, will be converted to equity at 78 cents per
share. The Company is required to obtain stockholder approval to authorize a new
class of convertible preferred stock to effectuate this aspect of this Agreement
with Castle Creek. There is no assurance that the Company will be able to obtain
authorization from its stockholders for this new class of convertible preferred
stock. The remaining $5.5 million in debt has been restructured as long-term
debt and is not due until March 2004. Castle Creek as the senior debt holder
will have the right to match any financing the Company would do at a price
significantly below 78 cents by converting that same portion of their notes,
dollar for dollar, into common stock at the same time and at the same price, but
with no warrant coverage. These agreements with the debt holders are subject to
a settlement being negotiated in parallel with the rest of the Company's
creditors, discussed below, and the Company's ability to raise additional
capital in the short term.

         Following the Loan Restructuring Agreement, CellPoint Inc. and its
Swedish subsidiary, CellPoint Systems AB, entered into `voluntary composition'
for settlement payments with all existing creditors. On April 3, 2002 the
Company proceeded with 'official composition' to complete the financial
reconstruction of CellPoint Systems AB, under the Swedish Company Reconstruction
Act. The voluntary composition agreements were completed in CellPoint Inc. on
April 21, 2002.

         On April 29, 2002, the subsidiary's voluntary composition was
inadvertently converted to a formal bankruptcy in the District Court of
Stockholm, Sweden, by the apparent failure of a consultant to file a notice with
the Court relating to the ongoing reconstruction.

         On June 5, 2002, the Company's newly formed subsidiary, CellPoint AB,
entered into a purchase agreement with the trustee and effectively purchased the
assets and then additionally rehired the key employees from CellPoint Systems
AB.


BUSINESS STRATEGY

CONTINUING OPERATIONS

         We promote, market, develop, offer, sell, support digital cellular or
GSM (Global System for Mobile Communications, "GSM") and CDMA (Code Division
Multiple Access, "CDMA") technologies and platforms for mobile phone location
services. We are primarily an enabler of location technology and services for
mobile phones and other mobile devices. Location services for mobile phones are
made possible by combining location technology, a location services platform
(similar to an operating system) and applications to deliver various location
services.

         CellPoint is an end-to-end provider of location services. Our location
technology enables users to determine the position of a cellular telephone or
object in unmodified cellular networks. The primary location service
applications include resource management of mobile workforce assets,
friend-finding relative to one's own location, personal security services and
fleet management and vehicle tracking for security, including positioning and
tracking for recovery in the event of theft. In the resource and fleet
management application, companies can view and track their mobile service
personnel over the Internet. Information services can include location-sensitive
traffic reports, weather, and concierge information services such as the
location of the nearest hotel, restaurant or repair shop. Emergency applications
could include locating persons making emergency calls, roadside assistance in
the event of vehicle breakdown or location of a disabled or impaired person who
may be lost or missing.

DISCONTINUED OPERATIONS AND OTHER LIQUIDATIONS

         In October 2001, the Company's subsidiary, Unwire, filed for protection
under the bankruptcy courts in Sweden. As a result of the filing the Company
ceased all funding of Unwire operations. The bankruptcy courts have appointed a
Trustee to oversee the disbursement of Unwire's assets and the Company now has
no control over the operations or decision-making capabilities of Unwire. As a
result, effective October 9, 2001,Unwire is no longer included in the
Consolidated financial statements. Results of operations and the financial
position of Unwire in all periods have been


                                       18

<PAGE>

presented as discontinued operations.

         The Company's South African subsidiary, CellPoint Systems SA (Pty) Ltd
("Systems SA"), also filed for bankruptcy protection under the laws of South
Africa in November 2001. Systems S.A. operated a research and development
facility for the Company. The telematics portion of Systems SA is presented
within the amounts presented as discontinued operations. The location services
portion of Systems SA is not included in discontinued operations, as those
functions will continue to be performed by the Company's Swedish subsidiary.
Costs of closing this subsidiary, primarily the write-off of the intercompany
net receivable from Systems SA, were accrued in the June 30, 2001 financial
statements with any adjust to be made in the current year.

         On November 2, 2001 the Company's subsidiary in England, CellPoint
Europe Ltd.("CellPoint Europe"), filed for liquidation by a appointed
liquidator. The functions performed by CellPoint Europe are now performed by the
Swedish subsidiary CellPoint Systems AB and its branch office in the United
Kingdom.

         On April 3, 2002 the Company's dormant subsidiary, Micronet MLS AB in
Sweden, was liquidated through bankruptcy. CellPoint Systems AB then maintained
all of the Company's operations in Sweden.

         The assets, liabilities and results of operations of Systems SA,
CellPoint Europe, and Micronet MLS AB were immaterial to the financial
statements of the Company for all periods presented.

         On April 29, 2002 the Company's subsidiary in Sweden, Systems AB
("Systems AB"), the primary operating subsidiary of the Company, was placed into
bankruptcy by a creditor and on May 10, 2002, the Trustee denied the Company's
appeal to put aside the formal bankruptcy in favor of allowing the Company to
proceed with its formal restructuring under Swedish Bankruptcy Law instead of
under the Swedish Reconstruction Act. As a result of the formal bankruptcy
proceeding, the Company no longer owned or controlled the operational or
financial decision of Systems AB.

         In June of 2002, the Company formed a new Swedish operating subsidiary,
CellPoint AB ("CellPoint AB").

         On June 5, 2002, CellPoint AB purchased from the trustee certain
tangible and intangible assets previously owned by Systems and negotiated new
employment contracts with all key employees previously employed by Systems AB.


RESULTS OF CONTINUING OPERATIONS

         The results of continuing operations are reported herein for the
Company's location services business. The Company's subsidiaries that are no
longer in operation are reported as "discontinued operations".

 Revenues. For the year ended June 30, 2002 ("Fiscal 2002"), the Company's gross
revenues from continuing operations decreased to $1,114,716, as compared to
revenues from continuing operations of $4,111,804 for the fiscal year ended June
30, 2001 ("Fiscal 2001") primarily as a result of the Company's inability to
focus on sales during the year because of the financial restructuring programs
that were on going. Virtually all of the Company's revenues came from the
European market.

Cost of Revenues. Costs incurred by the Company in producing revenues are mainly
the costs of supplying hardware in conjunction with the sale of the previous
generation of software platforms. Costs incurred by the Company in producing
revenues were $180,917 in Fiscal 2002 as compared to $587,281 in Fiscal 2001.
The Company expected the Company's role in supplying hardware in relation to its
sale of software and applications to decrease, and accordingly, the costs of
producing revenue as a percentage of revenue are expected to decrease. Research
and development expenses are recorded separately.

 Gross Profit. For Fiscal 2002, the Company recorded a gross profit of $933,798
as compared to $3,524,523 gross profit



                                       19
<PAGE>

in Fiscal 2001. This decrease in gross profit is attributable to the significant
decrease in revenues in Fiscal 2002.

 Selling, General and Administrative Expenses. The Company's selling, general
and administrative expenses decreased by $4,375,554, from $8,265,733 in Fiscal
2001 to $3,890,179 in Fiscal 2002. The decrease in selling, general and
administrative expenses in the Company's continuing operations was substantial
as the Company continued to reduce its infrastructure at both the corporate and
operational levels. The primary components of decreased expenses in Fiscal 2001
were a decrease in personnel costs due to a reduction in the number of
employees, a decrease in marketing expenses and establishment and maintenance of
operations and offices in the United Kingdom. Management expects selling,
general and administrative expenses to decrease in the near future as the
Company continues implementing cost-saving measures and structural changes.

 Research and Development Expenses. The Company's research and development
expenses decreased by $1,768,783 from $4,211,711 in Fiscal 2001 to $2,442,928 in
Fiscal 2002. The decrease in research and development expenses in the Company's
continuing operations was due to the completion of the new generation of
software platforms for location-based services.

 Professional Fees. Professional fees decreased from $1,374,892 in Fiscal 2001
to $1,014,204 in Fiscal 2002. The Company reached a legal settlement with its
former counsel during Fiscal 2002 that resulted in a net gain of approximately
$1,264,000. Professional fees in Fiscal 2002 primarily related to costs incurred
in connection with regulatory compliance and financial restructuring activities.
Management expects to continue to incur significant professional fees.

 Depreciation and Amortization Expense. Depreciation and amortization expense
decreased from $3,931,215 in Fiscal 2001 to $3,684,798 in Fiscal 2002.
Depreciation and amortization is primarily related to purchased technology.

 Financial Items. Financial items resulted in an expense of $3,982,499 in Fiscal
2002 compared to a net expense of $1,900,052 in Fiscal 2001. Interest expense
was $3,217,291 in Fiscal 2002, compared to $1,563,541 in Fiscal 2001. The
increase in interest expense was attributable to primarily the amortization of
the debt discount related to Castle Creek as well as interest on the Company's
long term debt. The Company also recorded a gain on the extinguishment of
certain payables of $418,399 related to the Company's financial restructuring
process. A loss on the investment in Systems of $579,746 was also recorded in
Fiscal 2002. In Fiscal 2002, the Company had realized and unrealized exchange
gains aggregating $393,909 whereas in Fiscal 2001, the Company had net realized
exchange gains of $177,529. These items result primarily from exchange rate
fluctuations in the currencies of the United States, Sweden and the United
Kingdom.

 Loss from Continuing Operations. Loss from continuing operations for Fiscal
2002 was $(14,080,699) versus ($16,501,365) in Fiscal 2001. The loss from
continuing operations was smaller in Fiscal 2002 because the Company greatly
reduced its infrastructure, decreased the number of its full-time employees and
decreased its marketing and selling expenses as the Company sought to
commercialize its products and obtain contracts for the sale of its services and
products. The Company believes that as a result of the economic downturn in the
telecom sector, anticipated orders from network operators may have been delayed.

 Income from Discontinued Operations. On July 25, 2001, the Company publicly
announced its intention to sell its telematics division. On October 9, 2001,
Unwire filed for bankruptcy protection under the laws of Sweden. Under
accounting principles generally accepted in the United States of America, the
results of operations for the telematics division, are presented under "Loss
from Discontinued Operations" for Fiscal 2001. The loss from "discontinued
operations" of $63,134,742 represents the operating losses of the telematics
division for Fiscal 2001. Income from discontinued operations in Fiscal 2002
of $2,184,074 is a result of the reversal of the cumulative translation
adjustment in the amount of approximately $1,526,000 relative to the
discontinued operations that had previously been recorded as a component of
Stockholders' Equity. Additionally, the Company reversed certain reserves
totaling approximately $658,000 related to the liquidated telematics
subsidiaries deemed no longer necessary. The loss for the discontinued
operations prior to October 9, 2001 was taken as a cost in Fiscal 2001. Results
subsequent to October 9, 2001 are no longer a part of the Company's
consolidated financial statements.

 Net Loss And Loss Per Share. As a result of the above, net loss for continuing
operations for Fiscal 2002 was ($14,080,699) and including discontinued
operations was increased by $2,184,074. Loss per share from continuing
operations was ($1.03) based on weighted average shares outstanding of
13,726,385, while Fiscal 2001 loss per share from continuing operations was
($1.57) based upon a weighted average of 10,532,913 shares outstanding. Loss
from operations including discontinued operations was ($0.87). The net loss for
Fiscal 2001 was ($79,636,107) including the loss from discontinued operations of
($63,134,742).


                                       20

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Working Capital. At June 30, 2002, the Company had $127,307 in current assets.
Cash and cash equivalents amounted to $5,125. The Company had $4,993,093 in
current assets at June 30, 2001. Current liabilities were $12,004,072 on June
30, 2002 compared to $7,401,872 on June 30, 2001. Working capital deficit at the
end of Fiscal 2002 was ($11,876,765), as compared to ($2,408,779) at the end of
Fiscal 2001. The decrease in working capital is attributable to the Company's
expenses in connection with the implementation of its contracts, the reclass of
debt from long-term to short-term, test launches and the development of the new
generation of software platforms for location-based services and marketing to
obtain new commercial contracts.

Cash Flow from Operations. For Fiscal 2002, the Company used net cash in
operating activities from continuing operations of $2,130,973, as compared to
$11,246,240 for Fiscal 2001. Net cash used in operating activities from
discontinued operations was $1,094,379 in Fiscal 2002, as compared to $3,044,374
in Fiscal 2001. The decrease in Fiscal 2002 was largely attributable to the
Company's net loss of ($11,896,625) for Fiscal 2002 compared to ($79,636,107)
offset by loss from discontinued operations of $63,134,742 for Fiscal 2001.

Cash Flow from Investing Activities. For Fiscal 2002, the Company had a net cash
outflow from investing activities from continuing operations of $1,391,352
versus a net cash outflow of $1,626,495 in Fiscal 2001. In Fiscal 2002, the cash
outflow was primarily attributable to costs incurred in the development of the
Company's software products. The Company does not currently have any commitments
for capital expenditures during the next fiscal year, but the Company may make
such expenditures if an opportunity consistent with the Company's business
strategy presents itself.

Cash Flow from Financing Activities. For Fiscal 2002, the Company had a net cash
inflow from financing activities from continuing operations of $3,990,113 versus
a net cash inflow from continuing operations of $10,150,323 in Fiscal 2001. The
Company received net proceeds of approximately $6,058,000 from sales of equity
through private placements in Fiscal 2002. Proceeds were used for working
capital and to repay long-term debt of approximately $3,294,000.

The Company will require additional capital during its fiscal year ending June
30, 2003 to implement its business strategies, including cash for (i) payment of
increased operating expenses such as salaries for additional employees; and (ii)
further implementation of those business strategies. Such additional capital may
be raised through additional public or private financing, as well as borrowings
and other resources. To the extent that additional capital is raised through the
sale of equity or equity-related securities, the issuance of such securities
could result in dilution to the Company's stockholders. No assurance can be
given, however, that the Company will have access to the capital markets in the
future, or that financing will be available on acceptable terms to satisfy the
Company's cash requirements to implement its business strategies. If the Company
is unable to access the capital markets or obtain acceptable financing, its
future results of operations and financial conditions could be materially and
adversely affected. The Company may be required to raise substantial additional
funds through other means. If adequate funds are not available to the Company,
it may be required to curtail operations significantly or to obtain funds
through entering into arrangements with collaborative partners or others that
may require us to relinquish rights to certain of its technologies or product
candidates that the Company would not otherwise relinquish. While the Company
has begun to receive commercial revenues, there can be no assurances that its
existing commercial agreements will provide adequate cash to sustain its
operations. If the Company decides to expand its business faster, or to
geographic areas outside of Europe during the next twelve months, it may need to
raise further capital.

Stockholders' Equity. Total stockholders' equity at June 30, 2002 was $354,969
including an accumulated deficit of ($107,170,335). The accumulated deficit for
Fiscal 2002 includes $2,184,074 attributable to income from discontinued
operations, recorded in accordance with United States generally accepted
accounting principles, associated with the Company's liquidation of subsidiaries
during Fiscal Year 2001. The Company's stockholders' equity was $4,026,846 at


                                       21
<PAGE>


June 30, 2001, including an accumulated deficit of ($95,273,710).


 The following table shows the Company's contractual obligations related to
fixed rate long-term debt as well as lease obligations (See Notes 9 and 16 to
the consolidated financial statements):

<TABLE>
<CAPTION>

                                                          Payments due by period

                                     Total        1 year     1 - 3 years   4 - 5 years     5 years
                                  -----------   -----------   -----------   -----------   -----------
<S>                               <C>           <C>           <C>           <C>           <C>
Contractual obligations
Long term debt..................  $ 8,976,735   $ 8,976,735   $         -   $         -   $         -
Operating lease obligations.....      320,000       160,000       160,000             -             -
                                  -----------   -----------   -----------   -----------   -----------
Total...........................  $ 9,296,735   $ 9,136,735   $   160,000   $         -   $         -
                                  ===========   ===========   ===========   ===========   ===========
</TABLE>

Recent accounting pronouncements

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

          SFAS No. 142 requires, among other things, that companies no longer
          amortize goodwill, but instead test goodwill for impairment at least
          annually. In addition, SFAS No. 142 requires that the Company identify
          reporting units for the purposes of assessing potential future
          impairments of goodwill, reassess the useful lives of other existing
          recognized intangible assets, and cease amortization of intangible
          assets with an indefinite useful life. An intangible asset with an
          indefinite useful life should be tested for impairment in accordance
          with the guidance in SFAS No. 142. SFAS No. 142 is required to be
          applied in fiscal years beginning after December 15, 2001 to all
          goodwill and other intangible assets recognized at that date,
          regardless of when those assets were initially recognized. SFAS No.
          142 requires the Company to complete a transitional goodwill
          impairment test six months from the date of adoption. The Company is
          also required to reassess the useful lives of other intangible assets
          within the first interim quarter after adoption of SFAS No. 142.

          The Company does not expect the adoption of SFAS No.'s 141 and 142 to
          have a material impact on its financial position or results of
          operations.

          In August 2001, the FASB issued SFAS No. 144, "Accounting for the
          Impairment or Disposal of Long-Lived Assets". This statement
          supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived
          Assets and for Long-Lived Assets to Be Disposed Of" ("SFAS No. 121")
          and Accounting Principles Board Opinion No. 30, "Reporting Results of
          Operations - Reporting the Effects of Disposal of a Segment of a
          Business, and Extraordinary, Unusual and Infrequently Occurring Events
          and Transactions". SFAS No. 144 retains the fundamental provisions of
          SFAS No. 121 for recognition and measurement of impairment, but amends
          the accounting and reporting standards for segments of a business to
          be disposed of. SFAS No.144 is effective for fiscal years beginning
          after December 15, 2001, and interim periods within those fiscal
          years, with early application encouraged. The provisions of SFAS No.
          144 generally are to be applied prospectively. The Company believes
          that the adoption of SFAS No. 144 will not have a material impact on
          the Company's financial position or results of operations.

          In July 2002, the FASB issued SFAS No. 146, Accounting for
          Restructuring Costs. SFAS No. 146 applies to costs associated with an
          exit activity (including restructuring) or with a disposal of
          long-lived assets. Those activities can include eliminating or
          reducing product lines, terminating employees and contracts, and
          relocating facilities or personnel. Under SFAS No. 146, a company will
          record a liability for a cost associated with an exit or disposal
          activity when that liability is incurred and can be measured at fair
          value. SFAS No. 146 will require a company to disclose information
          about its exit and disposal activities, the related costs, and changes
          in those costs in the notes to the interim and annual financial
          statements that include the period in which an exit activity is
          initiated and in any subsequent period until the activity is
          completed. SFAS No. 146 is effective prospectively for exit or
          disposal activities initiated after December 31, 2002, with earlier
          adoption encouraged. Under SFAS No. 146, a company may not restate its
          previously issued financial statements and the new Statement
          grandfathers the accounting for liabilities that a company had
          previously recorded under Emerging Issues Task Force Issue 94-3.


                                       22
<PAGE>

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

         Certain statement contained in this Report contain "forward looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. These are statements that do not relate strictly to
historical or current facts. Although the Company believes that its plans,
intentions and expectations reflected in such forward looking statements are
reasonable, it can give no assurance that such plans, intentions or expectations
will be achieved. Such forward-looking statements involve known and unknown
risks and uncertainties. The Company's actual actions or results may differ
materially from those discussed in the forward-looking statements. These risk
factors are set forth below. All forward looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by the cautionary statements set forth below:


       o    Our limited operating history makes evaluation of our business and
            prospects difficult;

       o    We have been sued by Castle Creek (see "Legal Proceedings");

       o    We have a history of losses and we anticipate significant future
            losses:

       o    Our business and prospects must be considered in light of the risks,
            uncertainties, expenses and difficulties frequently encountered by
            companies in their early stages of development, particularly
            companies in new and rapidly evolving markets, such as the market
            for location services;

       o    Our sales cycles are long and our revenue is unpredictable;

       o    We will need additional financing in the next twelve months and our
            ability to secure additional financing on acceptable terms, as and
            when necessary;

       o    Our ability to improve our technology to keep up with customer
            demand for new services;

       o    We depend heavily on our key personnel, and our inability to retain
            them and to attract new key management could materially adversely
            affect our business;

       o    We depend heavily on our board of directors, and our inability to
            retain them could materially adversely affect our business;

       o    The development cycle for new products may be significantly longer
            than expected, resulting in higher than anticipated development
            costs;

       o    The ability of our systems and operations to connect and manage a
            substantially larger number of customers while maintaining adequate
            performance, which could place a strain on managerial and
            operational resources;

       o    Our ability to expand customer service, billing and other related
            support systems;



                                       23
<PAGE>


       o    Our ability to effect and retain appropriate patent, copyright and
            trademark protection of our products;

       o    Despite the implementation of security measures, our computer
            networks and web sites may be vulnerable to unauthorized access,
            computer viruses and other disruptive problems, and any such
            occurrence could result in the expenditure of additional resources
            necessary to protect our assets;

       o    Increased competition in the field of location services;


ITEM 7. FINANCIAL STATEMENTS

The financial statements for the Company's fiscal year ended June 30, 2002 are
attached to this Annual Report commencing at page F-1.


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

None.

                                    PART III

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

The following table sets forth the directors and executive officers of the
Company:

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

 -----------------------------------------------------------------------------
 Stephen Childs                      Chairman and Chief Executive Officer
 -----------------------------------------------------------------------------
 Carl Johan Tornell                  Director, President
 -----------------------------------------------------------------------------
 Donald Lilly                        Director, Secretary
 -----------------------------------------------------------------------------
 Bengt Nordstrom                     Director
 -----------------------------------------------------------------------------
 Henrik Andersson                    Director
 -----------------------------------------------------------------------------

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

         Stephen Childs, 53, has been a director of the Company since May 2000.
He has more than 15 years international experience in the telecom industry and
has held senior management positions with Orange from 1997-2000 as Group
Director-New Business Ventures; Deutsche Telecom from 1995-1996 as Vice
President, International Business Development; US West International from
1993-1995, Assistant Vice President; Pakcom from 1990-1993 as CEO and McCaw
Cellular from 1986-1988 in the United States as General Manager. He has over 20
years of proven success in general management, sales and marketing and an
extensive network in the telecoms industry.

         Carl Tornell, 45, was elected the President of CellPoint, Inc. and as a
Director in June 2002 and has been involved with us over the past year. Prior to
joining CellPoint and since late 1999, he was with Tornell and Partenaris, a
management consulting firm based in Brussels, Belgium, where he provided
corporate advisory services to international companies.

         Donald Lilly, 67, elected as a Director in June, 2002, is retired
senior partner and counsel to the law firm Lilly Anderson Wilson plc, with
offices in Toronto and Ontario, Canada, where he practiced until September 2001.
He has been a director of several private companies in the asset management and
technology industries, and continues to serve as legal counsel to selected
European and North American companies. Mr. Lilly is currently a member of the
Advisory Board and Nominating Committee of CellPoint.


                                       24
<PAGE>


         Henrik Andersson, 56, elected as a Director in June 2002, is the
founder and former President of Stockholm Bors Information (SBI), the second
Swedish Stock Exchange. Mr. Andersson retired as head of the exchange in
February, 2000, and has since that time managed private business interests.

         Bengt Nordstrom, 44, has been a director of the Company since 1998. He
was the Chief Technology Officer and Executive Director of SmarTone
Telecommunications Ltd., a cellular network operator in Hong Kong, until January
1999. He is now the President and Senior Partner of Northstream AB of Sweden, a
GSM consulting company specializing in data over GSM. Mr. Nordstrom has been a
member of the Executive Committee of the GSM MoU association which represents
the interests of more than 400 GSM and satellite network operators around the
world. He was with SmarTone from 1993 to 1998, and was previously with Comviq
GSM AB from 1989 to 1993 and with Ericsson Telecom AB from 1983 to 1989.

         Each director shall serve until the next annual meeting of the
stockholders at which time he or his successor shall be elected and duly
qualified.


COMMITTEES AND MEETINGS

         In July, the Board of Directors established an Audit Committee. The
purpose of the Audit Committee is to review the proposed scope of audit and
non-audit services and the fees proposed to be charged for such services,
reviews the reports and receives comments and recommendations from the Company's
internal audit function and the Company's independent auditors following
completion of the annual audit, and reviews with such auditors and management
the Company's accounting policies and the adequacy of the Company's internal
accounting controls. The Audit Committee also deals with special matters
relating to the Company's accounting practices and financial statements brought
to its attention by the Company's internal auditors, management or the Company's
independent auditors. The Audit Committee is comprised of Messrs. Childs,
Tornell and Lilly.

         The Board of Directors held 15 meetings during the Company's fiscal
year ended June 30, 2002. Otherwise, the Board of Directors acted by unanimous
written consent.

COMPENSATION OF DIRECTORS

         The directors of the Company do not receive salaries for being
directors but do have options in the Company.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and persons who own beneficially more
than ten percent of the Company's outstanding Common Stock to file with the SEC
initial reports of beneficial ownership and reports of changes in beneficial
ownership of Common Stock and other securities of the Company on Forms 3, 4 and
5, and to furnish the Company with copies of all such forms they file. We
believe our officers and directors are in compliance with these requirements.

ITEM 10.   EXECUTIVE COMPENSATION

         The following table shows compensation for services rendered to the
Company during the fiscal years ended June 30, 2002 and 2001, respectively, by
the Chief Executive Officer and President of the Company. Each executive officer
serves under the authority of the Board of Directors. Directors who are also
employees of the Company receive no extra compensation for their service on the
Board of Directors of the Company.


                           SUMMARY COMPENSATION TABLE



                                       25

<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
NAME AND                   FISCAL   SALARY       BONUS    OTHER             RESTRICTED   SECURITIES      LTIP       ALL OTHER
PRINCIPAL POSITION         YEAR     ($)          ($)      ANNUAL            STOCK        UNDERLYING      PAYOUTS    COMPENSATION
------------------         ----     ---          ---      COMPENSATION      AWARD(S)     OPTIONS/        ($)        ($)
                                                          ($)               ($)          SARS            ---        ---
                                                          ---               ---          (#)
                                                                                         ---
------------------------------------------------------------------------------------------------------------------------------
                                                                            AWARDS                       PAYOUTS
                                                                            ------                       -------
------------------------------------------------------------------------------------------------------------------------------
                                                 ANNUAL COMPENSATION                       LONG-TERM COMPENSATION
                                                 -------------------                       ----------------------
------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>     <C>           <C>      <C>               <C>            <C>             <C>        <C>
Stephen Childs             2002    $ 80,000(1)   -        -                 -              -               -
------------------------------------------------------------------------------------------------------------------------------
Peter Henricsson,          2002    $180,000      -        $ 8,000(2)                                                  -
------------------------------------------------------------------------------------------------------------------------------
 President & CEO           2001    $200,000      -        $20,000(2)        -              -               -          -
------------------------------------------------------------------------------------------------------------------------------
                           2000    $140,000      -        $ 6,500(2)        -              -               -          -
------------------------------------------------------------------------------------------------------------------------------
Lynn Duplessis,            2002    $163,000      -        $ 8,000(3)
------------------------------------------------------------------------------------------------------------------------------
 EVP and Secretary         2001    $168,000      -        $20,000(3)        -              -               -          -
------------------------------------------------------------------------------------------------------------------------------
                           2000    $125,000      -        $ 6,500(3)        -              -               -
------------------------------------------------------------------------------------------------------------------------------
Lars Persson               2002    $ 98,000(4)   -        $70,000(5)        -              -               -          -
------------------------------------------------------------------------------------------------------------------------------
 President, CellPoint      2001    $294,000      -        $98,000(6)        -              -               -
Europe Ltd.
------------------------------------------------------------------------------------------------------------------------------
                           2000    -             -        -                 -              90,000/0        -
------------------------------------------------------------------------------------------------------------------------------
Lars Wadell                2002    $124,960                                                                           -
------------------------------------------------------------------------------------------------------------------------------
 Chief Financial Officer   2001    $140,000      -        -                 -              40,000/0        -
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

-----------
(1)    Represents salary paid for serving as interim President and CEO from
November 2001 thru June 2002.

(2)    Represents housing allowance paid on behalf of Mr. Henricsson. Mr.
Henricsson and Ms. Duplessis are husband and wife.

(3)    Represents housing allowance paid on behalf of Ms. Duplessis. Mr.
Henricsson and Ms. Duplessis are husband and wife.

(4)    Represents salary paid from July 2001 thru October 2001.

(5)    Represents housing allowance, car allowance and tuition reimbursement.

(6)    Represents housing allowance of $50,000, car allowance of $18,000, and
tuition reimbursement of $31,000.

       In October of 2001, Stephen Childs replaced Peter Henriccson as President
of CellPoint Inc. Mr. Henricsson continued to serve as the Company's CEO and
Chairman.

       In March of 2002, Stephen Childs assumed Peter Henricsson's duties as CEO
and Jan Rynning was appointed as the Company's new Chairman of the Board.

       On June 13, 2002, Carl Johan Tornell replaced Stephen Childs as President
of the Company. Mr. Childs continued to serve as the Company's CEO and Chairman
of the Board.

       As of June 30, 2002, the Company no longer had employment agreements with
its former executive officers: Peter Henricsson, Lynn Duplessis, Lars Persson
and Lars Wadell.



                                       26
<PAGE>

         The Company has no set bonus policy. Bonuses may be awarded by the
independent directors of the Company. There is no bonus plan currently under
discussion or in place with the Company. The directors of the company do not
receive salaries for being directors but do have options in the Company.

         Option Grants in Last Fiscal Year

         The Company granted the following options to executive officers during
Fiscal 2002:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Name                     Number of                    Percent of         Exercise      Expiration Date
----                     Securities                   Total              or Base       ---------------
                         Underlying                   Options/SARs       Price
                         Options/SARs                 Granted to         ($/sh)
                         Granted(#)(1)(2)             Employees In       -------
                         ----------------             Fiscal Year
                                                      ------------
--------------------------------------------------------------------------------------------------------------
                         Individual Grants
                         -----------------
--------------------------------------------------------------------------------------------------------------
<S>                      <C>                          <C>                <C>          <C>
--------------------------------------------------------------------------------------------------------------
Stephen Childs           35,000                                          $1.25        2011
--------------------------------------------------------------------------------------------------------------
                          5,000                                           6.09        2011
--------------------------------------------------------------------------------------------------------------
                         30,000                       28.57%              1.50        2012
--------------------------------------------------------------------------------------------------------------
Donald Lilly             15,000                                           1.26        2011
--------------------------------------------------------------------------------------------------------------
                         75,000                       36.73%               .36        2012
--------------------------------------------------------------------------------------------------------------
</TABLE>

-----------

(1)    The Company did not grant any SARs during Fiscal 2002.

(2)    The options granted vest in installments over eighteen to twenty-eight
months. The options fully vest in the event of a change in control of the
Company.

        AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES

        The following table sets forth as to each person named in the Summary
Compensation Table the specified information with respect to option exercises
during Fiscal 2002 and the status of their options at the end of Fiscal 2002.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Name                Number of         Value        Exercisable       Nonexercisable        Exercisable      Nonexercisable
----                Shares            Realized     -----------       --------------        -----------      --------------
                    Acquired          ($)(1)
                    on Exercise       ------
                    -----------
---------------------------------------------------------------------------------------------------------------------------
                                                   Number of Unexercised                   Value of Unexercised
                                                   Options/SARs at Fiscal                  in-the-Money(4)
                                                   Year-End                                Options/SARs at
                                                   --------                                Fiscal Year-End ($)(5)
                                                                                           ----------------------
---------------------------------------------------------------------------------------------------------------------------
<S>                 <C>               <C>          <C>               <C>                   <C>              <C>
---------------------------------------------------------------------------------------------------------------------------
Peter Henricsson    -                 -            75,000(2)         -                     -                -
---------------------------------------------------------------------------------------------------------------------------
Lynn Duplessis      -                 -            75,000(3)         -                     -                -
---------------------------------------------------------------------------------------------------------------------------
Lars Persson        -                 -            90,000            -                     -                -
---------------------------------------------------------------------------------------------------------------------------
Lars Wadell         -                 -            40,000            -                     -                -
---------------------------------------------------------------------------------------------------------------------------
Stephen Childs      -                 -            70,000            -                     -                -
---------------------------------------------------------------------------------------------------------------------------
Donald Lilly        -                 -            90,000            -                     -                -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

-----------

(1) The "value realized"  represents the difference between the exercise price
of the option shares and the market


                                       27

<PAGE>


price of the  option  shares on the date the  option  was  exercised.  The value
realized was determined  without  considering any taxes which may become payable
in respect of the sale of any such shares.

(2)     Excludes options to acquire 75,000 shares owned by Lynn Duplessis, Mr.
Henricsson's wife.

(3)     Excludes options to acquire 75,000 shares owned by Peter Henricsson, Ms.
Duplessis' husband.

(4)     "In-the-money" options are options whose exercise price was less than
the market price of Common Stock at June 30, 2002.

(5)     Based on a stock price of $.13 per share, which was the closing price of
a share of Common Stock reported on the OTC Bulletin Board on June 28, 2002.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The Company's capital structure consists of 50,000,000 authorized
shares of Common Stock, of which 19,489,804 shares were issued and outstanding
as of October 1, 2002 and 3,000,000 shares of Preferred Stock, none of which is
outstanding. Each share of Common Stock is entitled to one vote.

         The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of June 30, 2002, by (i)
each person who is known by the Company to own beneficially more than 5% of the
Company's outstanding Common Stock; (ii) each of the Company's officers and
directors; and (iii) all officers and directors as a group. Unless otherwise
noted below, each such person had sole voting and investment power over such
shares.

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
Name and Address of Beneficial                                                     Shares of Common        Percent of Common
Owners and Directors and Officers                                                  Stock Beneficially      Stock Beneficially
---------------------------------                                                  Owned                   Owned
                                                                                   -----                   -----
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>                     <C>
Stephen Childs                                                                     83,000(a)               *
-----------------------------------------------------------------------------------------------------------------------------------
 4800 Abbey Road
Placerville, California 95667
United States
-----------------------------------------------------------------------------------------------------------------------------------
Lynn Duplessis (together with Peter Henricsson)                                    2,150,000(b)            11.38%
-----------------------------------------------------------------------------------------------------------------------------------
Peter Henricsson (together with Lynn Duplessis)                                    2,150,000(c)            11.38%
-----------------------------------------------------------------------------------------------------------------------------------
c/o CellPoint
Suite 75 Frimley House
5 The Parade, High Street
Frimley, Surrey GU16 7JQ
England
-----------------------------------------------------------------------------------------------------------------------------------
Bengt Nordstrom                                                                    35,000(d)               *

</TABLE>


                                       28
<PAGE>
<TABLE>

<S>                                                                                <C>                     <C>
-----------------------------------------------------------------------------------------------------------------------------------
 Northstream AB
Sjoangsvagen 7
S-19172 Sollentuna
Sweden
-----------------------------------------------------------------------------------------------------------------------------------

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

-----------------------------------------------------------------------------------------------------------------------------------
Donald Lilly                                                                       180,000(e)              *
-----------------------------------------------------------------------------------------------------------------------------------

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

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

-----------------------------------------------------------------------------------------------------------------------------------
 Officers and Directors as a Group                                                 362,000                 1.91
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

-----------

*Less than 1%

(a)  Mr. Childs holds as of June 30, 2002, options to acquire 70,000 shares all
of which are currently exercisable.

(b)  Includes (1) 500,000 shares accrued by Lynn Duplessis, (1) 1,500,000
shares beneficially owned by Peter Henricsson, Ms. Duplessis' husband, (3)
options to acquire 75,000 shares issued to Ms. Duplessis, and (4) options to
acquire 75,000 shares issued to Mr. Henricsson.

(c)  Includes (1) 1,500,000 shares accrued by Peter Henricsson, (2) 500,000
shares beneficially owned by Lynn Duplessis, Mr. Henricsson's wife, (3) options
to acquire 75,000 shares issued to Mr. Henricsson and (4) options to acquire
75,000 shares issued to Ms. Duplessis.

(d)  Mr. Nordstrom holds options to purchase 35,000 shares, all of which are
currently exercisable.

(e)  Mr. Lilly holds options to purchase 90,000 shares of common stock. Marney
S. Lilly, Mr. Lilly's wife, owns 25,000 shares of common stock and 65,000 shares
of common stock are held in trust, with Mr. Lilly as Trustee for his son W.
Donald Lilly. Mr. Lilly disclaims beneficial ownership of the shares owned by
his wife and of the shares so held in trust for his son.


      For the purpose of the foregoing table, each of the directors and
executive officers is deemed to be the beneficial owner of shares that may be
acquired by him or her within 60 days through the exercise of options, if any,
and such shares are deemed to be outstanding for the purpose of computing the
percentage of the Company's Common Stock beneficially owned by him or her and by
the directors and executive officers as a group. Such shares, however, are not
deemed to be outstanding for the purpose of computing the percentage of the
Company's Common Stock beneficially owned by any other person.

       The foregoing table does not include shares issuable upon conversion of
notes and exercise of warrants currently held by Castle Creek. On July 25, 2001,
the Company and Castle Creek entered into a Note Purchase, Modification and
Forebearance Agreement, pursuant to which the Company has agreed to purchase the
remaining $9.25 million principal amount in convertible notes currently held by
Castle Creek. The Company was obligated to pay $3.0 million to Castle Creek by
September 24, 2001 and $4.955 million by October 23, 2001 (of which $1.0 million
was paid as a non-refundable deposit on July 25, 2001), plus all accrued and
unpaid interest from the original issuance date through October 23, 2001 or, if
earlier, the date of the purchase. As part of the transaction, the Company has
issued to Castle Creek five-year warrants to purchase 500,000 shares of Common
Stock, exercisable after one year, at an exercise price of


                                       29
<PAGE>


$3.14 per share (subject to specified anti-dilution adjustment). The shares
issuable upon exercise of such warrant are to be registered with the Securities
and Exchange Commission. In addition, the Company has granted to Castle Creek a
security interest in its assets (including the assets of its subsidiaries),
including its intellectual property. Castle Creek has agreed not to trade in the
Company's stock effective July 25, 2001 until the note repurchase is completed,
in consideration of which Castle Creek was paid $1.0 million as a non-refundable
deposit against the final note purchase payment. The fixed conversion price of
the notes was changed to $4.00 with no floating conversion price if the notes
are purchased on a timely basis and the Company complies with all its other
obligations to Castle Creek in all material respects. The Company also agreed to
certain limitations on the terms of future debt and equity financings, which
limitations would not apply to a financing that provided the proceeds for the
final purchase of the notes. The Company has granted Castle Creek a full release
of all claims and has agreed not to disparage Castle Creek; Castle Creek has
agreed not to disparage the Company. In addition, Castle Creek holds warrants to
purchase 210,526 shares of Common Stock, which are currently exercisable at an
exercise price of $11.40 per share (subject to antidilution adjustments).

         On September 26, 2001, CellPoint and Castle Creek entered into an
amendment of the July Agreement to repurchase the convertible notes currently
held by Castle Creek and related maters. Pursuant to the amendment, CellPoint
paid $2.25 million to Castle Creek on September 26, 2001 for principal and
accrued interest. The remaining outstanding convertible notes will be subject to
a fixed conversion price of $4.00, and were scheduled to be repurchased on
October 1, 2002 for approximately $6.1 million plus accrued interest (subject to
specified adjustments upon a material breach by CellPoint). The outstanding
notes are prepayable in part or in whole at any time.

         On March 14, 2002 the Company concluded preliminary agreements to
eliminate short-term debt held by Castle Creek Technology Partners and all other
debt holders. The terms negotiated with all the major debt holders, half of the
principal and interest on each outstanding debt, which equates to $5.5 million,
will be converted to equity at 78 cents per share. The Company is required to
obtain stockholder approval to authorize a new class of convertible preferred
stock to effectuate this aspect of this Agreement with Castle Creek. There is no
assurance that the Company will be able to obtain authorization from its
stockholders for this new class of convertible preferred stock. The remaining
$5.5 million in debt has been restructured as long-term debt and is not due
until March 2004. Castle Creek as the senior debt holder will have the right to
match any financing the Company would do at a price significantly below 78 cents
by converting that same portion of their notes, dollar for dollar, into common
stock at the same time and at the same price, but with no warrant coverage.
These agreements with the debt holders are subject to a settlement being
negotiated in parallel with the rest of the Company's creditors, discussed
below, and the Company's ability to raise additional capital in the short term.

         See "Legal Proceedings" for the description of a suit recently filed
against the Company by Castle Creek.

STOCK INCENTIVE PLAN

         The Board of Directors of the Company has adopted a stock incentive
plan (the "Plan"). Pursuant to the provisions of the Plan, 2,000,000 shares of
the Company's Common Stock are reserved for issuance upon exercise of options.
The Plan is designed to retain qualified and competent officers, employees, and
directors of the Company.

         The Company's Board of Directors, or a committee thereof, shall
administer the Plan and is authorized, in its sole and absolute discretion, to
grant options thereunder to all eligible employees of the Company, including
officers and directors (whether or not employees) of the Company. Options will
be granted pursuant to the provisions of the Plan on such terms and at such
prices as determined by the Company's Board of Directors. The exercise price
will not be lower than the closing price on the date the options are issued, or
if such prices are not available, at the fair market value as determined by the
Board of Directors. Options granted under the Plan will be exercisable after the
period specified in the option agreement. Options granted under the Plan will
not be exercisable after the expiration of ten years from the date of grant. The
Plan will also authorize the Company to make loans to optionees to enable them
to exercise their options. During Fiscal 2002, zero options were exercised,
393,900 were cancelled and 245,000 options were granted. There were 779,100
options outstanding as of June 30, 2002. To date, the Company has not issued any
SAR's.

STOCK WARRANT PLAN

         The Company has adopted a stock warrant plan (the "Warrant Plan").
Pursuant to the provisions of the Warrant



                                       30

<PAGE>

Plan, eligible employees, consultants and affiliates will be given the
opportunity to purchase warrants, which warrants can be exercised, upon vesting,
to purchase shares of the Company's Common Stock. An aggregate of 1,000,000
shares of the Company's Common Stock have been reserved for issuance pursuant to
the Warrant Plan. The Plan is designed primarily to retain qualified and
competent officers, employees, and directors.

         The Board of Directors of the Company, or a committee thereof, shall
administer the Plan and is authorized, in its sole and absolute discretion, to
grant options thereunder to all eligible employees, consultants and affiliates
including the Company's officers and directors (whether or not employees).
Warrants will be sold to eligible persons at prices determined by independent
appraisers to be fair market prices at the time of such sale. Each warrant will
have an exercise price equal to no less than 150% of the closing price of the
Company's Common Stock on the date immediately preceding the date of sale. Each
warrant sold pursuant to the Warrant Plan will be subject to a vesting period as
determined by the Board of Directors, and will expire no later than five years
from the date of issuance. To date, warrants with respect to an aggregate of
924,800 warrants have been sold.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         None.

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



(a)      Exhibits

         The following exhibits are filed as part of this Annual Report on Form
10-KSB:


Exhibit No.                                              Description of Exhibit
-----------                                              ----------------------
-------------------------------------------------------------------------------
      3.1      Articles of Incorporation (incorporated by reference to the
               Company's filing on Form 10-SB, filed on December 23, 1998)
-------------------------------------------------------------------------------
      3.2      Amended and Restated By-Laws (incorporated by reference to the
               Company's Registration Statement on Form SB-2, filed on June 8,
               2000)
-------------------------------------------------------------------------------
      3.3      Certificate of Amendment to the Articles of Incorporation of the
               Company, filed with the Secretary of State of Nevada on October
               4, 1999 (incorporated by reference to the Company's Current
               Report on Form 8-K, filed on October 5, 1999)
-------------------------------------------------------------------------------
      3.4      Certificate of Amendment to the Articles of Incorporation of the
               Company, filed with the Secretary of State of Nevada on March 6,
               2002 (filed herewith)
-------------------------------------------------------------------------------
      4.1      Registration Rights Agreement, dated as of February 29, 2000, by
               and among CellPoint Inc., CellPoint Swedish Holdings Ltd., and
               the Sellers named therein (incorporated by reference to the
               Company's Current Report on Form 8-K, filed on March 13, 2000, as
               amended by Form 8-K/A, filed on May 15, 2000).
-------------------------------------------------------------------------------
      4.2      Securities Purchase Agreement, dated as of December 6, 2000, by
               and among CellPoint Inc. and the Purchaser set forth therein
               (incorporated by reference to the Company's Current Report on
               Form 8-K, filed on December 12, 2000).
-------------------------------------------------------------------------------
      4.3      Registration Rights Agreement, dated as of December 6, 2000, by
               and among CellPoint Inc. and the Initial Investor (as such term
               is defined therein) (incorporated by reference to the Company's
               Current Report on Form 8-K, filed on December 12, 2000).
-------------------------------------------------------------------------------
      4.4      Convertible Note of CellPoint Inc., dated December 6, 2000,
               payable to the order of Castle Creek Technology Partners LLC, in
               the aggregate principal amount of $10,000,000 (incorporated by
               reference to the Company's Current Report on Form 8-K, filed on
               December 12, 2000).
-------------------------------------------------------------------------------

                                       31

<PAGE>

-------------------------------------------------------------------------------
      4.5      Stock Purchase Warrant of CellPoint Inc., dated December 6, 2000,
               with respect to the right of Castle Creek Technology Partners LLC
               (incorporated by reference to the Company's Current Report on
               Form 8-K, filed on December 12, 2000).
-------------------------------------------------------------------------------
      4.6      Stock Purchase Warrant of CellPoint Inc., dated July 25, 2001,
               with respect to the right of Castle Creek Technology Partners LLC
               (incorporated by reference to the Company's Current Report on
               Form 8-K, filed on July 31, 2001).
-------------------------------------------------------------------------------
      4.7      Form of Stock Purchase Warrant (filed as an Exhibit to the
               Company's Registration Statement on Form S-3, filed on October
               31, 2001).
-------------------------------------------------------------------------------
      4.8      Stipulation and Order, dated December 19, 2001, between Castle
               Creek Technology Partners LLC and CellPoint Inc. (incorporated by
               reference to the Company's Current Report on Form 8-K, filed on
               December 21, 2002).
-------------------------------------------------------------------------------
      4.9      Agreement, dated February 28, 2002, between Castle Creek
               Technology Partners LLC and CellPoint Inc. (incorporated by
               reference to the Company's Current Report on Form 8-K, filed on
               March 14, 2002).
-------------------------------------------------------------------------------
      4.10     Term Sheet, dated March 13, 2002, between Castle Creek Technology
               Partners LLC and CellPoint Inc. (incorporated by reference to the
               Company's Current Report on Form 8-K, filed on March 14, 2002).
-------------------------------------------------------------------------------
      10.1     Amended and Restated Stock Incentive Plan (Incorporated by
               reference to the Company's Registration Statement on Form
               10-SB/A-2, filed on January 18, 2000)

-------------------------------------------------------------------------------
      10.2     Agreement between Matrix Vehicle Tracking (Pty) Ltd. and Technor
               International Inc., dated May 11, 1999

-------------------------------------------------------------------------------
      10.3     Amended and Restated Option Agreement, dated May 13, 1999
               (Incorporated by reference to the Company's Registration
               Statement on Form 10-SB/A-2, filed on January 18, 2000)

-------------------------------------------------------------------------------
      10.4     Sale of Technology Agreement between Novel Electronic Systems &
               Technologies and Technor International Inc., dated May 13, 1999
               (Incorporated by reference to the Company's Registration
               Statement on Form 10-SB/A-2, filed on January 18, 2000)

-------------------------------------------------------------------------------
      10.5     Share Sale Agreement, dated May 13, 1999, between Gerrit van Urk,
               Albert van Urk, Guy Redford and Technor International, Inc
               (Incorporated by reference to the Company's Registration
               Statement on Form 10-SB/A-2, filed on January 18, 2000)

-------------------------------------------------------------------------------
      10.6     Limited Sale of Business, dated as of March 1, 1999, between Wasp
               International (Pty) Limited and Wasp S.A. (Pty) Limited
               (Incorporated by reference to the Company's Registration
               Statement on Form 10-SB/A-2, filed on January 18, 2000)

-------------------------------------------------------------------------------
      10.7     Project Agreement, dated April 23, 1999, between Tele2 and
               CellPoint Systems AB (Incorporated by reference to the Company's
               Registration Statement on Form 10-SB/A-2, filed on January 18,
               2000)

-------------------------------------------------------------------------------
      10.8     Agreement, dated as of June 30, 2000, by and between France
               Telecom Mobiles and CellPoint Systems AB (incorporated by
               reference to the Company's Annual Report on Form 10-KSB, filed on
               September 29, 2000; omits portions based upon a request for
               confidential treatment pursuant to Rule 24b-2 under the
               Securities Exchange Act of 1934)
-------------------------------------------------------------------------------
      10.9     Share and Asset Transfer Agreement, dated October 19, 2001,
               between Micronet AB and CellPoint Systems AB (filed as an Exhibit
               to the Company's Registration Statement on Form S-3, filed on
               November 1, 2001).
-------------------------------------------------------------------------------
      10.10    Employment Agreement, dated as of June 1, 1999, between CellPoint
               Inc. and Lynn Duplessis (incorporated by reference to the
               Company's Annual Report on Form 10-KSB, filed on September 29,
               2000)
-------------------------------------------------------------------------------


                                       32

<PAGE>
-------------------------------------------------------------------------------
      10.11    Employment Agreement, dated as of July 9, 2000, by and between
               CellPoint Inc. and Lars Persson (incorporated by reference to the
               Company's Annual Report on Form 10-KSB, filed on September 29,
               2000)
-------------------------------------------------------------------------------
      10.12    Employment Agreement, dated as of October 16, 2000, by and
               between CellPoint Inc. and Lars Wadell (incorporated by reference
               to the Company's Annual Report on Form 10-KSB, filed on October
               17, 2001)
-------------------------------------------------------------------------------
      10.13    Loan Agreement, dated June 7, 2000, by and between M&S Trust
               Company Limited and CellPoint Inc. (incorporated by reference to
               the Company's Annual Report on Form 10-KSB, filed on September
               29, 2000)
-------------------------------------------------------------------------------
      10.14    Securities Purchase Agreement, dated as of December 6, 2000, by
               and among CellPoint Inc. and the Purchaser set forth on the
               execution page thereof (incorporated by reference to the
               Company's Current Report on Form 8-K, filed on December 12, 2000)
-------------------------------------------------------------------------------
      10.15    Note Purchase, Modification and Forebearance Agreement, dated as
               of July 25, 2001, by and between CellPoint Inc. and Castle Creek
               Technology Partners LLC (incorporated by reference to the
               Company's Current Report on Form 8-K, filed on July 31, 2001)
-------------------------------------------------------------------------------
      10.16    Amendment, dated September 26, 2001, to Note Purchase,
               Modification and Forbearance Agreement, dated as of July 25,
               2001, by and between CellPoint Inc. and Castle Creek Technology
               Partners LLC (incorporated by reference to the Company's Current
               Report on Form 8-K, filed on October 5, 2001)
-------------------------------------------------------------------------------
      10.17    Cooperation Agreement Regarding Telematics, by and between Unwire
               AB and Ericsson Business Consulting (Malaysia), dated April 5,
               2000 (filed as an Exhibit to Amendment No. 1 to the Company's
               Registration Statement on Form S-3, filed on May 24, 2002).
-------------------------------------------------------------------------------
      10.19    Contract, dated July 7, 2000, between France Telecom Mobiles and
               CellPoint Systems AB (filed as an Exhibit to Amendment No. 1 to
               the Company's Registration Statement on Form S-3, filed on May
               24, 2002).
-------------------------------------------------------------------------------
      23       Consent of BDO SEIDMAN, LLP
-------------------------------------------------------------------------------
      99.1     Certification of Chief Executive Officer Pursuant to 18 USC 1350
               (filed herewith)
-------------------------------------------------------------------------------
      99.2     Certification of Principal Financial Officer Pursuant to 18 USC
               1350 (filed herewith)
-------------------------------------------------------------------------------

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

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

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

-----------



(b)      Reports on Form 8-K

         None.




                                       33


<PAGE>


                                   SIGNATURES

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


                                       CELLPOINT INC.

                                       By:   /s/ STEPHEN CHILDS

                                       -------------------------------
                                              Stephen Childs
                                       CHIEF EXECUTIVE OFFICER

                                       October 17, 2002
                                       By:

                                       /s/ CARL JOHAN TORNELL
                                       -------------------------------
                                            Carl Johan Tornell
                                      (PRINCIPAL FINANCIAL OFFICER)
                                      October 17, 2002

            In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.


             SIGNATURE                 TITLE                 DATE
             ---------                 -----                 ----

     /s/ Stephen Childs
--------------------------------       Chairman and Chief    October 17, 2002
         Stephen Childs                Executive Officer


     /s/ Carl Johan Tornell
--------------------------------       President and         October 17, 2002
         Carl Johan Tornell            Director


     /s/ Donald Lilly
--------------------------------       Secretary and         October 17, 2002
         Donald Lilly                  Director


     /s/ Bengt Nordstrom
 -------------------------------       Director              October 17, 2002
         Bengt Nordstrom


--------------------------------       Director              October __, 2002
        Henrik Andersson




                                       34

<PAGE>

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Stephen Childs, certify that:

        1.  I have reviewed this annual report on Form 10-KSB of CellPoint Inc.;

        2.  Based on my knowledge, this annual report does not contain any
            untrue statement of a material fact or omit to state a 2 material
            fact necessary to make the statements made, in light of the
            circumstances under which such statements were made, not misleading
            with respect to the period covered by this annual report; and

        3.  Based on my knowledge, the financial statements, and other financial
            information included in this annual report, fairly 3 present, in all
            material respects, the financial condition, results of operations
            and cash flows of the registrant as of, and for, the periods
            presented in this annual report.

Date: October 17, 2002

/s/    STEPHEN CHILDS
----------------------------------
STEPHEN CHILDS
Chief Executive Officer



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

                  CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Carl Johan Tornell, certify that:

        1.  I have reviewed this annual report on Form 10-KSB of CellPoint Inc.;

        2.  Based on my knowledge, this annual report does not contain any
            untrue statement of a material fact or omit to state a 2 material
            fact necessary to make the statements made, in light of the
            circumstances under which such statements were made, not misleading
            with respect to the period covered by this annual report; and

        3.  Based on my knowledge, the financial statements, and other financial
            information included in this annual report, fairly 3 present, in all
            material respects, the financial condition, results of operations
            and cash flows of the registrant as of, and for, the periods
            presented in this annual report.

Date: October 17, 2002


                                         /s/    CARL JOHAN TORNELL
                                         ---------------------------------
                                                CARL JOHAN TORNELL
                                                Principal Financial Officer

<PAGE>

CELLPOINT, INC. AND SUBSIDIARIES

Consolidated Financial Statements

Years Ended
June 30, 2002 and 2001


Contents

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

                                                                           PAGE

Report of Independent Certified Public Accountants                         F-1

Consolidated balance sheets
as of June 30, 2002 and 2001                                               F-2

Consolidated statements of operations
for the years ended June 30, 2002 and 2001                                 F-4

Consolidated statements of stockholders' equity
for the years ended June 30, 2002 and 2001                                 F-5

Consolidated statements of cash flows
for the years ended June 30, 2002 and 2001                                 F-7

Notes to consolidated financial statements                                 F-8



<PAGE>


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

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


TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
CELLPOINT, INC. AND SUBSIDIARIES
CHERTSEY, ENGLAND


         We have audited the accompanying consolidated balance sheets of
         CellPoint, Inc. and Subsidiaries (the Company) as of June 30, 2002 and
         2001 and the related consolidated statements of operations,
         stockholders' equity and cash flows for the years then ended. 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 audits.

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

         In our opinion, the consolidated financial statements referred to above
         present fairly, in all material respects, the financial position of
         CellPoint, Inc. and Subsidiaries as of June 30, 2002 and 2001, and the
         results of their operations and their cash flows for the years then
         ended in conformity with accounting principles generally accepted in
         the United States of America.

         The accompanying consolidated financial statements have been prepared
         assuming the Company will continue as a going concern. As discussed in
         Note 1 to the consolidated financial statements, the Company's
         recurring significant operating losses and its working capital deficit
         at June 30, 2002 raise substantial doubt about its ability to continue
         as a going concern. Management's plans regarding those matters are also
         described in Note 1. The financial statements do not include any
         adjustments that might result from the outcome of this uncertainty

         /s/BDO SEIDMAN, LLP

         New York, New York
         USA

         October 11, 2002


                                      F-1
<PAGE>


CELLPOINT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(amounts in USD)

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                               JUNE 30,               JUNE 30,
                                                             NOTE                2002                   2001

ASSETS

CURRENT ASSETS
<S>                                                          <C>           <C>                   <C>
   Cash and cash equivalents                                               $       5,125         $      687,151
   Accounts receivable, net of allowance for
     doubtful accounts of $Nil and $Nil, respectively         17                       -              1,366,641
   Unbilled receivables                                                                -                792,443
   Prepaid expenses and other current assets                   2                  57,914                383,578
   Other receivables                                                              64,268                402,132
    Current assets of discontinued operations                 10                       -              1,361,148
                                                                               ---------             ----------
TOTAL CURRENT ASSETS                                                             127,307              4,993,093
                                                                               ---------             ----------
LONG-TERM ASSETS
   Restricted cash                                                                     -                184,216
   Acquired technology, net                                    3              12,575,189             15,571,001
   Other intangible assets, net                                4                 262,387              1,107,201
   Property and equipment, net                                 7                 119,908                885,780
   Non-current assets of discontinued operations              10                       -                521,401
                                                                            ------------             ----------
TOTAL LONG-TERM ASSETS                                                        12,957,484             18,269,599
                                                                            ------------             ----------

TOTAL ASSETS                                                               $  13,084,791         $   23,262,692
                                                                            ============             ==========

See accompanying summary of accounting policies and notes to the financial statements
</TABLE>

                                      F-2
<PAGE>


CELLPOINT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED)
(amounts in USD)

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                 JUNE 30,                    JUNE 30,
                                                             NOTE                  2002                        2001

<S>                                                            <C>           <C>                        <C>
LIABILITIES AND STOCKHOLDERS'
 EQUITY

CURRENT LIABILITIES
   Accrued expenses and other current liabilities              8             $   2,047,458              $    2,337,066
   Accounts payable                                                                979,879                   2,082,257
   Current maturities of long-term debt                        9                 8,976,735                           -
   Current liabilities of discontinued operations                                        -                   2,982,549
                                                                                ----------                  ----------
TOTAL CURRENT LIABILITIES                                                       12,004,072                   7,401,872

Due to Related Parties                                        12                   725,750                           -

LONG-TERM DEBT, NET OF CURRENT MATURITIES                      9                         -                  11,785,510
                                                                                ----------                  ----------

TOTAL LIABILITIES                                                               12,729,822                  19,187,382
                                                                                ----------                  ----------

MINORITY INTEREST                                                                        -                      48,464

COMMITMENTS AND CONTINGENCIES                                 16

STOCKHOLDERS' EQUITY                                        15, 18
   Common shares ($0.001 par value; authorized
   50,000,000 shares, 18,745,645 shares and
   10,824,503 shares issued and
   outstanding, respectively)                                                       18,746                      10,824
   Additional paid in capital                                                  107,556,660                  98,692,254
   Cumulative foreign currency translation adjustment                              (50,102)                    597,478
   Accumulated deficit                                                        (107,170,335)                (95,273,710)
                                                                              ------------                  ----------
TOTAL STOCKHOLDERS' EQUITY                                                         354,969                   4,026,846
                                                                              ------------                  ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                   $  13,084,791              $   23,262,692
                                                                              ------------                  ----------


See accompanying summary of accounting policies and notes to the financial statements
</TABLE>
                                      F-3
<PAGE>


CELLPOINT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in USD)

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                               YEAR ENDED           YEAR ENDED
                                                                                JUNE 30,             JUNE 30,
                                                  NOTE                            2002                 2001

<S>                                                                        <C>                  <C>
Revenues                                                                   $    1,114,716       $    4,111,804
Cost of revenues                                   17                            (180,917)            (587,281)
                                                                            -------------         ------------
Gross profit                                                                      933,799            3,524,523


Selling, general and administrative expenses                                   (3,890,179)          (8,265,733)
Research and development expenses                   1                          (2,442,928)          (4,211,711)
Professional fees, net of approximately
  $1,264,000 litigation settlement                                             (1,014,204)          (1,374,892)
Depreciation and amortization                                                  (3,684,798)          (3,931,215)
                                                                            -------------          -----------
   TOTAL OPERATING EXPENSES                                                   (11,032,039)         (17,783,551)
                                                                            -------------          -----------
LOSS FROM OPERATIONS                                                          (10,098,240)         (14,259,028)

Investment expenses:
Loss on sale of investment                                                              -             (342,285)
Financial items, net                               11                          (3,982,459)          (1,900,052)
                                                                             ------------           ----------
LOSS FROM CONTINUING OPERATIONS                                               (14,080,699)         (16,501,365)

DISCONTINUED OPERATIONS                            10

Income/(loss) from discontinued operations                                      2,184,074          (10,876,197)
Loss on disposal of discontinued operations                                             -          (52,258,545)
                                                                             ------------          -----------

Income/(loss) from discontinued operations                                      2,184,074          (63,134,742)

LOSS BEFORE INCOME TAX                                                        (11,896,625)         (79,636,107)

Income tax                                         14                                   -                    -
                                                                              -----------         ------------
NET LOSS                                                                   $  (11,896,625)      $  (79,636,107)
                                                                             ============         ============



Weighted average number of shares
 outstanding, basic and diluted                                                13,726,385           10,532,913
                                                                             ============         ============

Net income/(loss) per common share basic and diluted:
   Continuing operations                                                   $        (1.03)      $        (1.57)
   Discontinued operations                                                 $         0.16       $        (5.99)
   Net loss per share                                                      $        (0.87)      $        (7.56)


See accompanying summary of accounting policies and notes to the financial statements
</TABLE>
                                      F-4
<PAGE>

CELLPOINT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(amounts in USD)

-------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                   COMMON SHARES ISSUED              ADDITIONAL                  ACCUMULATED
                                          NUMBER                      PAID-IN        DEFICIT    COMPREHENSIVE
                                         OF SHARES      AMOUNT        CAPITAL      ACCUMULATED  INCOME/(LOSS)    TOTAL

<S>                                      <C>            <C>       <C>            <C>             <C>           <C>
Balance, June 30, 2000                   10,465,000     $ 10,465  $ 95,434,348   $(15,637,603)   $  292,866    $80,100,076

Shares issued                               268,030          268       150,055              -             -        150,323
Shares issued for the conversion
 of debt (note 9(b))                         91,473           91       299,909              -             -        300,000

Original issue debt discount (note 9(b))          -            -     2,807,942              -             -      2,807,942

Comprehensive loss
   Net loss                                       -            -             -    (79,636,107)            -    (79,636,107)
   Other comprehensive income:
      Currency translation                        -            -             -              -       304,612        304,612
                                                                                                                ----------
Comprehensive loss for fiscal year                                                                             (79,331,495)

                                         ----------    ---------    ----------     ----------     ---------      ---------
Balance, June 30, 2001                   10,824,503     $ 10,824   $98,692,254   $(95,273,710)   $  597,478     $4,026,846
                                         ==========     ========   ===========   ============    ==========     ==========

</TABLE>

        See accompanying summary of accounting policies and notes to the
                       consolidated financial statements.

                                      F-5
<PAGE>

CELLPOINT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE
INCOME (LOSS) (CONTINUED)
(amounts in USD)

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                   COMMON SHARES ISSUED          ADDITIONAL                   ACCUMULATED
                                          NUMBER                  PAID-IN       DEFICIT      COMPREHENSIVE
                                         OF SHARES     AMOUNT     CAPITAL     ACCUMULATED    INCOME/(LOSS)        TOTAL

<S>                                      <C>           <C>      <C>           <C>              <C>             <C>
Balance, June 30, 2001                   10,824,503    $10,824  $98,692,254   $(95,273,710)    $   597,478     $  4,026,846

Shares issued upon the conversion
of debt (Note 9(b))                       1,451,453     $1,452   $1,428,757              -               -        1,430,209

Private placements (Note 18)              6,469,689      6,470    6,051,374              -               -        6,057,844
(net of issuance cost)

Debt discount  (Note 9(b))                        -          -    1,384,275              -               -        1,384,275

Comprehensive loss
   Net loss                                       -          -            -    (11,896,625)              -      (11,896,625)
   Other comprehensive loss:
      Currency translation                        -          -            -              -         441,074          441,074
                                                                                                               ------------
   Reversal of currency translation related
    to discontinued operations (Note 10)          -          -            -              -      (1,525,670)      (1,525,670)

   Reversal of currency translation related
    to liquidated and deconsolidated
    subsidiaries (Notes 5 and 6)                  -          -            -              -         437,016          437,016

   Comprehensive loss for fiscal year                                                                           (12,544,205)
                                         ----------   --------  -----------  -------------     -----------     ------------
Balance, June 30, 2002                   18,745,645 $   18,746  107,556,660  $(107,170,335)    $   (50,102)        $354,969
                                         ========== ==========  ===========  =============     ===========     ============
</TABLE>

                                      F-6
<PAGE>

CELLPOINT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in USD)

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                         YEAR ENDED           YEAR ENDED
                                                                NOTE                      JUNE 30,             JUNE 30,
                                                                                            2002                 2001
<S>                                                             <C>                    <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                     13                     $(11,896,625)        $(79,636,107)

ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
 PROVIDED BY OPERATING ACTIVITIES:
   (Income)/loss from discontinued operations                                            (2,184,074)          10,876,197
   Loss from disposal of discontinued operations                                                  -           52,258,545
   Depreciation and amortization                                                          3,793,369            3,931,215
   Non-cash financing costs                                                               2,731,623              893,452
   Loss on disposal of investment in affiliated company                                           -              342,285
  Reversal of cumulative translation adjustment related to
  liquidated  subsidiaries                                                                 (127,506)                   -
  Reversal of unused reserves related to liquidated
  subsidiaries                                                                              658,404
  Loss on deconsolidation of subsidiary                                                     579,746                    -
  Gain on extinguishment of payable                                                        (418,399)                   -

   Minority interest in net income of subsidiary                                            (48,464)              48,464

CHANGES IN OPERATING ASSETS AND LIABILITIES:
   Increase in restricted cash                                                                    -             (184,216)
   (Increase)/decrease in accounts receivable                                             1,315,487           (1,161,718)
   (Increase)/decrease in unbilled receivables                                              792,443             (792,443)
   Decrease in prepaid expenses                                                              81,351              109,354
   (Increase)/decrease in other receivables                                                 424,799             (205,891)
   Increase in accrued expenses and other current liabilities                               750,278              959,340
   Increase in accounts payable                                                           1,416,596            1,370,800
   Decrease in due to affiliate                                                                   -              (55,517)
                                                                                        -----------          ------------

NET CASH USED IN OPERATING ACTIVITIES FROM CONTINUING OPERATIONS:                        (2,130,973)         (11,246,240)
NET CASH USED IN OPERATING ACTIVITIES FROM DISCONTINUED OPERATIONS:                      (1,094,379)          (3,044,374)
                                                                                        -----------          ------------
NET CASH USED IN OPERATING ACTIVITIES:                                                   (3,225,352)         (14,290,614)
                                                                                        -----------          ------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditure                                                                   (1,165,052)          (1,784,274)
   Proceeds from disposal of investments in affiliated companies                                  -              157,715
   Cash paid for acquired assets                                                           (226,360)                   -
   Other                                                                                          -                   64
                                                                                        -----------          ------------
NET CASH USED IN INVESTING ACTIVITIES FROM CONTINUED OPERATIONS:                         (1,391,352)          (1,626,495)
NET CASH USED IN INVESTING ACTIVITIES FROM DISCONTINUED OPERATIONS:                          (3,429)            (597,146)
                                                                                        -----------          ------------
NET CASH USED IN INVESTING ACTIVITIES:                                                   (1,394,781)          (2,223,641)
                                                                                        -----------          ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayment of notes payable                                                            (3,293,481)                   -
   Proceeds from notes payable                                                                    -           10,000,000
   Net proceeds from private placements                                                   6,057,844                    -
   Proceeds from issuance of shares                                                               -              150,323
   Due to related party                                                                     725,750                    -
   Advances of bank loans                                                                   500,000                    -
                                                                                        -----------          -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES FROM CONTINUING OPERATIONS:                     3,990,113           10,150,323
NET CASH PROVIDED BY FINANCING ACTIVITIES FROM DISCONTINUED OPERATIONS:                           -               51,849
                                                                                        -----------          -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES:                                                3,990,113           10,202,172
                                                                                        -----------          -----------
Effects of exchange rate changes on cash                                                    174,320              416,196
Effects of exchange rate changes on cash from discontinued operations                        (2,192)             (41,354)
                                                                                        -----------          -----------

Decrease in cash and cash equivalents                                                      (457,893)          (5,937,241)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                            687,151            6,624,392
Cash associated with deconsolidated subsidiary                                             (224,133)                   -
                                                                                         ----------          -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                             $      5,125         $    687,151
                                                                                          =========          ===========
</TABLE>
                                      F-7

<PAGE>


CELLPOINT, INC. AND SUBSIDIARIES

Notes to consolidated financial statements
(amounts in USD)

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

1     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      (a) Business

         CellPoint, Inc. and Subsidiaries ("the Company" or "CellPoint"), was
         incorporated in the state of Nevada on February 28, 1997. CellPoint
         owns a GSM (Global System for Mobile Communications) positioning system
         technology (the "Technology") which can be used for a variety of
         positioning applications including positioning standard mobile phones
         for resource management, information, safety and security.

         CellPoint is marketing and further developing the positioning
         applications of the CellPoint System. The CellPoint System consists of
         three main parts: mobile phone or terminal, the positioning server and
         the positioning programs. The GSM network facilitates the communication
         between the mobile phone or terminal and the CellPoint server system.
         The positioning server system enables the use of the Internet or fixed
         lines as information carriers.

         During the year ended June 30, 2002 the Company operated its
         positioning business primarily through two wholly owned subsidiaries in
         Sweden, CellPoint Systems AB (Systems) and CellPoint AB. This is
         CellPoint's commercial arm focusing primarily on, but not limited to,
         Europe. The Company operates in a single reportable business segment.

      (b) Going Concern

         The consolidated financial statements have been prepared assuming the
         Company will continue as a going concern. The Company has had recurring
         significant losses and at June 30, 2002 had a deficiency in working
         capital of approximately $11,877,000. There is substantial doubt
         about the Company's ability to continue as a going concern unless it is
         able to obtain additional financing. The Company has received signed
         term sheets from two of its senior debt holders whereby the lenders
         have agreed to convert 50% of the outstanding debt to equity and to
         extend the maturity terms of the remaining 50% to fiscal 2004 (see Note
         9). The Company continues to explore sources of additional financing to
         satisfy its current operating requirements.

         There can be no assurance that any funds required during the next
         twelve months or thereafter will be generated from operations or that
         if such required funds are not internally generated that funds will be
         available from external sources such as debt or equity financings or
         other potential sources. The lack of additional capital resulting from
         the inability to generate cash flow from operations or to raise capital
         from external sources would force the Company to substantially curtail
         or cease operations and would, therefore, have a material adverse
         effect on its business. Further, there can be no assurance that any
         such required funds, if available, will be available on attractive
         terms or that they will not have a significantly dilutive effect on the
         Company's existing shareholders.

         To enhance the Company's longer term prospects, in September 2002, the
         Company entered into a partnership agreement with a major
         telecommunications company that could result in significant revenue
         streams into the foreseeable future. There can be no assurance that
         the partnership arrangement will be successful or that sufficient
         capital will be available to fund operations. There is substantial
         doubt about the Company's ability to continue as a going concern. The
         accompanying consolidated financial statements do not include any
         adjustments relating to the recoverability or classification of asset
         carrying amounts or the amounts and classification of liabilities that
         may result should the Company be unable to continue as a going
         concern.

      (c)   Basis of presentation

                                       F-8
<PAGE>

            The accompanying consolidated financial statements include the
            financial statements of CellPoint and all its subsidiaries and have
            been prepared in accordance with accounting principles generally
            accepted in the United States and are presented in US dollars. All
            material inter-Company transactions and balances have been
            eliminated.

      (d)   Cash and cash equivalents

            Cash and cash equivalents include all highly liquid investments with
            original maturities of three months or less.

      (e)   Revenue Recognition

            Sales of Mobile Location System (MLS) and Mobile Location Broker
            (MLB) licenses are recognized when the operating system has been
            delivered, installed and tested by the Company and accepted by the
            customer. Support services are recorded on a straight-line basis
            over the term of the support agreements. Sales related to MLS
            licenses where the Company maintains and monitors the operating
            system are based on the number of subscribers and recorded on a
            monthly basis for actual services provided.

      (f)   Acquired technology

            Acquired technology arising on an acquisition of a subsidiary
            undertaking is an allocation of the difference between the value of
            the consideration paid and the value of the assets and liabilities
            acquired. Purchased technology is stated at cost. All acquired
            technology is amortized through the statement of operations over a
            period of seven years, which is the Company's best estimate of its
            useful economic life.

      (g)   Software development costs

            Software development costs for products and certain product
            enhancements are capitalized subsequent to the establishment of
            their technological feasibility (as defined in Statement of
            Financial Accounting Standards ("SFAS") No. 86) based upon the
            existence of working models of the products which are ready for
            initial customer testing. Costs incurred prior to such technological
            feasibility or subsequent to a product's general release to
            customers are expensed as incurred. During fiscal 2002 and 2001, the
            Company capitalized costs of approximately $1,359,000 and $790,000,
            respectively attributable to continuing operations. Capitalized
            software development costs shall be amortized on a
            product-by-product basis. The annual amortization shall be the
            greater of the amount computed using (a) the ratio that current
            gross revenues for a product bear to the total of current and
            anticipated future gross revenues for that product or (b) the
            straight-line method over the remaining estimated economic life of
            the product including the period being reported on. Amortization
            shall start when the product is available for general release to
            customers. Amortization expense for the years ended June 30, 2002
            and 2001, were approximately $170,000 and $NIL, respectively, and
            have been reflected as cost of revenues in the accompaning statement
            of operations.

      (h)   Other intangible assets

            Other intangible assets were amortized on a straight-line basis over
            their estimated lives based on the underlying agreements, as
            follows:

                         Acquired franchising concept              - 3 years
                         Patents                                   - 3 years

            Patent costs represent the preparing and filing applications to
            patent the Company's proprietary technologies. Such costs are
            amortized over the shorter of the life of the technology or the life
            of the patent, beginning on the date the patents or rights are
            issued. Amortization expense for fiscal 2002 and 2001 was $95,407
            and $91,060, respectively.

      (i)   Property and equipment

            Furniture and equipment are recorded at cost less accumulated
            depreciation. Depreciation is calculated using a straight-line
            method over the estimated useful lives of the related assets, as
            follows:

                                      F-9
<PAGE>


                         Furniture and equipment                   - 5 years
                         Computer equipment                        - 3 years

            Assets acquired during the year are depreciated from the date the
            assets are put to service. Expenditures for normal maintenance and
            repairs are charged to operations. Significant improvements are
            capitalized.

      (j)   Impairment of long-lived assets

            The Company periodically evaluates potential impairment of
            long-lived assets based upon cash flows. A loss relating to an
            impairment of assets occurs when the aggregate of the estimated
            undiscounted future cash inflows to be generated by the Company's
            asset groups (including any salvage values) are less than the
            related assets' carrying value. Impairment is measured based on the
            difference between the fair value of the assets and the assets'
            carrying value.

      (k)   Income taxes

            The Company utilizes the asset and liability method to account for
            income taxes whereby deferred tax assets and liabilities are
            recognized to reflect the future tax consequences attributable to
            temporary differences between the financial reporting basis of
            existing assets and liabilities and their respective tax basis.
            Deferred tax assets and liabilities are measured using enacted tax
            rates expected to be recovered and settled. The effect of a change
            in tax rates on deferred tax assets and liabilities is recognized in
            the period in which the change is enacted.

      (l)   Earnings per share

            The Company calculated its earnings per share pursuant to SFAS No.
            128, "Earnings per Share", which requires the presentation of both
            basic and fully diluted earnings per share. The following
            approximate number of potentially dilutive securities are not
            included in the diluted earnings per share calculation since they
            are anti-dilutive:
                                               June 30, 2002     June 30, 2001
                                               -------------     -------------
            Stock Options...................       779,100           903,000
            Warrants........................     6,087,917           690,285
            Convertible notes...............     3,935,000         3,400,000

                                      F-10
<PAGE>


      (m)   Foreign currency translation

            The financial position and results of operations of the Company's
            foreign subsidiaries are determined using local currency as the
            functional currency. Assets and liabilities of foreign units are
            translated to USD at the exchange rate in effect at each year-end.
            Income statements are translated at the average exchange rate for
            the period. Translation differences that arise from the use of
            differing exchange rates from period to period are recorded directly
            as a component of stockholders' equity.

            Receivables and liabilities denominated in foreign currencies are
            translated at balance sheet date rates. Unrealized exchange gains
            and losses on translation are reported in the income statement.

      (n)   Use of estimates

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

      (o)   Research and development costs

            Research and development costs, other than capitalized software
            development costs, are charged to expense as incurred.

      (p)   Stock compensation

            The Company accounts for stock options granted to employees under
            the provisions of Accounting Principles Board Opinion No. 25,
            "Accounting for Stock Issued to Employees" ("APB 25"), as permitted
            by SFAS No. 123 "Accounting for Stock-Based Compensation". APB 25
            provides for compensation cost to be recognized over the vesting
            period of the options based on the difference, if any, between the
            fair market value of the Company's stock and the option price on the
            grant date. SFAS No. 123 requires the Company to provide pro forma
            disclosures of net income and earnings per share as if the optional
            fair value method had been applied to determine compensation costs
            for the Company's stock option plans.

      (q)   Effect of recent accounting pronouncements

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

            SFAS No. 142 requires, among other things, that companies no longer
            amortize goodwill, but instead test goodwill for impairment at least
            annually. In addition, SFAS No. 142 requires that the Company
            identify reporting units for the purposes of assessing potential
            future impairments of goodwill, reassess the useful lives of other
            existing recognized intangible assets, and cease amortization of
            intangible assets with an indefinite useful life. An intangible
            asset with an indefinite useful life should be tested for impairment
            in accordance with the guidance in SFAS No. 142. SFAS No. 142 is
            required to be applied in fiscal years beginning after December 15,
            2001 to all goodwill and other intangible assets recognized at that
            date, regardless of when those assets were initially recognized.
            SFAS No. 142 requires the Company to complete a transitional
            goodwill impairment test six months from the

                                      F-11
<PAGE>


            date of adoption. The Company is also required to reassess the
            useful lives of other intangible assets within the first interim
            quarter after adoption of SFAS No. 142.

            The Company does not expect the adoption of SFAS No.'s 141 and 142
            to have a material impact on its financial position or results of
            operations.

            In August 2001, the FASB issued SFAS No. 144, "Accounting for the
            Impairment or Disposal of Long-Lived Assets". This statement
            supercedes SFAS No. 121, "Accounting for the Impairment of
            Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
            ("SFAS No. 121") and Accounting Principles Board Opinion No. 30,
            "Reporting Results of Operations - Reporting the Effects of Disposal
            of a Segment of a Business, and Extraordinary, Unusual and
            Infrequently Occurring Events and Transactions". SFAS No. 144
            retains the fundamental provisions of SFAS No. 121 for recognition
            and measurement of impairment, but amends the accounting and
            reporting standards for segments of a business to be disposed of.
            SFAS No.144 is effective for fiscal years beginning after December
            15, 2001, and interim periods within those fiscal years, with early
            application encouraged. The provisions of SFAS No. 144 generally are
            to be applied prospectively. The Company believes that the adoption
            of SFAS No. 144 will not have a material impact on the Company's
            financial position or results of operations.

            In July 2002, the FASB issued SFAS No. 146, Accounting for
            Restructuring Costs. SFAS No. 146 applies to costs associated with
            an exit activity (including restructuring) or with a disposal of
            long-lived assets. Those activities can include eliminating or
            reducing product lines, terminating employees and contracts, and
            relocating facilities or personnel. Under SFAS No. 146, a company
            will record a liability for a cost associated with an exit or
            disposal activity when that liability is incurred and can be
            measured at fair value. SFAS No. 146 will require a company to
            disclose information about its exit and disposal activities, the
            related costs, and changes in those costs in the notes to the
            interim and annual financial statements that include the period in
            which an exit activity is initiated and in any subsequent period
            until the activity is completed. SFAS No. 146 is effective
            prospectively for exit or disposal activities initiated after
            December 31, 2002, with earlier adoption encouraged.



2     PREPAID EXPENSES
                                                   JUNE 30,          JUNE 30,
                                                     2002              2001

         Rent                                              -           236,237
         Other                                        57,914           147,341
                                                   ---------         ---------
                                                $     57,914        $  383,578
                                                   =========        ==========

3     ACQUIRED TECHNOLOGY

         Acquired technology at June 30, 2002 and 2001 consisted of the
following:

                                                   JUNE 30,           JUNE 30,
                                                    2002               2001

     Positioning technology arising on the
       acquisition of Unwire (See Note 10) and
       CellPoint AB (See Note 6)                  $ 10,865,892    $  10,832,605
     Amortization                                   (3,607,398)      (2,028,283)
                                                     ---------        ---------
     Net Book value                                  7,258,494        8,804,322
                                                     =========        =========


                                      F-12
<PAGE>

Purchased core positioning technology        10,150,000           10,150,000
Amortization                                 (4,833,305)          (3,383,321)
                                             ----------            ---------
Net Book value                                5,316,695            6,766,679


Acquired technology, net                  $  12,575,189       $   15,571,001
                                             ==========           ==========

4     OTHER INTANGIBLE ASSETS
                                                 JUNE 30,             JUNE 30,
                                                   2001                2000

Acquired franchising concept, net
 of amortization of $1,000,000 and
 $777,780, respectively                   $              -    $         222,220
Patents (previously owned by Systems),
 net of amortization of
 $95,407 and $91,060, respectively                       -               95,407
Capitalization of software development
 costs, net of amortization of
 $Nil and $Nil, respectively
 (See also Note 6)                                 262,387              789,574
                                                 ---------         ------------
                                          $        262,387    $       1,107,201
                                                 =========          ===========

5        LIQUIDATION AND DECONSOLIDATION OF SUBSIDIARIES

         In October 2001, the Company's subsidiary, Unwire AB ("Unwire"), filed
         for protection under the bankruptcy courts in Sweden. As a result of
         the filing the Company ceased all funding of Unwire's operations. The
         bankruptcy courts have appointed a Trustee to oversee the disbursement
         of Unwire's assets and the Company now has no control over the
         operations or decision-making capabilities of Unwire. Unwire is no
         longer an operating entity under Swedish laws. As a result, effective
         October 9, 2001,Unwire is no longer included in the Consolidated
         financial statements. Results of operations and the financial position
         of Unwire in prior periods have been presented as discontinued
         operations (Note 10). The Company believes that all material
         obligations related to Unwire have been satisfied, however, an accrual
         for approximately $372,000 has been recorded related to bank guarantees
         originally issued on behalf of Unwire that may be claimed.

         The Company's South African subsidiary, CellPoint Systems SA (Pty) Ltd
         ("Systems SA"), also filed for bankruptcy protection under the laws of
         South Africa in November 2001. Systems S.A. operated a research and
         development facility for the Company. The telematics portion of Systems
         SA had already been recorded within the amounts presented as
         discontinued operations. The location services portion of Systems SA is
         not included in discontinued operations, and those functions will
         continue to be performed by the Company's Swedish subsidiary. Systems
         SA is no longer an operating entity. Costs of closing this subsidiary,
         primarily the write-off of the intercompany net receivable from Systems
         SA, were accrued in the June 30, 2001 financial statements. The Company
         believes that all material obligations related to Systems SA have been
         satisfied and thus no additional accruals are recorded at June 30,
         2002.

         On November 2, 2001 the Company's subsidiary in England, CellPoint
         Europe Ltd.("CellPoint Europe"), filed for liquidation by the appointed
         liquidator. The functions performed by CellPoint Europe are now
         performed by the Swedish subsidiary CellPoint AB and its branch office
         in the United Kingdom.

         The assets, liabilities and results of operations of Systems SA and
         CellPoint Europe were immaterial to the financial statements of the
         Company for all periods presented.

                                      F-13

<PAGE>


         On April 3, 2002, the Company's dormant subsidiary, Micronet MLS AB in
         Sweden, was liquidated through bankruptcy. Through April 29, 2002, all
         of the Company's operations in Sweden were maintained by Systems (See
         Note 6). Beginning June 5, 2002, all of the Company's operations in
         Sweden are now maintained by CellPoint AB (See Note 6).

6        FINANCIAL RESTRUCTURING

         In March 2002, the Company initiated a process to renegotiate its long
         term and short term notes payable as well as accounts payable. This
         process resulted in agreements reached regarding the notes payable
         subject to certain other restructuring of the Company's liabilities
         (See Note 9). The Company approached all of its short term creditors,
         the majority of whom agreed in April 2002 to accept 25% of their
         balances owed in order to avoid a formal bankruptcy proceeding. By
         April 2002 the voluntary settlement agreements were completed in
         CellPoint Inc. On April 3, 2002, the Company announced it was
         proceeding with 'official composition' to complete the financial
         reconstruction of its Swedish subsidiary, Systems, under the Swedish
         Company Reconstruction Act. The 'official composition' may be used if a
         majority of the creditors accept the composition which forces the
         minority of the creditors to accept the settlement payments offered. As
         of June 30, 2002, the Company has recognized a benefit of approximately
         $418,000 related to certain short term creditors who have
         unconditionally accepted the voluntary composition. The amount has been
         included in financial items (Note 11) on the statement of operations.
         Other creditors are awaiting the finalization of the Company's
         financial restructuring and thus the Company has not reflected the
         reduced balances at June 30, 2002.

         However, on April 29, 2002, the Company's primary operating subsidiary,
         Systems, was placed into involuntary bankruptcy under Swedish laws.
         At April 29, 2002, the carrying book value of Systems' assets was
         approximately $4,324,000, which consisted of primarily cash of
         approximately $408,000, receivables from the other group entities of
         approximately $1,480,000, capitalized software development costs of
         approximately $1,853,000 and fixed assets of approximately $531,000.
         Systems' liabilities at April 29, 2002 were approximately $3,836,000,
         which consisted of primarily payables to group entities of
         approximately $1,499,000, accounts payable and accrued expenses of
         approximately $1,367,000 and other current liabilities of approximately
         $971,000.

         Under Swedish bankruptcy laws, a trustee was appointed to run the
         operations and make all significant decisions related to the future of
         the subsidiary. The employees were terminated by Systems and were paid
         by the Swedish government during the period of bankruptcy. The trustee
         continued to operate the subsidiary during the period it was in
         bankruptcy with all expenses being paid by the Swedish government and
         any receipts being turned over to the Swedish government. The trustee
         determined that the best course of action was to sell the assets of the
         subsidiary. The Company was given the opportunity to bid on reacquiring
         the assets of the subsidiary from the trustee. The assets had
         previously been pledged to Cellpoint Inc.'s lender and the pledge was
         not released by the bankruptcy filing. The Company's bid was accepted
         by the trustee, and on June 5, 2002, the Company purchased certain
         assets of its former subsidiary from the trustee for approximately
         $230,000. The assets acquired consisted of primarily fixed assets,
         internally developed software programs, patents, trade names, customer
         databases and other intangibles. The Company placed the assets into a
         newly formed subsidiary, CellPoint AB. The Company only purchased
         assets and therefore did not assume any of the previously existing
         liabilities. Upon repurchase of the assets, the Company negotiated new
         contracts with the majority of the employees of Systems who then became
         employed by CellPoint AB.

         The Company has accounted for the above transactions as follows: At the
         time the subsidiary was placed into involuntary bankruptcy, the Company
         ceased to own the subsidiary or control the financial and operating
         decisions, as such subsidiary was now owned by the Swedish government
         and control over the significant financial and operating decisions was
         now exercised by the trustee. Therefore, in accordance with SFAS No.
         94, "Consolidation of All Majority Owned Subsidiaries," the financial
         results of Systems were deconsolidated as of April 29, 2002 and the
         investment accounted for under the cost method. The Company then
         determined its investment was impaired on an other than temporary basis
         and wrote-off such investment. The net impact of the deconsolidation
         was therefore a loss of approximately $578,000 related primarily to the
         write-off of the Company's net investment in Systems of approximately
         $448,000 and the cumulative foreign exchange translation adjustment of
         approximately $563,000 offset by the write off of intercompany amounts
         payable from the various group companies to Systems of approximately
         $433,000.

         The Company paid approximately $230,000 in cash to acquire certain
         assets from the trustee. The Company allocated the purchase price to
         the assets acquired. The purchase price was allocated primarily to
         computer equipment and the acquired software development costs and
         patents. The Company does

                                      F-14
<PAGE>

 not believe that the other acquired
         intangible assets have any significant value. The assets remain subject
         to a lien related to debt incurred by CellPoint, Inc.

7     PROPERTY AND EQUIPMENT

         Property and equipment at June 30, 2002 and 2001 consisted of the
following:

                                                          JUNE 30,      JUNE 30,
                                                           2002          2001

             Furniture and equipment                  $    10,457    $  161,416
             Motor vehicles                                     -        35,801
             Computer equipment                           114,658     1,168,908
                                                         --------     ---------
                                                          125,115     1,366,125
             Accumulated depreciation                      (5,207)     (480,345)
                                                         --------     ---------
                                                      $   119,908    $  885,780
                                                         ========     =========

8     ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
                                                        JUNE 30,      JUNE 30,
                                                          2002          2001

         Professional fees                            $   453,873    $  474,601
         Vacation pay                                           -       283,501
         Payroll taxes and social security costs          171,312       226,407
         Interest                                         692,302       390,000
         Temporary employees                                    -       134,840
         Contingent costs related to prior
         period acquisition                               212,176       212,176
         Other                                            729,971       615,541
                                                        ---------    ----------
                                                      $ 2,047,458    $2,337,066
                                                        =========    ==========

9     LONG-TERM DEBT
                                                         JUNE 30,     JUNE 30,
                                                           2002         2001

         Bank loans (a)                               $  4,500,000   $ 4,000,000
         Castle Creek (b)                                4,467,735     7,785,510
                                                      ------------    ----------

                                                         8,976,735    11,785,510
         Less current maturities                         8,976,735             -
                                                      ------------    ----------

                                                      $          -   $11,785,510
                                                      ------------    ----------

         (a) Bank loans

         Interest on the bank loan is payable quarterly in arrears and is
         charged at 9% per annum. The loan was required to be repaid in total no
         later than October 1, 2002. In June 2001, an addendum was added to the
         loan that allows the loan to be converted to shares of the Company at a
         fixed rate of $1.60 per share in the event that there is a change in
         control of the Company.

                                      F-15
<PAGE>

         On March 13, 2002 the Company and the bank entered into a preliminary
         Loan Restructuring Agreement, wherein one-half (50%) of the outstanding
         principal amount, plus outstanding interest will be converted into
         common stock subject to a fixed price of $0.78 per share. The remaining
         principal and interest will be transferred to a convertible debenture,
         maturing on April 1, 2004. Interest on the debt of 9% per annum will be
         reduced to 6% per annum, compounded semi-annually.

         The Loan Restructuring Agreement is subject to a complete finalization
         of the Company's debt negotiations (See (b) below) and completion of
         certain financing transactions. As of June 30, 2002, the Company had
         not completed the debt negotiations, the financing transactions nor
         obtained the shareholder approval to increase the number of authorized
         preferred stock and thus the effects of the Loan Restructuring
         Agreement have not been reflected in these financial statements.

         (b) Castle Creek

         On December 6, 2000, the Company entered into an agreement whereby it
         issued to Castle Creek Technology Partners LLC ("Castle Creek")
         convertible notes in the aggregate principal amount of $10,000,000,
         which were originally due and payable on September 30, 2002. Interest
         on the debt is 6% per annum, compounded semi-annually and payable
         semi-annually on each June 30 and December 31. Prior to June 5, 2001,
         the notes were convertible, in whole or in part, at a fixed conversion
         price of $25 per share at the option of the holder of the debt and
         could be converted in exchange for all or part of the outstanding debt
         plus the accrued interest at the conversion date. Subsequent to June 5,
         2001, the notes were convertible at the lower of $25 or 90% of the
         average of the five lowest volume weighted average prices during the
         period of twenty consecutive trading days ending on the trading day
         immediately prior to the date of determination. The conversion of the
         notes contained certain limitations as set forth in the agreement. The
         Company has reserved 2,000,000 shares for the purpose of possible
         future conversions.

         In connection with the convertible notes, the Company issued a warrant
         that was immediately exercisable and which expires on December 5, 2005.
         The warrant grants granted Castle Creek the right to purchase 210,526
         shares of the Company's common stock at an exercise price per share of
         $11.40, subject to adjustment.

         On July 25, 2001, the Company entered into a note purchase,
         modification and forebearance agreement with Castle Creek concerning
         the above mentioned notes. Under the agreement, the outstanding notes
         were to be repurchased by the Company. The Company agreed to buy back
         the outstanding principal of the notes over 90 days for 86% of the
         remaining principal, plus accrued interest, and issued a warrant for
         500,000 shares issuable upon exercise of the warrant at an exercise
         price of $3.14 per share and exercisable after one year for a period of
         four years (subject to specified anti-dilution adjustments). In
         addition, the Company granted to Castle Creek a security interest in
         its assets (including the assets of its subsidiaries), including its
         intellectual property. Castle Creek agreed not to trade in the
         Company's stock effective July 25, 2001 until the note repurchase is
         completed, in consideration for which Castle Creek was paid $1,000,000
         as a non-refundable deposit against the final note purchase payment.
         The fixed conversion price of the Notes was changed to $4.00 with no
         floating conversion price if the notes are purchased on a timely basis
         and the Company complies with all its other obligations to Castle Creek
         in all material respects. The Company also agreed to certain
         limitations on the terms of future debt and equity financings, which
         limitations would not apply to a financing that provided the proceeds
         for the final purchase of the Notes.

         On September 26, 2001, the Company and Castle Creek entered into an
         amendment of the July 25, 2001 agreement, wherein the outstanding
         convertible notes were to be repurchased at 100% of the remaining
         principal and subject to a fixed conversion price of $4.00. The Company
         paid $2,250,000 to CastleCreek on September 26, 2001 for principal and
         accrued interest and was scheduled to make a final payment on October
         1, 2002 for $6,105,100 plus accrued interest (subject to specified
         adjustments upon a material breach by the Company). The outstanding
         notes are prepayable in part or in whole at any time without penalty.
         However, if the Company is in non-compliance of the limitations on the
         terms of future debt and equity financing, there will be a $2,000,000
         penalty and the notes will become convertible at the lower of 1) the
         average closing price during the ten day period beginning five days
         prior to the date of the non-compliance event or (2) the lowest price
         of common stock or common stock equivalents sold

                                      F-16
<PAGE>

         from September 25, 2001 to the non-compliance event. The July
         agreement, except as modified by the amendment and the Stipulation and
         Order discussed below, remains in effect.

         On November 15, 2001, the Company was served with a suit by Castle
         Creek, and on December 13, 2001, Castle Creek filed an amended
         complaint, to have its debt of in excess of $6.1 million principal plus
         interest declared due and payable, for a default payment of $2 million
         and other damages and relief. The principal issue in dispute in the
         litigation was the antidilution adjustment applicable to the number of
         shares that Castle Creek is entitled to purchase under the warrant
         issued in the July 25, 2001 restructuring with Castle Creek to purchase
         500,000 shares of common stock (see "Legal Proceedings").

         On December 19, 2001, the Company entered into a Stipulation and Order
         with Castle Creek providing that Castle Creek agreed to stay
         prosecution of this case until February 28, 2002, provided that the
         Company makes required prepayments on its Notes to Castle Creek of
         $200,000 by January 31, 2002, which payment was timely made, and an
         additional $550,000 by February 28, 2002 and provided, further, that
         the Company does not breach its agreements and instruments with Castle
         Creek subsequent to the date of the Stipulation and Order. In addition,
         the Stipulation and Order specified an adjustment in the exercise price
         of the December 2000 warrant from $11.40 to $7.75 and the July 2001
         warrant that carried anti-dilution provisions was amended to give
         Castle Creek the right to purchase 1,500,000 shares at an adjusted
         exercise price of $1.20 per share. 50% of the 1,500,000 shares are
         exercisable immediately and the balance are exercisable beginning July
         25, 2002 with all shares expiring on July 25, 2006. The anti-dilution
         feature was further modified such that the number of shares that Castle
         Creek is entitled to purchase under the July 2001 Warrant was fixed at
         1,500,000 (subject to adjustment for stock splits, stock dividends and
         combinations of shares, and like events, but not subject to adjustment
         due to a decrease in the exercise price of the warrant). Procedures
         clarifying the manner of calculating the adjustments to the exercise
         price of the July 2001 Warrant were incorporated in the Stipulation and
         Order. The Company is also required to make prepayments of the Notes in
         an amount equal to 25% of the gross proceeds of each financing the
         Company closes; provided, that the maximum aggregate amount of
         prepayments that the Company is required to make under the Stipulation
         and Order prior to October 1, 2002 (the due date of the Notes) is
         $3,000,000.

         On January 31, 2002 the Company made a payment of $200,000 to Castle
         Creek for principal and accrued interest in accordance with the
         December 19, 2001 Stipulation and Order.

         On February 28, 2002, the Company satisfied the second required payment
         of $550,000, in accordance with the Stipulation and Order, through the
         delivery of 705,128 shares of its common stock to Castle Creek, who
         agreed that this was in accordance with the Stipulation and Order and
         therefore withdrew its lawsuit without prejudice.

         On March 13, 2002 the Company entered into a Loan Restructuring
         Agreement with Castle Creek pursuant to which one-half (50%) of the
         then outstanding principal amount of Castle Creek's convertible note of
         approximately $5,400,000, plus interest of approximately $400,000, or
         approximately $2,900,000 in total, would be converted into shares of
         convertible preferred stock of the company, each share of which would
         be convertible into common stock (the reference conversion price for
         the principal amount and interest so converted is $.78 per share of
         common stock). The only anti-dilution adjustments applicable to the
         preferred stock would be for stock splits, stock dividends and the
         like. To restructure one-half of Castle Creek's short-term debt into
         equity, the Company is required to authorize a new class of convertible
         preferred stock to effectuate this aspect of this Agreement with Castle
         Creek. There is no assurance that the Company will be able to obtain
         authorization from its stockholders for this new class of convertible
         preferred stock. At CellPoint's annual meeting of stockholders, held on
         December 12, 2001, the Company's proposal to authorize a new class of
         preferred stock did not receive the necessary number of stockholder
         votes for authorization.

         The other 50% of the outstanding principal amount of the convertible
         note and accrued interest (approximately $2.9 million) would be
         replaced by a new convertible note, due April 2004, with interest at
         the rate of 6% per annum, no principal or interest payments under which
         would be due until maturity. CellPoint can prepay at any time all or
         part of the amounts outstanding under the new convertible note, without
         premium or penalty. The new convertible note would be convertible into
         common stock at a conversion price of $.78. The only anti-dilution
         adjustments applicable to the new convertible note would be for stock
         splits, stock


                                      F-17

<PAGE>

         dividends and the like, except that (1) if any portion of the first
         $950,000 raised by CellPoint is at a price less than $.50 per share
         for common stock (without reference to any warrants issued in the
         financing), Castle Creek will have the right to convert the same
         principal amount of the new convertible note into common stock at that
         price within five (5) days of when they are notified of the closing of
         the financing; and (2) if any subsequent financings by CellPoint are
         at a price less than $.70 per share for common stock (without
         reference to any warrants issued in the financing), Castle Creek will
         have the right to convert the same principal amount of the new
         convertible note into common stock at that price within five (5) days
         of when they are notified of the closing of the financing. CellPoint
         would covenant not to issue equity or equity-equivalent securities at
         a discount of more than twenty (20%) percent of the lesser of: (i) the
         closing market price of the CellPoint common stock on the trading day
         immediately preceding the date of issuance of such equity or
         equity-equivalent securities or (ii) the average of the daily volume
         weighted average prices for the preceding five (5) trading days
         immediately preceding the date of issuance of such equity of
         equity-related securities.

         The Loan Restructuring Agreement is subject to a complete finalization
         of the Company's debt negotiations and completion of certain other
         financing transactions. Additionally, the Company will need stockholder
         approval to increase the number of authorized Preferred Stock in order
         to satisfy the provisions of the Loan Restructuring Agreement. As of
         June 30, 2002, the Company had not completed the debt negotiations and
         the financing transactions and thus the effects of the Loan
         Restructuring Agreement have not been reflected in these financial
         statements.

         During the year ended June 30, 2002, Castle Creek converted
         approximately $1,430,000 of the notes into 1,451,453 shares. Subsequent
         to June 30, 2002, Castle Creek has converted $577,500 principal amount
         of its notes into an aggregate of 815,120 shares of common stock.

         Following each of the debt modifications, the Company applied the rules
         of Emerging Issues Task Force ("EITF") 96-19: "Debtor's Accounting for
         a Modification or Exchange of Debt Instruments." Based on the
         provisions of EITF 96-19 it was determined that through December 19,
         2001 there was not a substantial change from the original debt
         agreement and as such, the modified debt continues to be presented at
         fair value using the new effective interest rate. Legal fees associated
         with the modifications were expensed in the periods in which they were
         incurred. Since the modifications related to the March 13, 2002
         amendment have not been finalized, the related accounting effect has
         not been reflected in the financial statements.

         Due to the beneficial conversion features associated with the
         financing, the Company applied EITF 00-27: Application of EITF No. 98-5
         "Accounting for Convertible Securities with Beneficial Conversion
         Features or Contingently Adjustable Conversion Ratios", to the
         convertible instruments. In accordance with EITF 00-27 the value of the
         beneficial conversion feature was recorded as a reduction to the
         carrying amount of the convertible debt and an addition to
         paid-in-capital. The fair value of the warrants granted in connection
         with the financing and the amendments thereto was calculated using the
         Black Scholes pricing model and recorded as a further reduction to the
         carrying amount and an addition to paid-in-capital.

         As a result of the private placements at the end of the first quarter
         the anti-dilution provision attached to the warrants issued on July 25,
         2001 became effective. As such, the Company recalculated and adjusted
         the exercise price and therefore adjusted the number of shares issuable
         upon exercise of the warrants. This resulted in an adjusted exercise
         price of $1.42 and 608,235 additional shares of issuable upon exercise
         of the warrants. The adjustment to the exercise price of the warrants
         increased the value of the warrants recorded as debt discount by
         $263,553. The terms of this warrant were further modified by the
         Stipulation and Order discussed above. As a result of the changes
         provided by the Stipulation and Order, a further discount of $370,256
         was recorded. The effects of the proposed terms set out in the March
         13, 2002 amendment have not yet been determined.

         The Company has therefore recorded a total debt discount of
         approximately $4,192,000 and is amortizing the discount over the term
         of the debt. Amortization is accelerated when necessary for conversions
         of the debt principal. Amortization for the years ended June 30, 2002
         and 2001 was approximately $2,732,000 and $893,000, respectively, and
         is recorded as a component of interest expense within financial items.
         See also Note 11.

                                      F-18
<PAGE>

         On August 21, 2002, Castle Creek filed a lawsuit in the United States
         District Court for the Southern District of New York against the
         company, and on September 19, 2002, filed an amended complaint in this
         lawsuit, seeking (1) a declaratory judgment that events of default have
         occurred under the Convertible Notes of CellPoint held by Castle Creek
         (the "Notes"), that as a result of the events of default Castle Creek
         is entitled to demand conversion of the Notes at an adjusted conversion
         price, and that CellPoint is required to deliver to Castle Creek
         additional shares from prior conversion requests of Castle Creek; (2)
         specific performance of CellPoint's obligations under the Notes and,
         specifically, the issuance of shares (up to an additional 889,894
         shares) at the adjusted conversion price; (3) judgment against
         CellPoint for all sums owed under the Notes; and (4) an injunction
         mandating CellPoint to deliver the required number of shares based on
         the adjusted conversion price. Castle Creek bases its allegations on
         the original December 2000 agreement, which CellPoint alleges has been
         superseded by the March 13, 2002 term sheet agreement with Castle Creek
         containing different terms. CellPoint also denies that it is in
         default. CellPoint is defending this action, and intends to
         counterclaim against and seek damages from Castle Creek.

10       DISCONTINUED OPERATIONS

         On May 19, 2001, the Company approved the disposal of the telematics
         business segment of the Company and committed to a plan to dispose of
         the business (except for the positioning technology acquired from
         Unwire (see Note 3)). In October and November 2001, the two
         subsidiaries that contained the telematics business segment filed for
         protection under the bankruptcy court. As a result of the filings the
         Company ceased all funding of the telematics business segment and
         relinquished to the respective bankruptcy courts control over the
         operations and decision-making capabilities of the former subsidiaries
         (See also Note 5). Accordingly, the telematics business segment was
         presented as a discontinued operation in the balance sheet as of June
         30, 2001 and the statements of operations and cash flows for the year
         then ended. At June 30, 2001, the Company had accrued approximately
         $1,100,000 for additional losses expected from the discontinued
         operation through the expected date of disposition. For the year ended
         June 30, 2002, upon disposition of the subsidiaries operating in the
         telematics business the Company has recorded the reversal of the
         cumulative translation adjustment in the amount of approximately
         $1,526,000 relative to these discontinued operations that had
         previously been recorded as a component of Stockholders' Equity.
         Additionally, the Company reversed certain reserves totalling
         approximately $658,000 related to the liquidated telematics
         subsidiaries deemed no longer necessary. From the time the business
         ceased to be under the control of the Company, its financial statements
         have ceased to be included in the Company's consolidated financial
         statements. Losses through the date at which control was relinquished
         are included in the Company's Accumulated Deficit.

         The continuing operations of the Company now constitute the only
reportable business segment.

         The components of assets (liabilities) of discontinued operations
included in the Company's Consolidated Balance Sheet at June 30, 2001 are as
follows:

                                                       June 30,        June 30,
                                                         2002            2001

Current assets:
   Cash and cash equivalents........................   $     -     $         -
   Accounts receivable..............................         -         262,504
   Prepaid expenses and other current assets........         -               -
   Other receivables................................         -         482,423
   Inventory........................................         -         429,432
   Other current assets.............................         -         186,789
Non-current assets:
   Other long-term assets...........................         -         521,401
Current liabilities:
   Accounts payable, accrued expenses
   and other current liabilities....................         -      (2,982,549)
                                                        -------      ----------

Net liabilities of discontinued operations             $     -     $(1,100,000)
                                                        -------     -----------

                                      F-19
<PAGE>


11    FINANCIAL ITEMS, NET

                                                   JUNE 30,          JUNE 30,
                                                     2002              2001

         Interest income                      $       13,936    $      179,823
         Gain on extinguishment of payables          418,399                 -
         Interest expense                         (3,424,225)       (1,563,541)
         Loss on deconsolidation of
          subsidiary                                (579,746)                -
         Other financial expense                    (122,622)         (693,863)
         Realized foreign currency
          exchange gains/(losses)                   (288,201)          177,529
                                                  ----------         ---------

                                              $   (3,982,459)   $   (1,900,052)
                                                  ==========        ==========

12   DUE TO RELATED PARTIES

         Bank debt of $725,750 to finance group operations had been personally
         guaranteed by certain stockholders of the Company. The Company agreed
         to reimburse these shareholders for amounts paid by these shareholders
         if the guarantee was called by the bank. These shareholders have agreed
         to defer the repayment of this amount which the bank claimed in the
         quarter ended December 31, 2001 until April 15, 2003. The parties
         further agreed that no interest will be charged. As a result, the
         amount payable to these shareholders has been classified as a long-term
         liability in the accompanying financial statements.

         These shareholders have also agreed to restructure their debt in terms
         similar to the preliminary Loan Restructuring Agreements agreed to by
         the Company's other debt holders. The Loan Restructuring Agreement is
         subject to a complete finalization of the Company's debt negotiations
         and completion of financing necessary to address current needs without
         resort to bankruptcy. As of June 30, 2002, the Company had not
         completed the debt negotiations and the financing and thus the effects
         of the Loan Restructuring Agreement have not been reflected in these
         financial statements.

13    SUPPLEMENTAL CASH FLOW INFORMATION


                                                         JUNE 30,     JUNE 30,
                                                           2002         2001
         Cash paid during the year for:
         Interest related to continuing
          operations                                    $  389,703   $  279,864
         Interest related to discontinued operations         4,796       16,332

         Non-cash transactions relating
         to investing and financing activities
         Discount on debt issued                         1,384,275    2,807,942
         Conversion of convertible debt
         to common stock                                 1,430,208      300,000

14       INCOME TAXES

         The Company and its eligible subsidiaries file a consolidated Federal
         income tax return. Other subsidiaries file separate income tax returns
         in their respective countries. The Company's U.S. and wholly owned
         foreign subsidiaries had net operating losses for the years ended June
         30, 2001 and 2000 and were not subject to income tax.

         Actual income tax benefit differs from the amount computed by applying
         the U.S. Federal corporate income tax rate of 34% to pre-tax losses,
         primarily as a result of foreign tax reporting subsidiaries and
         valuation allowances netted against potential deferred tax assets.

                                      F-20
<PAGE>

         The significant components of the Company's deferred income tax assets
are as follows:

                                                   JUNE 30,         JUNE 30,
             DEFERRED INCOME TAX ASSETS:             2002             2001

              Net operating Losses -
                US subsidiaries               $    7,150,270   $    3,864,727
              Net operating Losses -
                Foreign subsidiaries              18,213,120       19,787,830
              Valuation Allowance                (25,363,390)     (23,652,557)
                                                  ----------       ----------

             NET DEFERRED INCOME TAX ASSET    $            -   $            -
                                                  ==========       ===========


         At June 30, 2002, the Company provided a 100% valuation allowance for
         the deferred tax asset because the ultimate realization of this asset
         is uncertain.

         At June 30, 2002, the Company's net operating losses carried forward
         amounted to approximately $21,030,000 which are available to offset
         future federal taxable income through 2023. Foreign net operating
         losses carried forward totalled approximately $75,888,000 at June 30,
         2002. Such losses can be utilized against future foreign income.

15       STOCK OPTIONS AND WARRANTS

      (a)    Stock incentive plan

            In 1998, the Company adopted a Stock Incentive Plan ("the Stock
            Incentive Plan") for its employees, officers and directors (whether
            or not employees). The Stock Incentive Plan provides for the grant
            of non-qualified stock options. The Stock Incentive Plan provides
            that for each option granted under the Stock Incentive Plan, the
            exercise price shall not be less than 100% of the fair market value
            of the common share on the date before the option is granted. The
            Stock Incentive Plan provides that options granted vest in one, two
            or three installments: the first being six to twelve months, the
            second being one year to two years, and the third being eighteen
            months to twenty-eight months after the anniversary of the date of
            grant, and expire no later than 10 years subsequent to the grant
            date. The number of shares authorized for grants under the Share
            Option Plan is 2,000,000.

         The following table summarizes information about stock options
outstanding at June 30, 2002.

                               WEIGHTED
                  OUTSTANDING   AVERAGE    WEIGHTED                     WEIGHTED
  RANGE OF           AS OF     REMAINING   AVERAGE     EXERCISABLE AS    AVERAGE
  EXERCISE         JUNE 30,   CONTRACTUAL  EXERCISE      OF JUNE 30,    EXERCISE
  PRICES             2002        YEARS      PRICES          2002         PRICES

$ 0.36 - 0.86       95,000        9.72        $0.41          2,500        $0.86
$ 1.08 - 1.70      127,500        9.48         1.37         54,500         1.21
$ 2.26 - 3.88      227,500        6.05         2.73        211,500         2.74
$ 4.00 - 5.37      107,500        7.2          4.39        107,500         4.39
$ 6.09 - 7.00       60,000        7.7          6.70         60,000         6.70
$ 8.06              23,000        8.6          8.06          3,000         8.06
$13.63 -14.75      118,600        8.0         14.47         62,300        14.33
$17.00              20,000        7.9         17.00         13,000        17.00
                  --------                 --------       --------
                   779,100                     5.01        514,380
                 =========                 ========       ========

                                      F-21
<PAGE>

             Information concerning the Stock Incentive Plan is summarized as
follows:
                                                                   WEIGHTED
                                    YEAR ENDED        OPTION       AVERAGE
                                      OPTION         PRICE PER    PRICE PER
                                      SHARES           SHARE        SHARE

Outstanding at June 30, 2000        1,126,000     1.00 - 64.00       7.02
Granted                               244,900     5.02 - 14.63       9.95
Exercised                            (192,600)    1.00 -  4.38       1.85
Cancelled/expired                    (250,300)    2.75 - 64.00      10.60
                                    ---------     -----------     -------

Outstanding at June 30, 2001          928,000     2.50 - 23.88       8.35
Granted                               245,000     0.40 -  2.80       1.16
Exercised                                   -                -          -
Cancelled/expired                    (393,900)    2.50 - 23.88      10.93
                                    ---------     ------------     ------
Outstanding at June 30, 2002          779,100    $0.40 - 17.00      $5.01
                                    =========    =============     ======


                                      F-22
<PAGE>

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

            The weighted average fair value of options granted during the year
            was $0.58 and $7.29 for June 30, 2002 and 2001 respectfully.

            The Company has used the Black Scholes pricing model to determine
            fair value of each option with pricing assumption, as follows:

                                                         OPTIONS
                                                         -------
                                                     2002        2001

              Risk free interest rate               4.76%       5.28 %
              Expected option life                  5 years     7-8 years
              Volatility                            75%         61.0 %
              Dividends expected                      -            -


             SFAS 123 requires the Company to provide pro forma disclosures of
             net loss and net loss per share as if the fair value method had
             been used to determine compensation costs. The following represents
             the Company's net loss and net loss per share under the fair value
             method of accounting for stock compensation.

                                                 JUNE 30,           JUNE 30,
                                                  2002               2001

Net loss             As reported              $11,896,625        $79,636,107
                     Compensation - options       476,604            891,358
                                               ----------         ----------
                     Pro forma                $12,373,229        $80,527,465
                                               ==========         ==========

Loss per share       As reported                   $(0.87)            $(7.56)
                     Compensation - options         (0.03)             (0.08)
                                               ----------         ----------

                     Pro forma                     $(0.90)            $(7.64)
                                               ==========         ==========
      (b)    Warrants

             In May 2000, the Company instituted a warrant plan whereby warrants
             may be granted to employees, officers and directors. The warrant
             plan provides that the exercise price of each warrant granted will
             be 150% or 125% of the market price of the company's shares on the
             day such warrants are granted. Such warrants are purchased by the
             employee, officer or director at a price equal to the fair market
             value of the warrant on the date of the grant. The fair market
             value is determined using the Black Scholes valuation method. The
             plan provides for the warrants to vest two or three years after the
             date of grant, and have a life of six months from the vesting date.

             The following table summarizes information about the warrant plan
at June 30, 2002:

                               WEIGHTED
               OUTSTANDING     AVERAGE     WEIGHTED                 WEIGHTED
RANGE OF          AS OF       REMAINING     AVERAGE  EXERCISABLE AS  AVERAGE
EXERCISE        JUNE 30,     CONTRACTUAL   EXERCISE    OF JUNE 30,  EXERCISE
PRICES            2002          YEARS       PRICES        2002       PRICES

$1.29 - 4.13      548,000        1.63     $ 1.86        31,000      $ 2.23
$5.57 -25.50      376,800        1.27      17.43        72,000       25.50
                ---------                  -----        ------
                  924,800                 $ 8.05       103,000

                                      F-23
<PAGE>
                                                                   WEIGHTED
                                                                   AVERAGE
                                    YEAR ENDED       WARRANT     EXERCISABLE
                                      WARRANT       PRICE PER      PRICE PER
                                      SHARES         SHARE          SHARE

Outstanding at June 30, 2000         322,000       $0.40        $  25.50
Granted                              238,300       $0.09-0.37   $  12.46
Cancelled                           (175,000)      $0.40        $  25.50
                                    ---------      -----------    -------

Outstanding at June 30, 2001         385,300       $0.09-0.40   $  17.43

Granted                              548,000       $0.02-0.05   $   1.85
Cancelled                             (8,500)      $0.19-0.37   $  21.80
--------
Outstanding at June 30, 2002

                                     924,800       $0.02-0.37   $  8.05
                                  ==============                 ======

16    COMMITMENTS AND CONTINGENCIES

         A significant portion of the Company's continuing business is conducted
         in currencies other than the US dollar (the currency in which its
         financial statements are stated), primarily the Swedish krona. The
         Company incurs a significant portion of its expenses in Swedish krona.
         As a result, the value of the Swedish krona relative to the other
         currencies in which the Company generates revenues, particularly the US
         dollar, could adversely affect operating results. As the Company's
         customers are mostly found in Europe the invoicing is predominately
         made in Euro. The Company does not currently undertake hedging
         transactions to cover its currency.

(a)      Operating leases

             The Company rents offices under noncancelable operating leases
         expiring through April 30, 2003. Rental expense amounted to
         approximately $517,000 and $915,000 for fiscal year 2002 and 2001,
         respectively.

         Future minimum annual rental payments under the noncancelable leases at
             June 30, 2001 are approximately as follows:

             2002-2003                     $160,000
             2003-2004                     $160,000


(b)      Litigation

             The Company is subject to claims and lawsuits that arose in the
         ordinary course of business. On the basis of information presently
         available, it is the opinion of management that the disposition or
         ultimate determination of such claims and lawsuits will not have a
         material adverse effect on the financial position or operations of the
         Company (See also Note 9).

                                      F-24
<PAGE>

17       MAJOR CUSTOMERS

         The Company's largest and two largest customers relative to continuing
         operations accounted for 98% and 46% and 19% of the Company's sales for
         the fiscal years ended June 30, 2002 and 2001, respectively. Accounts
         receivable from this customer and these two customers represented 100%
         and 76% and 10% of accounts receivables at June 30, 2002 and 2001,
         respectively.

             For the years ended June 30, 2002 and 2001, the Company's business
         was primarily conducted in Sweden with customers in Europe.

18       EQUITY FINANCING

         On September 25, 2001, the Company closed a private placement pursuant
         to which it issued 3,250,000 shares of Common Stock for proceeds of
         $3,250,000. In addition, the Company issued warrants to purchase
         1,625,000 shares of Common Stock, exercisable at $2.25 per share for
         two years. The Company used part of the proceeds from this offering to
         make the initial required payment to Castle Creek for the repurchase of
         a portion of the convertible notes held by Castle Creek.

         On September 25, 2001, the Company closed a placement under Regulation
         S for an aggregate of approximately $1,212,000, pursuant to which the
         Company issued an aggregate of 1,046,606 shares and 784,071 warrants to
         purchase shares of the Company's Common Stock, exercisable at $2.36 per
         share for two years.

         On October 5, 2001, the Company completed the initial closing of a
         private placement of Common Stock and warrants pursuant to which it
         issued an aggregate of 1,238,097 shares of Common Stock for proceeds of
         $1,300,000. In addition, the Company issued warrants to purchase
         619,048 shares of Common Stock, half of which are exercisable at $3.50
         per share for twelve months following the closing, and the other half
         of which are exercisable at $5.00 per share for twenty-four months
         following the closing.

         On January 31, 2002 the Company completed the closing of a private
         placement of Common Stock and warrants pursuant to which it issued an
         aggregate of 848,939 shares of Common Stock for proceeds of $655,000.
         In addition, the Company issued warrants to purchase 424,472 shares of
         the Company's Common Stock, exercisable at $1.50 per share for two
         years.

         As a result of the private placements, the Company has received gross
         proceeds totalling approximately $6,417,000 as of June 30, 2002. These
         proceeds were recorded at net of fees totalling approximately $359,000.
         The Company issued approximately 86,000 additional shares to pay for a
         portion of the fees.


                                      F-25