UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
--------------------------------------------------------------------------------

                                   FORM 10-KSB

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

     For the fiscal year ended December 31, 2001

                                       OR

|_|  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from ______________ to ______________

                        Commission file number: 000-30620

                           UNITY WIRELESS CORPORATION
                 (Name of Small Business Issuer in its charter)

      Delaware                          4812                    91-1940650
(State or jurisdiction of         (Primary Standard          (I.R.S. Employee
    incorporation or          Industrial Classification     Identification No.)
      organization                  Code Number)


                             7438 Fraser Park Drive
                   Burnaby, British Columbia, Canada V5J 5B9
                                 (800) 337-6642
            --------------------------------------------------------
                    (Address of principal place of business)

                       Evergreen Corporate Services, Inc.
                             33713 9th Avenue South
                           Federal Way, WA 98003 6762
                                 (253) 874-2949
            --------------------------------------------------------
            (Name, address and telephone number of agent for service)


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

       Title of each class             Name of each exchange on which registered
       -------------------             -----------------------------------------
             None                                       None

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

                         Common shares, par value $0.001
                      ------------------------------------
                                (Title of Class)

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

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of Regulation S-B in this form, and no disclosure will be contained,  to the
best  of  the  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. [X]

     State issuer's revenues for its most recent fiscal year: $3,544,770

     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
December 31, 2001 was $10,897,785.

     As of March 15, 2002,  30,915,704  shares of the issuer's Common Stock were
outstanding.

   Transitional Small Business Disclosure Format (Check one): Yes [ ]; No [X]

<PAGE>


                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

Forward Looking Statements.....................................................4

Item 1. Business...............................................................4

Item 2. Description Of Property...............................................17

Item 3. Legal Proceedings.....................................................17

Item 4. Submission of Matters to a Vote of Security Holders...................17

Item 5. Market for Registrant's Common Equity and Related
        Stockholder Matters...................................................17

Item 6. Management's Discussion and Analysis or Plan of Operation.............19

Item 7. Financial Statements..................................................25

Item 8. Changes In And Disagreements With Accountants on Accounting
        and Financial Disclosure..............................................25

Item 9. Directors And Executive Officers, Promoters, And Control Persons......26

Item 10. Executive Compensation...............................................28

Item 11. Security Ownership Of Certain Beneficial Owners And Management.......32

Item 12. Certain Relationships And Related Transactions.......................35

Item 13. Exhibits and Reports on Form 8-K.....................................35




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<PAGE>
                                     PART I


Forward Looking Statements

     We  may  use  words  like  "expects,"  "intends,"  "anticipates,"  "plans,"
"projects" or "estimates" in this Form 10-KSB.  When used,  these words identify
"forward-looking"  statements.  We have  made  forward-looking  statements  with
respect to the following, among others:

     o    our goals and strategies;
     o    our expectations  related to growth of the wireless  telecommunication
          industry in China and the other markets in which we conduct business;
     o    our  ability to  develop,  manufacture  and market  telecommunications
          amplifiers on a competitive basis;
     o    our ability to earn sufficient revenues from our products;
     o    the pace of change in wireless telecommunications technologies;
     o    the demand for our products;
     o    competition in the wireless telecommunications industry; and
     o    our anticipated results of operations.

     These statements are forward-looking and reflect our current  expectations.
They are  subject  to a number of risks  and  uncertainties,  including  but not
limited to,  changes in the economic  and  political  environments  in China and
other Asian markets, changes in technology, increased competition and changes in
the wireless  telecommunications  industry.  Forward-looking  statements  are by
their nature  subject to many varied  uncertainties  and risks.  Actual  results
could vary greatly. Potential investors should review the section entitled "Risk
Factors" beginning on page 10 of this report.

     We are making these statements only as of the date of this Form 10-KSB.


ITEM 1. BUSINESS

General

     We, Unity Wireless  Corporation,  design,  develop and manufacture wireless
technologies  and  products  for a broad  range  of  industrial  and  commercial
applications.  Our business is focused on developing,  marketing and selling our
UltraTech high power linear radio frequency (RF) amplifiers.

     UltraTech  high  performance  linear  RF  amplifiers  are  used in  current
generation wireless voice,  Internet and data base station and repeater networks
and support Cellular, PCS (Personal  Communications  Services),  Paging, and WLL
(Wireless Local Loop) frequencies.

Corporate History

     We were incorporated in the State of Delaware on October 1, 1998, under the
name  Sonic  Systems  Corporation.  We are the  successor  to M&M  International
Realty,  Inc., a Florida  corporation,  which effected a  re-incorporation  as a
Delaware  corporation  by  merger on  December  1,  1998,  with  Unity  Wireless
Corporation  as the  surviving  corporation.  Before  the  merger,  the  Florida
corporation  had no material  commercial  activity.  On December  11,  1998,  we
acquired all of the issued and  outstanding  stock of UW Systems in exchange for
11,089,368 shares of our common shares. As a result, the former  shareholders of
UW Systems owned a majority of our outstanding stock. Therefore,  for accounting
purposes, UW Systems was deemed to have acquired Unity Wireless Corporation.



                                       1
<PAGE>

     In connection  with the  acquisition  of UW Systems,  we formed 568608 B.C.
Ltd.  ("568608") to act as an acquisition  vehicle to acquire  Ultratech  Linear
Solutions  Inc.,  a  designer,   developer  and  manufacturer  of  linear  power
amplifiers for the wireless network infrastructure  industry  ("Ultratech").  We
acquired  Ultratech  in a share  purchase  transaction  that  was  completed  on
November 16, 2000. Ultratech is a wireless  communications  technology designer,
developer  and  marketer  specializing  in high power linear RF  amplifiers.  In
consideration of the Ultratech  shares, we paid to the shareholders of Ultratech
$48,000 (Cdn.$72,000) on account of shareholder loans, and issued 700,000 shares
of our common stock. We had loaned $200,000  (Cdn.$300,000)  to Ultratech before
closing. As of December 31, 2000, 568608,  Ultratech and UW Systems were merged,
with UW Systems remaining as the surviving corporation.

     In keeping with its decision to focus on wireless technologies,  we changed
our name to Unity Wireless  Corporation by filing Articles of Amendment with the
State of Delaware  Secretary of State that became effective on July 20, 2000. We
began using the new name as a "dba" in March, 2000.

     Our fiscal year end is December 31.


Principal Products & Services

High Power Linear RF Amplifiers

     High  power  linear RF  amplifiers  allow  radio  frequency  signals  to be
amplified  and  broadcast  in a given area with minimal  distortion.  RF signals
carry voice and data  information used in wireless  transmissions  such as those
used for cell phones and wireless Internet access.

     "Linearity" of the signal (the lack of  distortion)  becomes more important
as the amount of data  transported and the density and  interference of adjacent
channels in a cell increases.

     We produce  amplifiers  in a variety of  frequency  bands and output  power
levels,  tuned for  optimal  performance  with  certain  network  protocols.  In
general,  our  products  fall  into 3  frequency  bands for  cellular  telephone
infrastructures  (800-900 MHz, also known as "cellular  band" or 1st generation;
18-1900 MHz, aka "PCS" or 2nd generation; and 2.1GHz, aka "3G" or 3rd generation
networks).  Collectively,  these are all  known as  cellular  networks.  We also
manufacture  one  amplifier  family for use in Digital  TV  broadcasting,  which
operates in the frequency range of 460-870 MHz.

     Within  the  cellular  network  bands,  products  can be tuned for  optimal
operation with Code Division  Multiple Access ("CDMA"),  Time Division  Multiple
Access ("TDMA"),  Global System for Mobile Communications ("GSM"), Wideband CDMA
("W-CDMA") and other network protocols. Not all protocols are used in all bands;
some amplifiers  support multiple  protocols  and/or multiple  channels within a
band.

     Our  products  range  from 2 watts  output  power  to 80  watts  (sometimes
expressed as "dBm" (deci-bell milliwatts, where 33dBm =2W and 47dBm=50W).

     Wireless  communications  infrastructure  is one of the  quickest  and most
cost-effective  method of providing  both fixed and mobile  voice,  Internet and
data  network  communications.  The  global  market is being  driven by  several
economic and other factors as it goes wireless:

     o    Consumers and businesses  worldwide are driving up  penetration  rates
          and  therefore  increasing  the demands for voice,  Internet  and data
          wireless communication networks.

     o    Affordable  telecommunication  infrastructure is becoming necessary in
          developing  countries and the  construction of wireless local loops is
          one of the quickest and most cost-effective solution.

     o    Telecommunication  service  providers are starting to incorporate  and
          bundle wireless technology into their suite of offerings.



                                       2
<PAGE>

     o    Applications such as video demand higher bandwidths.

     o    The  move to one or a  small  number  of  global  standards  for 3G or
          third-generation wireless will cause most current infrastructure to be
          upgraded or replaced.

     We expect  that  factors  such as these will  continue  to drive the global
demand for wireless  technologies for the foreseeable  future. As consumer usage
of wireless  applications  increases,  the demand for more system  capacity  and
greater system  coverage also increases,  thus creating an increased  demand for
amplifiers.  Industry  analysts  estimate  that the wireless  telecommunications
networks and technologies market will grow to $135 billion by 2004, and that the
total  global  market sales of RF power  amplifiers  to support such growth will
increase from $1.1 billion in 1999 to $3.5 billion by 2004.

     Network service  providers  typically  source their network  equipment from
companies  known as  system  integrators,  which  in turn  source  their  system
components from a variety of subcontractors and component  suppliers.  Typically
system  integrators  use  representative  agents to source  and  present to them
suppliers of network sub components such as amplifiers.  The amplifier  supplier
that has experienced sales and agent representation,  combined with the required
technical  and  operational  capability  will  have  the  market  advantage.  We
currently have agent representation in 19 countries around the world, and we are
building our direct sales and marketing capabilities.

     The wireless telecommunications equipment industry consists of four primary
sectors:  (1) wireless  system  integrators  or  infrastructure  providers;  (2)
handset and end user terminal  devices;  (3) accessory items,  including towers,
cable,  connectors,  etc.; and (4) the amplifying equipment sector. Our products
compete in the amplifying equipment sector.

     Several  trends have  affected  the supply and demand for high power linear
amplifiers  in the global  market.  As recently  as a few years ago,  the global
market was small and  dominated by a few  suppliers.  With the  explosion in the
growth  of  wireless  technologies  in  the  past  five  years,  the  number  of
competitors  increased and smaller  companies that supplied  amplifiers to niche
markets grew very quickly and gained market share.

     We believe  certain  competitors  are unable to deal with the rapid pace of
change  in  the  second  tier  amplifier   market,   which  creates   additional
opportunities for us to provide quality products for specialty applications.

     We believe the large,  conventional  amplifier  suppliers  will continue to
represent  approximately  70% of the  market,  and that  opportunity  exists for
smaller and focused amplifier businesses,  like us, to supply the non-captive or
specialized markets.

     These specialized markets are expected to become even more important as the
3G  networks  begin to build out over the next few  years.  The  nature of 3G RF
signals is such that the signals have higher  attenuation rates which means that
the  "footprint"  of each 3G cell  site is much  smaller  in area  than  that of
earlier generations of wireless  technology.  The solution for network operators
who wish to (or  need  to)  move to 3G is to a) build  out as many as 5 times as
many base stations,  or b) to deploy one or more "infill"  technologies  such as
repeaters,  smart antennas,  distributed  base stations and  micro-cells.  Unity
Wireless  believes that network  operators will choose the latter approach since
it is a much more cost  effective  way of achieving  coverage.  Our products are
particularly well suited for use in 3G infill applications.

Product Research and Development

     We have recently augmented our research and development capabilities in the
area of our  Ultratech  High Power  Linear  Amplifiers,  with the addition of RF
design  engineers and the leasing of additional test and measurement  equipment.
We have devoted and will  continue to devote a large portion of our research and
development  resources  towards next  generation  products,  using  leading edge
design techniques and other progressive technologies.



                                       3
<PAGE>

     We are also actively  working with  leading-edge  technology  developers to
potentially  increase the  performance  and efficiency of our  amplifiers.  Most
recently we have entered  into a licensing  agreement  with an Israeli  company,
which is expected to lead to a new  generation  of  amplifiers  with  measurable
competitive advantage in the third quarter of 2002.

     We spent $842,487 on research and development in 2001,  including  $152,436
in stock based  compensation  and $880,818 on research and  development in 2000,
including  $238,655  in  stock  based   compensation.   The  2000  research  and
development expenses related to discontinued operations.

Sales and Marketing

     We  plan to  build  strategic  alliances  and  partnerships  to  assist  in
technology  development  which will help to extend our  position in the wireless
communications market.

     We sell our high power linear RF amplifiers  primarily  through sales agent
channels and on-site visits with customers.  The majority of UltraTech amplifier
sales to date have been in South  Korea  through  one agent.  The agent is under
contract  with us for sales  commissions,  and has been  granted  a  significant
number of  options  (vesting  over  three  years) in our stock as a  longer-term
incentive.

     We have expanded our marketing efforts to include North America, Europe and
countries in Asia, including China. In late 2001 and the first quarter 2002, our
marketing efforts led to sales contracts in North America,  Europe and China, We
intend to participate  in industry trade shows in 2002 to build brand  awareness
in the wireless network infrastructure market.

     We hired an  experienced  Vice-President  of  Marketing  during  the fourth
quarter 2001 to work with our  Vice-President  of Sales to develop and implement
our marketing sales strategy. Short term marketing efforts focus on two areas to
expand  sales:  (i) direct  sales and (ii)  channel  development.  Direct  sales
activities  will  target the large  "tier  one"  suppliers  of base  transceiver
station (BTS) equipment.  We intend to position  ourselves as having the ability
to quickly produce specialty  products meeting high standards,  evidenced by our
successful installation of several thousand installed units in Korea.

     Direct  sales  activities  also  target  manufacturers  of infill  coverage
products, in particular repeaters and smart antennas.  Much of our Korea product
is already built into repeaters,  and our primary US customer is also a repeater
manufacturer.  Initial orders from a European-based  repeater manufacturer and 2
European antenna manufacturers have also been received.

     Channel  development   activities  will  focus  on  sales   representatives
following  closely the model already working in Korea, that is, to contract with
agents who are currently representing  manufacturers of complementary  products,
selling to system integrators of cellular,  PCS and related wireless transceiver
equipment.

     A  third,  longer-term  component  of our  marketing  strategy  for  the RF
amplifier  products is to align with  developers of new  technologies  in the RF
marketplace to keep current with technical advances and position as key supplier
to the innovators.  Several  organizations with exciting  technologies have been
identified and/or are being worked with currently.

Manufacturing and Suppliers

     We subcontract our electronics  manufacturing to qualified companies with a
history of quality assurance.  This minimizes the need for capital  expenditures
related  to  electronics  manufacturing  facilities,  minimizes  staff  and uses
specialists  in each stage of  manufacturing.  All  enclosure  metalwork is also
subcontracted. Alternate contract manufacturers are available, should any of our
existing contract manufacturers cease providing services to us.

     We  currently  assemble,  configure,  tune  and test  our  products  and RF
circuitry in our facility located in Burnaby,  British Columbia. We have limited
manufacturing capacity, and the process to assemble, test and tune our



                                       4
<PAGE>

current products is labor intensive.  We believe our  manufacturing  capacity is
sufficient  to meet our  requirements  during  2002.  In the  future,  we may be
required  to expand our  manufacturing  facilities,  hire  additional  personnel
and/or automate  assembling,  tuning and testing processes to meet future demand
for our products. We may also subcontract certain manufacturing functions.

     The  principal  raw  materials  used in the  production of our products are
mostly standard electronic,  plastic and hardware components. We have, from time
to time,  experienced  difficulties  in obtaining  raw  materials  and we reduce
supply risk by using alternate suppliers.

Competition

     We  believe  that  there are two sizes and types of  competitors  in the RF
amplifier business: (1) large-scale manufacturers with annual sales ranging from
$100,000,000 to $500,000,000,  specializing in large volume  production runs and
mainstream  type products;  and (2) smaller  companies with annual sales ranging
from $1,000,000 to $30,000,000,  specializing in custom order markets. The large
and dominant RF amplifier companies are Powerwave  Technologies Inc.,  Spectrian
Inc., Andrew  Corporation,  Celiant Corporation and Microwave Power Devices Inc.
Microwave  Power  Devices Inc.  was  recently  purchased by Ericsson and Celiant
Corporation  was also  recently  purchased by Andrew  Corporation.  The dominant
smaller   companies  are  Amplidyne  Inc.,   Stealth   Microwave  Inc.  and  AML
Communications.

     Powerwave,  located in Irvine, California, is an independent supplier of RF
high  performance   amplifiers  that  it  designs  and   manufacturers  for  the
multi-carrier  ultra-linear  high  power RF  amplifier  market.  These  types of
amplifiers  are key  components  in  wireless  communications  networks  such as
Cellular  and PCS  (Personal  Communications  Services).  Powerwave  is also the
leading  supplier of RF  amplifiers  for the Land Mobile Radio (LMR)  market.  A
significant portion of Powerwave's annual revenue comes from Nortel Networks.

     Spectrian, located in Sunnyvale,  California, is also a leading supplier of
ultra-linear high power RF amplifiers to wireless communications  infrastructure
manufacturers   and  service   providers   worldwide.   Spectrian   designs  and
manufactures  power  amplifiers for use in microcell and macrocell base stations
for cellular, PCS and wireless local loop.

     Amplidyne, located in Somerset, New Jersey, designs, manufactures and sells
ultra-linear  power amplifiers and related  subsystems to the worldwide wireless
telecommunications   market.   These  single  and  multi-carrier   linear  power
amplifiers,  which are key components in cellular and PCS base stations, utilize
a patented pre-distortion technique.

     Stealth,  located in Trenton,  New Jersey,  designs and manufactures single
channel  amplifiers  for the cellular  market and is trying to penetrate the PCS
bands with newer technology.

     AML  Communications,   located  in  Camarillo,   California,   designs  and
manufactures  high power  linear  amplifiers  for  cellular,  PCS and  satellite
markets.  AML  Communications  is also involved in the design and manufacture of
low noise amplifiers.

Intellectual Property

     Trade Marks

     We  registered  the  trade  marks  "We  Hear  the  Future  Now(R),"  "Sonic
Solution(R)," and "Sonic Systems  Corporation(R)" with the Canadian Intellectual
Property  Office in 1997.  We have also been using the  unregistered  trade mark
"SONEM 2000(TM)" since 1997, but did not register it at the time due to resource
constraints.  As a result of the sale of our Sonem division, we do not intend to
formally register this trade mark. We are also using the unregistered trade mark
"Unity  Wireless(TM)".  We intend to register this mark in the U.S., Canada and,
possibly, other countries.



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<PAGE>

     Our Sonem business was sold on October 6, 2000, to Traffic  Systems LLC, an
Arizona  limited  liability  corporation  ("Traffic  Systems")  owned  37% by UW
Systems  and  63% by one of the  Sonem  contractors  of UW  Systems.  The US and
Canadian siren detector  patents and trade marks related to our Sonem  business,
except for the trade mark Sonic Solution(R), were licensed on an exclusive basis
to Traffic Systems, and all rights to the trade mark Sonic Solution(R) were sold
to Traffic Systems in connection with the sale. See "Recent  Developments - Sale
of Sonem Business."

     Patents

     We do not have any patents with  respect to our  Ultratech  technology.  We
have an immaterial  residual  interest in several  patents  associated  with the
Sonem  technology,  substantially  all of which we have  transferred  to Traffic
Systems. See "Recent Developments - Sale of Sonem Business."

     Service and Product Warranty

     We offered a standard  warranty on our Sonem  products  covering  parts and
labor for a fixed period, either one year or two years, depending on the product
and  application.  Our warranty  obligations  for Sonem products were assumed by
Traffic Systems. See "Recent Developments - Sale of Sonem Business."

     We installed a one-off system for audible  tornado  warnings in Batesville,
Arkansas in 1998.  These systems were sold with a five year warranty.  There are
about 18 months  remaining on that  warranty and no failures  have been reported
recently.

     We offer a  standard  warranty  of one year on parts and labor from date of
shipment on our Ultratech  amplifiers.  In some cases, a warranty  period of two
years may be negotiated.  For instance,  the sale of Ultratech  amplifiers  into
Korea to date typically have a two year warranty.

     We will repair units under warranty at our cost and return freight  prepaid
back to the customer. A repaired unit will be warranted for the remainder of the
original  warranty  period or for one year from the repair  date,  whichever  is
longer.

     Our  warranties   specifically   exclude  all   liabilities  for  "special,
incidental,  direct,  indirect, or consequential damages or expenses whatsoever"
arising  from  the  functioning  or use,  or  inability  to use,  the  warranted
products.  The warranties are void if the product has been improperly installed,
subjected to abuse or  negligence,  or tampered  with.  State and other laws may
limit our ability to limit our liability or exclude certain types of damages.

Government Regulation

     UltraTech RF power  amplifiers  are sold as  components  which form part of
larger systems,  which are tested for FCC compliance at the system level, by the
manufacturer or integrator of the system equipment. We do not test our amplifier
products for compliance at the component level.

Management and Employees

     Our senior  management  team has experience in exploiting  technologies  in
emerging markets and our technical team is proficient in wireless  technologies.
Currently  each of our  employees and managers  holds stock and/or  options with
future  vesting dates to encourage  continued  commitment  and focus for several
years. As of March 15, 2002, we had approximately 50 full-time  employees and 10
contract  or  part-time  employees.  Our  employees  are  not  represented  by a
collective  bargaining  agreement  and we  consider  our  relationship  with our
employees to be good.



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<PAGE>

Disposition of Our Traffic Systems Business

     We were  founded  to  commercialize  the Sonem  technology  traffic  system
devices.  Based on our  knowledge  of  intersection  controllers  gained  in the
traffic signal preemption business,  specifically the specialized computers that
control the signal  lights,  we developed  our  "UniLinx(TM)"  technology.  With
further  development of the UniLinx(TM)  technology,  management came to believe
that  the  Sonem  business  should  be  de-emphasized  in  favor  of a focus  on
UniLinx(TM) and other wireless technologies.

     In keeping with this change in focus, we sold our Sonem business on October
6, 2000, to Traffic Systems, an Arizona limited liability  corporation owned 37%
by UW Systems and 63% by one of the Sonem  contractors of UW Systems,  under the
terms of an Asset  Purchase  Agreement  among UW  Systems,  Traffic  Systems and
others.  Under the Asset Purchase Agreement,  UW Systems licensed  substantially
all of its Sonem patent  rights to Traffic  Systems (on an exclusive  world-wide
basis)  and  Traffic  Systems  covenanted  to  commercialize  and sell the Sonem
technology.  In addition to its equity interest in Traffic  Systems,  UW Systems
was entitled to receive $2,000,000 from the gross profits of Traffic Systems. UW
Systems also agreed to assist  Traffic  Systems in the  transition  of the Sonem
business, by providing limited technical, consulting and financial support.

     Although  Traffic  Systems  agreed  under the Asset  Purchase  Agreement to
assume  the  warranty  obligations  of UW  Systems  for Sonem  products  already
installed,  UW Systems was  required  to advance the costs of such  obligations,
with  repayment to come from the gross  profits of Traffic  Systems.  We believe
that the costs of such  obligations in the future may be  substantial,  and have
agreed,  pursuant to a term sheet dated January 31, 2001, that these obligations
will be assumed by Traffic Systems in consideration  of UW System's  transfer of
its equity  interest in Traffic  Systems and our residual  interest in the Sonem
patents.  On April 30, 2001, UW Systems and Traffic  Systems signed a definitive
agreement consummating the term sheet.

     For financial  reporting  purposes,  the ultimate  disposition of the Sonem
business  results  in  it  being  considered  to  be a  discontinued  operation.
Accordingly,  all  discussions  of our continuing  operations  exclude the Sonem
business.

Disposition of Integration Services Business

     To complement internally developed Sonem technology, we formed wholly owned
UW Integration (and its wholly owned  subsidiary Unity Wireless  Integration (S)
Pte Ltd.) in early 2000 to pursue alliances,  licensing agreements and marketing
partnerships in the ITS (intelligent  transportation systems) and communications
markets.  In  order to  better  focus on our new  high  power  linear  amplifier
business,  we sold UW Integration to Lyma Sales & Management Corp.  ("Lyma"),  a
British  Columbia,  Canada  company  wholly owned by Siavash  Vojdani,  a former
officer and director of ours, on December 30, 2000.


                         RISK FACTORS AND UNCERTAINTIES

     Readers should  carefully  consider the risks and  uncertainties  described
below before deciding whether to invest in shares of our common stock.

     If we do  not  successfully  address  any of the  risks  and  uncertainties
described  below,  there  could be a material  adverse  effect on our  business,
financial  condition  or results of  operations,  and the  trading  price of our
common stock may decline and investors may lose all or part of their investment.

     We cannot  assure any  investor  that we will  successfully  address  these
risks.



                                       7
<PAGE>

RISKS AND UNCERTAINTIES RELATING TO OUR COMMON STOCK

You may lose your entire investment

     Given our continued need for additional  capital and our history of losses,
our stock  involves a high degree of risk,  and should not be  purchased  by any
person who cannot  afford the loss of the entire  investment.  A purchase of our
stock is  currently  "unsuitable"  for a person  who  cannot  afford to lose his
entire investment.


We have a history of losses and may never achieve profitability

     Sales of our  products  have  provided  insufficient  cash flow to  sustain
operations.  We had an accumulated  deficit at December 31, 2001 of $12,830,289.
During the year ended December 31, 2001, we incurred a loss of $2,098,014  (2000
- $5,318,633) and used cash from  operations of $1,847,392  (2000 - $3,097,829).
We anticipate  that we will continue to incur net losses during our current year
ending December 31, 2002 due to increased sales and marketing costs,  additional
personnel  requirements,  research and development  costs and our general growth
objectives.  Our  ability  to  earn a  profit  will  depend  on  the  commercial
acceptance   and   profitability   of  our   products.   We  may  never  achieve
profitability.


We anticipate that we may require additional capital

     Our  capital  requirements  are  difficult  to plan in light of our current
strategy  to  expand  our  customer   base  and  to  develop  new  products  and
technologies.  Since our inception, we have been dependent on investment capital
as our primary  source of liquidity.  Our operations to date have been primarily
financed by issuing  equity.  As of December 31, 2001, we had working capital of
$984,384.  During the quarter  ended  December 31, 2001,  we completed a private
placement  of  5,147,551  units at $0.18 per unit to raise net cash  proceeds of
$788,035  after  deducting  $47,902  share issue costs and $90,600  unsubscribed
share capital.  Each unit consisted of one share of common stock and one warrant
exercisable  to acquire one share of common stock at $0.30 per share.  We cannot
assure  you that the  warrants  will be  exercised.  We  anticipate  that we may
require additional working capital for inventory, components and work in process
or to expand our  manufacturing  capacity if we enter into  contracts  for large
quantities of our  amplifiers.  Our inability to obtain  sufficient  capital for
these commitments or to fund our obligations under our existing sales orders may
cause us to delay delivery of products or to default on one or more  agreements.
Our inability to deliver  products on a timely basis may have a material adverse
effect on our business, financial condition and results of operations.


Our  auditors  have  expressed  doubt  about our ability to continue as a "going
concern"

     Our  financial  statements  have been  prepared on the going  concern basis
under which an entity is considered to be able to realize its assets and satisfy
our liabilities in the ordinary course of business. Operations to date have been
primarily  financed  by  long-term  debt and  equity  transactions.  Our  future
operations are dependent upon the  identification  and successful  completion of
additional  long-term or permanent equity  financing,  the continued  support of
creditors and  shareholders,  and,  ultimately,  the  achievement  of profitable
operations.  There can be no assurances  that we will be  successful.  If we are
not, we will be required  to reduce  operations  or  liquidate  assets.  We will
continue to evaluate  projected  expenditures  relative to available cash and to
seek  additional  means of financing in order to satisfy our working capital and
other  cash  requirements.  The  auditors'  report  on  our  December  31,  2001
consolidated  financial statements includes an explanatory paragraph that states
that as we have suffered  recurring  losses from operations,  substantial  doubt
exists  about our  ability to  continue  as a going  concern.  The  consolidated
financial   statements   do  not  include  any   adjustments   relating  to  the
recoverability of assets and classification of assets and liabilities that might
be necessary should we be unable to continue as a going concern.


Our common stock is subject to penny stock regulation

     The  SEC  has  adopted  rules  that  regulate  broker-dealer  practices  in
connection  with  transactions  in "penny  stocks."  Penny stocks  generally are
equity  securities  with a price  of less  than  $5.00  per  share  (other  than
securities  registered on certain national securities exchanges or quoted on the
NASDAQ National Market System, if current



                                       8
<PAGE>

price and volume  information with respect to transactions in such securities is
provided by the exchange or system). Our common stock is considered penny stock.
The  penny  stock  rules  require  a  broker-dealer,  before  consummation  of a
transaction in a penny stock not otherwise  exempt from the rules,  to deliver a
standardized  risk  disclosure  document  prepared  by  the  SEC  that  provides
information  about  penny  stocks and the nature and level of risks in the penny
stock market.  The broker-dealer also must provide the customer with bid and ask
quotations for the penny stock,  the compensation of the  broker-dealer  and its
salesperson  in the  transaction,  and monthly  account  statements  showing the
market value of each penny stock held in the  customer's  account.  In addition,
the penny stock rules require that,  before  consummation  of a transaction in a
penny stock not otherwise exempt from such rules, the broker-dealer  must make a
special written  determination  that a penny stock is a suitable  investment for
the purchaser and receive the purchaser's  written agreement to the transaction.
These  disclosure  requirements  often have the effect of reducing  the level of
trading activity in any secondary market for a stock that becomes subject to the
penny stock rules. Our stock is currently  subject to the penny stock rules, and
accordingly, investors may find it difficult to sell their shares.


We may issue  additional  shares in the future which would result in dilution to
our existing shareholders

     Our  Certificate  of  Incorporation  authorizes the issuance of 100,000,000
shares of common stock and  5,000,000  shares of preferred  stock.  Our Board of
Directors  have the authority to issue  additional  shares up to the  authorized
capital stated in the  certificate of  incorporation,  subject to the regulatory
requirements of the CDNX. Our Board of Directors may choose to issue some or all
of such shares to acquire one or more businesses or other types of property,  or
to provide  additional  financing in the future. The issuance of any such shares
may result in a reduction of the book value or market  price of the  outstanding
shares of our common  stock.  If we do issue any such  additional  shares,  such
issuance also will cause a reduction in the  proportionate  ownership and voting
power of all other  shareholders.  Further,  any such  issuance  may result in a
change of control of our corporation.


We do not anticipate we will pay any dividends

     We have never paid  dividends  on our  common  stock and do not  anticipate
paying any dividends in the foreseeable  future.  The declaration and payment of
dividends  are  subject  to  the  discretion  of our  Board  of  Directors.  Any
determination  as to the  payment of  dividends  in the future  will depend upon
results  of  operations,   capital   requirements,   and  restrictions  in  loan
agreements,  if any, and such other  factors as our Board of Directors  may deem
relevant.


Exercise of warrants and stock options may cause dilution to our shareholders

     We have adopted a stock  option plan.  The total number of shares of common
stock to be delivered on the exercise of all options  granted under the plan may
equal up to 20% of all outstanding shares of such common stock, including shares
of common stock  previously  issued under the plan. We had options for 4,408,250
shares of common  stock  issued  and  outstanding  as of March 15,  2002 (out of
7,729,000  issuable  under the plan as of that date) at the  following  exercise
prices:

               Number of Shares(1)           Exercise Price($)
               ------------------            -----------------
                  3,602,500                       0.17
                     20,000                       0.21
                     40,000                       0.22
                    130,000                       0.23
                     25,000                       0.28
                     10,000                       0.33
                     20,000                       0.35
                    397,000                       0.38
                     20,000                       0.40
                    143,750                       1.00



                                       9
<PAGE>

     (1)  These numbers do not include options for 500,000 shares at an exercise
          price of $1.00  originally  granted  to  Integrated  Global  Financial
          Corporation.  Integrated Global has sued us for a declaration that the
          grant of 500,000  options is of  unlimited  duration.  We believe  the
          options have expired. See "Legal Proceedings."

     As of March 15, 2002,  we had  warrants  outstanding  to acquire  5,647,551
shares of our common stock as follows:

               Number of Shares              Exercise Price ($)
               ----------------              ------------------
                  5,147,551                      $0.30
                    200,000                      $0.38
                    300,000                      $0.29

     The existence of below-market  options or warrants could  adversely  affect
the market price of our common stock and impair our ability to raise  additional
capital through the sale of our equity securities or debt financing.

     We  cannot  assure  you that  any of  these  warrants  or  options  will be
exercised.  Exercise of any such options or warrants  will result in dilution of
the proportional interests of our shareholders at the time of exercise,  and, to
the  extent  that the  exercise  price is less than the book value of the common
stock at that time, dilution of the book value per share of the common stock.


RISKS AND UNCERTAINTIES RELATED TO OUR BUSINESS AND OPERATIONS

Lack of Prior Operations and Experience

     We  have a  limited  history  of  revenues  from  operations  and  have  no
significant tangible assets. Accordingly, there can be no assurance that we will
operate  at  a  profitable   level.  Our  business   involves  the  development,
manufacture  and  marketing of products,  novel and  otherwise,  in the wireless
communications industry. Future development and operating results will depend on
many factors,  including the  completion of developed  products,  demand for our
products,  level of  product  and price  competition,  success in setting up and
expanding  distribution  channels,  and  whether we can  develop  and market new
products and control costs. In addition, our future prospects must be considered
in light of the risks,  expenses  and  difficulties  frequently  encountered  in
establishing a new business in the technology  industry,  which is characterized
by intense competition,  rapid technological change, and significant regulation.
There can be no assurance  that our future  financial  forecasts will be met and
that they will be similar to past results.


We depend on experienced management and key technical employees

     We are a growing company dependent upon the services of certain management,
particularly  incoming President Ilan Kenig,  Roland Sartorius,  Chief Financial
Officer, Tom Dodd, Senior Vice President and General Manager and Raffi Antepyan,
Vice  President  Engineering.  The  loss of the  services  of any  one of  these
persons, or an inability to recruit and retain additional  qualified  personnel,
could  have a  material  adverse  effect  on our  business.  We have no plans at
present  to  obtain  key  person  life  insurance  for any of our  officers  and
directors.

     We are  also  dependent  on  highly  qualified  technical  end  engineering
personnel. Although we have had success in recruiting these employees in today's
competitive marketplace, there can be no assurance that this will continue which
may put us at risk of being unable to sustain and grow our business.


We face substantial competition

     The wireless  communications  industry is characterized by rapidly evolving
technology  and  intense  competition.  We may be at a  disadvantage  with other
companies having larger technical staffs,  established market shares and greater
financial and operational  resources.  Some  competitors  have achieved  greater
brand  recognition and  technologies  than we have been able to as of now. There
can be no assurance that we will be able to



                                       10
<PAGE>

successfully  compete.  There also can be no assurance that our competitors will
not continually  succeed in developing  products or competing  technologies that
are more effective or more effectively marketed than products marketed by us, or
that render our technology obsolete. Earlier and larger entrants into the market
often obtain and maintain  significant  market share relative to later entrants.
We believe that an increasing number of products in the market and the desire of
other   companies  to  obtain  market  share  will  result  in  increased  price
competition.

     Price reductions by us in response to competitive pressure or our desire to
also  successfully  increase  market  penetration  or market  share could have a
material,  adverse effect on our business,  financial condition,  and results of
operations.

     Our  products  compete  on the  basis of  price,  technology,  performance,
quality,   reliability,   customer  service  and  on-time  delivery.  Our  size,
infrastructure  and  location  allow us to provide  our  customers  with  timely
responses to their individual requests. There can be no assurance that this will
continue in the future.


We experience  significant  fluctuations  in revenues and results on a quarterly
basis

     Our revenues and operating results experience fluctuations from one quarter
to the next due to amongst other things:  customers  changing delivery schedules
or  canceling  orders,  long  sales  cycle,  availability  of  component  parts,
competitive  pressures  on  sales  prices  and  discounts,   delays  in  product
development  and  redesign of  customer  specifications,  mix of  products  with
varying  gross  margins,  management  of our  variable  and fixed  expenses  and
warranty expenses. Our customers also provide us with varying order sizes, short
lead, tight delivery time requests and even change their orders on short notice.

     We have experienced  these  fluctuations in the past and may continue to do
so in the  future.  As a  result,  our  historical  results  are not a  reliable
indicator  of our future  results.  The share price of our common  shares  could
therefore fluctuate substantially.


We depend on protection of our proprietary technology

     Our success  will  depend in part on our  ability to  preserve  and protect
trade secrets and any proprietary technology,  and to operate without infringing
upon the  patents  or  proprietary  rights of third  parties  in both the United
States and other countries.  We may inadvertently fail to do so and consequently
could face  infringement  claims which could be costly and thus adversely affect
our business.

     We do not own any  patents in  connection  with its  UltraTech  products or
technologies  and depend entirely on trade secrets,  confidentiality  agreements
and continual improvement to our products to protect our proprietary technology.
We may apply for patent protection of UltraTech  products or technologies in the
future.  However,  there can be no  assurance  that our  efforts to protect  our
proprietary  technology will be effective and this could have a material adverse
effect on our results of operation and financial condition.

     We have  filed  applications  for trade  mark  protection  in the U.S.  and
Canada.


Disputes related to our intellectual property

     We are not aware of any disputes  with  respect to any of our  intellectual
property, except as follows:

     o    a possible opposition to the application for registration of the trade
          mark "Unity  Wireless" in Canada by a party applying for  registration
          in Canada of the trade mark "Unity;" and

     o    an examiner's  opposition to the application  for  registration of the
          trade mark "Unity Wireless" in the United States on the basis that the
          trade mark "Unity  Wireless" is confusing  with  currently  registered
          trade marks.

     We are working to resolve these issues and believe we will be able to so do
successfully.



                                       11
<PAGE>

     We are not involved in any other  litigation  respecting  our  intellectual
property.  The use of trade marks, service marks, trade names, slogans,  phrases
and other  expressions  in the  course  of our  business  and our  subsidiaries,
however, may be the subject of dispute and possible  litigation.  We may have to
defend  ourselves  from  infringement  claims  by  others.  Such  litigation  is
expensive and  time-consuming,  and can be used by well-funded  adversaries as a
strategy for  depleting  the  resources of a small  enterprise.  This could also
affect  our  competitive  position.  There  is no  assurance  that we will  have
sufficient  resources to  successfully  protect our interests in any  litigation
that may be brought.  There can be no assurance that we or our subsidiaries will
be able to continue  to use their  current  trade  names and marks.  Any changes
could  result in  confusion to potential  customers  and  negatively  affect our
business and our financial condition.


We have limited manufacturing capacity

     We  currently  assemble,  tune and test our  products in our  manufacturing
facility located in Burnaby,  British  Columbia.  Current models of our products
are  required  to be  individually  assembled,  tuned  and  tested  to meet  the
specifications  of the  end-user.  This  process  is time  consuming  and  labor
intensive and our ability increase  manufacturing  output is limited by the size
of our facilities and our ability to hire, train and retain qualified personnel.
Currently,  we believe we have  sufficient  manufacturing  capacity  to fill our
orders in 2002. In the future,  we may be required to expand our facility,  hire
additional personnel and automate the assembly, tuning and/or testing process to
increase  our  manufacturing  capacity  in order to meet  future  demand for our
products.  Such  expansion  will  require  additional  capital  investments  and
allocation of resources,  which may affect our results of operations.  We cannot
assure you that adequate  resources will be available or that we will be able to
increase our manufacturing capacity in a timely manner, if at all. Our inability
to meet the demand for our products would have an adverse effect on our business
and our results of operations.


We depend on suppliers and third parties

     We are a small  enterprise and have yet to establish  substantial  internal
management,  personnel and other resources.  We depend  substantially upon third
parties for several  critical  elements of our business  including,  among other
things, promotion and marketing,  technology and infrastructure  development and
distribution  activities.  We also depend  substantially  upon third party sales
agents.  A substantial  portion of our high power RF amplifier  revenues to date
have been derived  through a South Korean sales agent.  The loss of any of these
resources  could  have a  material  adverse  effect on our  business,  financial
condition and results of operations.

     We rely on outside  suppliers for some  components and the assembly of some
portions  of our  products.  There can be no  assurance  that  component  parts,
materials  or services  obtained  from  outside  suppliers  will  continue to be
available in adequate  quantities or on adequate terms.  The inability to obtain
sufficient  quantities of such  materials,  parts or services at reasonable cost
could have a material  adverse effect on our business,  financial  condition and
results of operations.


Our success will depend upon future strategic partnerships

     The successful  execution of our business  strategy is partially  dependent
upon  enlisting  a number  of  strategic  partners  regionally,  nationally  and
globally  to assist in a  focused  marketing  effort  and to  provide  financial
strength.  There is no assurance  that we will be successful in developing  such
strategic  partnerships  on a timely  basis or in  developing  enough  strategic
partnerships to successfully market our technologies and products globally.


We depend on  telecommunication  system  providers to accept our  technology and
products

     There  can  be  no  assurance  that  our  existing   technologies  will  be
incorporated  into products,  or that products based on our technologies will be
marketed  successfully.  In  addition,  there  can  be  no  assurance  that  our
technologies  will be adopted  widely as  industry  standards,  even if products
based on its technologies have been introduced successfully to the marketplace.



                                       12
<PAGE>

     The markets for our  technologies  and products have only recently begun to
develop.  As is  typical  in the case of a new and  rapidly  evolving  industry,
demand and market acceptance for recently  introduced  products and services are
subject to a high level of  uncertainty  and risk.  Because  the markets for our
technologies  and products are new and/or  evolving,  it is difficult to predict
the future growth rate, if any, and size of these markets. There is no assurance
that the  markets for our  technologies  and  products  will emerge or become or
remain  sustainable.  If the markets  fail to develop,  develop more slowly than
expected  or become  saturated  with  competitors,  or if our  technologies  and
products do not achieve or sustain market acceptance,  our business,  results of
operations and financial condition will be materially and adversely affected.


There are risks and uncertainties related to our development of new products

     We have only recently released  additional  commercial  versions of some of
our  technologies and products.  Additional  efforts and expenditures to enhance
their  capabilities  are critical to  commercial  viability.  Although we invest
heavily in the research and  development  of new products,  we cannot assure you
that  the  new  products  we  develop  will  be  commercially  viable  or that a
sufficient demand will develop for such products.


Product warranty risks and uncertainties

     Our  products  are  relatively  new to their  respective  markets  and lack
extensive  field  operating  experience.  While we have tested our  products for
failure in certain  circumstances,  there can be no assurance  that our products
will  continue  to  operate  satisfactorily  after  sustained  field  use.  If a
substantial   number  of  products   are  returned  and  accepted  for  warranty
replacement, the cost to us could have a material adverse effect on our business
and financial condition. See "Recent Developments - Sale of Sonem Business."


Potential product liability related to our Sonem products

     In the past,  we sold  emergency  traffic  preemption  devices of our Sonem
division  (sold in October 2000) which are  installed at traffic  intersections.
Also, we have sold some of our UniLinx(TM)  devices (division sold in June 2001)
for use with traffic control equipment located at intersections. If any of these
products fail to perform properly,  significant personal injury, property damage
or death  could  arise  from  traffic  accidents  resulting  from such  failure.
Although we maintain product liability insurance, there is no assurance that the
amount of coverage will be sufficient in the event of a claim,  or that coverage
will  continue to be available to us on  reasonable  terms and  conditions or at
all.


Risks and uncertainties related to failure to maintain technological  advantages
and risks of obsolescence

     We are dependent upon what we perceive as the  technological  advantages of
our  products  and the  ability to  maintain  trade  secret  protection  for our
products.  There can be no assurance  that we will be able to obtain or maintain
such advantages; failure to do so would have substantial adverse consequences to
our business.

     Technological  obsolescence  of our  technologies  and  products  remains a
possibility.  There is no  assurance  that our  competitors  will not succeed in
developing  related  products using similar  processes and marketing  strategies
before us, or that they will not develop technologies and products that are more
effective  than any which have been or are being  developed by us.  Accordingly,
our ability to compete will be dependent on timely  enhancement  and development
of our technologies and products,  as well as the development and enhancement of
future  products.  There is no assurance  that we will be able to keep pace with
technological developments or that our products will not become obsolete.


We face risks and uncertainties of foreign currency exposure

     Our functional  currency is the Canadian  dollar,  which means that most of
our  operations  are  undertaken  in  Canadian   dollars.   We  are  exposed  to
fluctuations  in the US dollar  relative  to the  Canadian  dollar,  because  we
collect revenues in U.S. dollars.  As we expand our operations,  we may begin to
collect  revenues  from  customers in  currencies  other than the US or Canadian
dollar. We do not currently engage in any hedging activities.



                                       13
<PAGE>

ITEM 2. DESCRIPTION OF PROPERTY

     We currently lease 11,425 square feet of office,  research and development,
and production  space on a triple net basis at 7438 Fraser Park Drive,  Burnaby,
British Columbia,  Canada. The lease has a five-year term expiring on August 31,
2005, with an option to renew for an additional  three-year term.  Minimum basic
rental rates are as follows:

     (a)  years 1 and 2 - Cdn$10.00 ($6.70) per square foot per annum;

     (b)  year 3 - Cdn$10.25($6.87) per square foot per annum; and

     (c)  years 4 and 5 - Cdn$10.50 ($7.04) per square foot per annum.

     We do not currently  maintain any  investments in real estate,  real estate
mortgages or employ persons primarily engaged in real estate activities,  nor do
we expect to do so in the foreseeable future.


ITEM 3. LEGAL PROCEEDINGS

     We, along with Sonic Systems Corporation and M&M Realty Incorporated,  have
been sued in the Supreme Court of British Columbia, Canada, by Integrated Global
Financial  Corporation.  The action is dated January 5, 2001.  Integrated Global
alleges it has options to purchase  500,000 shares at an alleged  exercise price
of $1.00 per share, plus unspecified damages. We dispute the allegations and are
defending the claim vigorously.  No trial date has been set. No Examinations for
Discovery  have been  conducted  or are even set down.  The  matter is at a very
preliminary  stage. It is our view that the claim has little,  if any, merit and
we do not expect the proceeding to have any material adverse effect on us. It is
our belief that these  options are expired and we have not included such options
in our outstanding options.

     We have filed a lawsuit  against  Cobratech  Industries Inc. in the Supreme
Court of  British  Columbia,  Canada  to  recover  certain  funds  owed to us by
Cobratech.  The  action is dated  October  24,  2001.  We made a bridge  loan of
$200,000 to Cobratech in November 2000, secured by a security interest in all of
the personal and real property of Cobratech.  The  obligation was evidenced by a
promissory note bearing interest at the rate of 1% per month.  Cobratech owes us
approximately  $78,000 in principal  under the note.  The action has been stayed
until May 2002 on the condition that Cobratech  Industries  Inc. pays 10 percent
of all funds  received  from  financing  until May 2002,  in excess of $100,000,
until the  outstanding  amount has been paid.  Two of our former  directors were
also  directors  of  Cobratech.   See,   "Certain   Relationships   and  Related
Transactions" below for further details.


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

     We  submitted no matters to a vote of security  holders  during the quarter
ended December 31, 2001.


                                     PART II

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

     In Canada,  our common stock traded on the Canadian Venture Exchange (CDNX)
under the symbol "UWC". Our common stock is traded on the NASD  over-the-counter
or "Bulletin Board" market under the symbol "UTYW." Between February 6, 1999 and
August 17,  2000,  our common  stock  traded  under the  symbol  "ZSON."  Before
February 6, 1999, our common stock traded under the symbol "MMIM." The following
comprises the high and low bid prices for our common stock as of the end of each
period  indicated  since  March 31,  1999 (the stock was not  "publicly  traded"
before December 31, 1998), unless otherwise indicated:



                                       14
<PAGE>

                               Fiscal Year 2000

        Period                                High Bid         Low Bid
        ------                                --------         -------
        January 1 - February 9, 2000            1.27             0.89
        February 10 - April 27, 2000*           6.25            0.9000
        April 28 - June 30, 2000                4.50            1.0625
        Third Quarter 2000                      1.90             1.16
        Fourth Quarter 2000                     1.53             0.37

                               Fiscal Year 2001

        Period                                High Bid         Low Bid
        ------                                --------         -------
        First Quarter 2001                      0.68             0.26
        Second Quarter 2001                     0.48             0.19
        Third Quarter 2001                      0.30             0.11
        Fourth Quarter 2001                     0.35             0.15

Source: Nasdaq Trading & Marketing Services

     *    Our common shares were traded on the National  Quotation  Bureau "Pink
          Sheets" from  February 10, 2000 until April 27,  2000,  and  therefore
          high and low bid  information is not available  during this period and
          the numbers reflect high and low trade prices.

     Over-the-counter  market  quotations  reflect  inter-dealer  prices without
retail  mark-up,   mark-down  or  commission,   and  may  not  represent  actual
transactions.

     Our common stock began  trading on the CDNX on December 24, 2001.  On March
15,  2002,  the closing  price of our common stock was Cdn $0.39 on the CDNX and
$0.26 on the OTCBB.

     As of March 15, 2002 there were  approximately 300 holders of record of our
common stock. We have never declared a cash dividend on our common stock.

                     RECENT SALES OF UNREGISTERED SECURITIES

     On June 22, 2001,  we issued 25,000 shares of common stock to Robert Singer
in return for consulting  services  rendered by Mr. Singer and valued at $7,000.
This issuance was exempt from registration pursuant to Rule 701 and Section 4(2)
under the Securities Act of 1933.

     We issued in January,  2001 to Mueller and Ideas 200,000 warrants  (100,000
for each party) at an exercise  price of $0.38,  which vest until  December  31,
2002 and expire up to March 31,  2005.  In April 2001,  we issued to Mueller and
Ideas 300,000  (150,000 for each party)  warrants at an exercise price of $0.29,
which vest until March 31, 2004 and expire up to March 31, 2005. On December 15,
2001 the 250,000 warrants allocated to Ideas were terminated,  which resulted in
them  becoming  fully vested on that date and expire on December  14, 2002.  The
issuance was exempt from  registration  under Section 4(2) of the Securities Act
of 1933.

     On December 24, 2001,  we completed  an equity  financing  through  private
offering of 5,147,551  units at $0.18 per unit in reliance upon  Regulation D to
persons in the United  States and  Regulation  S to persons  outside  the United
States.  Each  unit  consisted  of one share of  common  stock  and one  warrant
exercisable  to acquire  one  additional  common  share at $0.30 per share until
December 25, 2003. We agreed to use our  reasonable  efforts to cause the shares
and the shares  acquirable upon exercise of the warrants to be registered  under
the  Securities  Act. An SB-2  registration  statement was filed on February 15,
2002 pursuant to that agreement, and declared effective on March 7, 2002.



                                       15
<PAGE>

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

     The following discussion of our financial  condition,  changes in financial
condition, and results of operations should be read in conjunction with our most
recent financial statements and the accompanying notes.

Overview

     We are in the business of  designing,  developing  and  manufacturing  high
power linear RF  amplifiers  and  specialized  communications  products that use
traditional   wireless   channels.   Prior  to  the   introduction   of  our  RF
communications   products,   we  had   designed,   manufactured,   and  sold  an
acoustic-based  traffic signal  preemption  system under the trade name "Sonem."
The Sonem product  accounted  for all revenues  earned in the fiscal years ended
December 31, 1998 and 1999,  and the quarter  ending March 31, 2000.  In view of
our strategic repositioning toward RF wireless products during 2000, we, through
our subsidiary Unity Wireless Systems  Corporation (UW Systems),  sold our Sonem
business to Traffic  Systems,  L.L.C. on October 6, 2000.  Accordingly,  revenue
from acoustic products ended in the third quarter of 2000.

     We agreed,  pursuant to a term sheet dated January 31, 2001,  that warranty
obligations of UW Systems for Sonem products  already  installed were assumed by
the purchaser of the Sonem business, in consideration of UW System's transfer of
its equity  interest in Traffic  Systems and our residual  interest in the Sonem
patents.  On April 30, 2001, UW Systems and Traffic  Systems signed a definitive
agreement consummating the term sheet.

     Also, in late 1999, we increased our marketing  efforts in Asia,  resulting
in a contract in the first  quarter of 2000 with the  Transportation  Management
Systems  division  of  Orbital  Sciences.   Under  the  Orbital   contract,   UW
Integration, through our wholly owned subsidiary, UW Singapore, provided systems
integration support, warranty and maintenance services for the Automatic Vehicle
Management  System to be  delivered  by  Orbital  and Sanyo  Trading  Company to
Singapore  Bus Services Ltd.  Revenue from this contract  started in the quarter
ended June 30, 2000,  and continued for the rest of the year. As we continued to
refocus upon RF  communication  products,  the Orbital  contract was assigned to
Lyma Sales & Management  Corp.  on December 30,  2000,  and  therefore we had no
further interest in any revenue resulting from the contract.

     In 1999 and 2000, we designed a specialized RF  communication  product with
the trade mark "UniLinx",  which we introduced commercially in the later part of
2000. This wireless IP (Internet  Protocol)  gateway was deployed in the traffic
control  market  and the  remote  POS market  during  2000.  Sales from  UniLinx
commenced in the quarter  ended June 30, 2000 and  continued for the rest of the
year and into the  first  quarter  of 2001.  In order to focus  solely on the RF
communication products, we sold the UniLinx business and assets on June 12, 2001
to Horton Automation Inc. for Cdn $150,000,  which is payable on a percentage of
unit sales by Horton.  Consequently,  revenue from the Unilinx business ended in
second quarter of 2001.

     On November 16, 2000 we acquired  Ultratech.  Ultratech's  operations  have
been  consolidated  from the date of  acquisition.  The  revenues  from sales of
Ultratech  amplifiers  from its inception on April 22, 1999 to December 31, 2000
were  approximately  $3,200,000.  We received  revenue from the sale of RF power
amplifiers  starting in the quarter ended December 31, 2000.  Management expects
that the Ultratech  acquisition  will have a significant  positive impact on our
revenues in the current year and beyond.

     We have  incurred  net losses since we became  active in July 1995.  Losses
resulted from low sales of our Sonem traffic signal preemption system,  combined
with startup manufacturing activity and engineering and research and development
costs relating to product improvement and new technologies.

     Losses  continued into 2000 as our revenue from Sonem sales,  and the later
revenue from UniLinx and the Orbital contract,  did not exceed  expenditures for
research and development,  marketing, and general and administrative activities.
In the  first  half of 2000,  we  became a  registrant  with the SEC,  requiring
additional  expenditures on legal and accounting services.  Also, up to the time
of the sale of the Sonem product,  we made further  development  expenditures on
this  product to improve  performance  and to reduce unit costs.  Marketing  and
additional development costs were also incurred on the UniLinx product.



                                       16
<PAGE>

     With the completion of the Ultratech  purchase,  the  discontinuance of the
contract  services   (Singapore)   business   segment,   the  ending  of  active
participation in the Sonem product and the sale of the Unilinx business, we have
restructured  our  operations  and staff  complement  to adjust for the needs of
higher manufacturing  volumes and development  activities for RF power amplifier
products.  We have also reviewed  other costs and  eliminated  expenditures  not
directly required to implement our RF wireless focus.

     During  2001,  we focused on  developing  our  marketing,  sales and global
distribution  network by increasing the number of distributors  from one to over
twenty by year-end.  As well, we introduced  over  twenty-five new products into
the marketplace.  Our development activities were concentrated on increasing our
engineering  resources  to develop our new  products and the new feed forward RF
power amplifier technology.

Results of Operations

     (All amounts are in US dollars unless otherwise stated)

Years Ended December 31, 2001 and 2000

     Net Sales in fiscal 2001  increased by 648%, or  $3,070,767,  to $3,544,770
from  $474,003 in 2000.  2001 sales were  totally  attributable  to RF amplifier
sales and in 2000 net sales were $474,003 from RF amplifiers between November 16
and December 31, 2000.

     Cost of  goods  in  fiscal  2001  increased  by  605%,  or  $2,206,031,  to
$2,570,454  from  $364,423 in 2000.  The increase was primarily due to increased
sales  of RF  amplifiers  in  2001.  The  cost of  goods  sold in 2001  was also
increased by an inventory write down of $88,429 for the UniLinx  inventory.  The
gross margin for the RF amplifiers was positive.  Stock  compensation  resulting
from the granting of stock options was $30,548 in 2001 and $354 in 2000.

     Research and development expenses for fiscal 2001 were $842,487,  including
$152,436 in stock based compensation. Expenses in 2001 were primarily due to the
hiring of senior level RF  engineering  positions,  leasing of RF test equipment
and development of additional amplifier products.  During 2001, we also received
$225,448 related to a Canadian Government Investment Tax Credit that was paid to
us as a result of RF amplifier  research  and  development  activities  in 2000.
Stock compensation  resulting from the granting of stock options was $152,436 in
2001.

     Sales and  marketing  expenses  in fiscal  2001  increased  by  4,696%,  or
$504,560 to $515,305 from $10,745.  Costs in 2001 were primarily attributable to
the RF amplifier  business and included the restructuring of sales and marketing
staff,  hiring senior level sales and marketing  positions,  revamping corporate
and promotional  material,  attendance at various industry trade shows, building
up a  worldwide  distributor  network as well as travel to visit  customers  and
distributors.  In 2000 sales and  marketing  expenses  were  attributable  to RF
amplifier sales between  November 16 and Decemebr 31, 2000.  Stock  compensation
resulting from the granting of stock options was $112,331 in 2001 and $88,766 in
2000.

     Depreciation  and  amortization  in fiscal 2001  increased  by 14,175%,  or
$286,900,  to  $288,924  from  $2,024  in 2000.  $185,399  of the  increase  was
attributable  to  amortization  of  goodwill  arising  from the  acquisition  of
Ultratech Linear Solutions Inc. on November 16, 2000.

     Exchange  gain (loss)  increased by $46,222 to ($49,258)  from  ($3,036) in
2000. The exchange gain in 2001 was due to fluctuations in the currency exchange
rate between the United States and Canada.  Our revenues are received  mostly in
US dollars,  while the majority of expenses are incurred in Canadian dollars. As
we measure our financial results in Canadian dollars,  strength of the US dollar
results in exchange rate gains.

     General and  administrative  expenses in fiscal  2001  decreased  by 6%, or
$108,323,  to  $1,844,146  from  $1,952,469  in 2000.  Expenses in 2001 included
non-recurring  legal and regulatory  related costs associated with restructuring
our  operations   during  the  year,  hiring   additional   operations   related
administrative staff, general



                                       17
<PAGE>

operating  overhead  expenses  associated  with the  leased  premesis,  expenses
related  to  listing  our  shares on the CDNX,  financing  costs of the  private
placement  which was  completed  in December  2001,  initiation  of the ISO 9001
certification  process as well as increased legal, audit,  regulatory,  investor
relations and corporate  finance  activities  which are associated  with being a
public company.  Stock compensation resulting from the granting of stock options
was $360,139 in 2001 and $354,426 in 2000.

     Interest  income in 2001 was $43,545.  This amount  results  primarily from
interest earned from term deposits.

     Net gain from  discontinued  operations  amounted  to  $267,504.  A loss of
$165,125 is  attributable  to sale of the UniLinx  business on May 1, 2001 and a
gain of $432,629  resulting from the sale of the Sonem business from a reduction
of the  warranty  accrual  for  the  Sonem  product  due to the  replacement  of
previously installed Sonem systems and the sale of the remaining interest in the
Sonem business.

Liquidity and Capital Resources

     Since  inception,  we have been  dependent on equity capital as our primary
source of funding. Prior to December 31, 2000, sales of our Sonem traffic signal
priority product, and sales of our UniLinx product,  provided  insufficient cash
flow to sustain  operations.  We had an accumulated deficit at December 31, 2001
of  $12,830,289.  During  2001,  we focused  entirely  on the  wireless  product
segment,  primarily  our  amplifier  products,  and  incurred a net loss,  after
stock-based compensation expense, of $2,098,014 (2000 - loss of $5,318,633).  We
also used cash from  operations of $1,847,392  (2000 - $3,097,829 in cash used).
Operations to date have been primarily financed by equity.

     The  financial  statements  have been  prepared on the going  concern basis
under which an entity is considered to be able to realize its assets and satisfy
its liabilities in the ordinary course of business. Operations to date have been
primarily  financed  by  long-term  debt and  equity  transactions.  Our  future
operations are dependent upon the  identification  and successful  completion of
additional  long-term or permanent equity  financing,  the continued  support of
creditors and  shareholders,  and,  ultimately,  the  achievement  of profitable
operations. There can be no assurance that we will be successful. If we are not,
we will be required to reduce  operations or liquidate  assets. We will continue
to evaluate our projected  expenditures  relative to our  available  cash and to
seek additional means of financing in order to satisfy working capital and other
cash  requirements.  Our auditors' report on the December 31, 2001  consolidated
financial  statements  includes an explanatory  paragraph that states that as we
have suffered  recurring losses from operations,  substantial doubt exists about
our  ability  to  continue  as  a  going  concern.  The  consolidated  financial
statements  do not include any  adjustments  relating to the  recoverability  of
assets and  classification  of assets and  liabilities  that might be  necessary
should we be unable to continue as a going concern.

     During 2001,  our cash position  decreased by $989,654 to  $1,012,430  from
$2,002,084 on December 31, 2000. The $1,847,392  used by operations  comprised a
net loss of $2,098,014,  and non-cash charges including $103,525 in depreciation
of equipment and $185,399 in goodwill  amortization  and $655,454 in stock-based
compensation  expense.   Other  significant  non-cash  working  capital  changes
included accounts receivable and government grant receivables which increased by
$43,708,  inventory which increased by $56,104 and accounts  payable and accrued
liabilities which deceased by $70,224. The product warranty accrual decreased by
$591,997 as we contributed  to the  replacement  of previously  installed  Sonem
systems.

     Our  investing  activities  during  2001  amounted  to  $53,286,  which was
primarily  attributable  to  increased  capital  leases of  testing  and  tuning
hardware and software.

     Financing  activities  included a decrease in the Cobratech loan receivable
of $118,823 and the bank overdraft  decreased by $38,144 due to a lower level of
cheques outstanding at December 31, 2001 than at December 31, 2000. In May 2001,
we replaced an existing  demand  revolving loan with Royal Bank of Canada with a
$79,263 (Cdn  $125,000)  operating  line of credit from HSBC Bank Canada,  at an
interest rate of HSBC prime, and secured



                                       18
<PAGE>

by an $80,000 guaranteed investment certificate.  The HSBC Bank Canada operating
line was replaced in February 2002 with a $78,616 (Cdn 125,000)  operating  line
from CIBC bank,  at an  interest  rate of prime and  secured  by a $78,616  (Cdn
$125,000)  guaranteed  investment  certificate.  In March  2002,  we  secured  a
$750,000 account receivable credit facilty with CIBC at an interest rate of CIBC
prime + 1% and an  administrative  fee of 1% of invoice value.  See  "Subsequent
Events".  In December 2001, we completed an equity  financing  through a private
placement offering under regulation D and Regulation S of the Securities Act. We
accepted  subscriptions  for 5,147,551  units  resulting in net cash proceeds of
$788,035  (gross proceeds of $926,537 less $47,902 share issue costs and $90,600
unsubscribed  share  capital  as a result  of an  advance  that was made to John
Robertson,  our CEO and President.  See item "Certain  Relationships and Related
Transactions").

     Other than operating  loan  commitments,  we have no material  commitments,
including capital commitments, outstanding December 31, 2001.

Subsequent Events

     In January 2002, we announced  sales to our first three customers in China.
All  three of which  have  placed  initial  orders  and two have  signed  supply
agreements for the development and delivery of our RF power amplifiers.  We also
announced the first commercial sales of our new power amplifier for base station
applications which is a new market for us. As well, we announced purchase orders
for RF power amplifiers  worth $640,930  destined for export to Korean customers
and that we had a 26% increase to our technical and  engineering  staff,  now in
excess of 35 people.

     In  February  2002,  we  announced  follow-on  orders  from  two  of our US
customers worth approximately  $625,000 for the delivery of RF amplifiers in the
first  quarter  2002.  In  addition,  we  announced  that of  January's  orders,
approximately  60% were from new  customers  representing  20% to  customers  in
China,  and 40% to customers in the US in  comparison to January 2001 where 100%
of the orders were from customers in Korea.

     The existing HSBC Bank Canada  operating line was replaced in February 2002
with a $78,616 (Cdn $125,000) operating line from CIBC bank, at an interest rate
of  prime,  and  secured  by a  $78,616  (Cdn  $125,000)  guaranteed  investment
certificate.  In March 2002 , we secured a $750,000  account  receivable  credit
facilty with CIBC at an interest  rate of CIBC prime + 1% and an  administrative
fee of 1% of invoice value.

     On March 12, 2002, we announced the  appointment of Mr. Ilan Kenig,  as our
President  effective  April 1, 2002. Mr. John  Robertson,  our President and CEO
resigned his positions  effective  March 31, 2002 and remains as a Director.  As
noted in Item 12, Certain Relationships and Related  Transactions,  The Board of
Directors agreed to advance $90,000 to John Robertson to enable him to subscribe
for  500,000  units in  conjunction  with the  private  placement  completed  on
December  24,  2001.  The  loan  principal  plus  interest  is  currently  still
outstanding and is secured by the subscribing  shares. On his resignation,  John
Robertson  will either repay the loan and all interest owing on the loan in cash
or transfer to us, all of the  securities  comprising of the units he subscribed
to.

     Mr. Featherstonhaugh resigned as a director effective March 31, 2002.

     Trends and uncertainties

     The  wireless  infrastructure  market  is in  various  stages  of  maturity
throughout the world.  Developed  countries generally have an established system
of cell  phone  capabilities,  usually  with  more  than  one  service  provider
competing  for  subscribers.  In some places  competing  technologies  have been
deployed.  Developing  countries  are  continuing  to  build  out  1st  and  2nd
generation  networks to complete  their coverage  footprints,  often in place of
wired phone systems.

     There are 2 main sources of future growth.  First,  ever-growing numbers of
subscribers  require more  infrastructure  to support the number of simultaneous
calls  (compounded by the  increasing  length of calls) all driven by aggressive
rate  programs  offered by the  carriers as well as by new features and services
being offered to subscribers. Second, new network technologies (2.5G and 3G) are
being or about to be deployed, which will require



                                       19
<PAGE>

significant new investment in infrastructure. These new network technologies are
being driven by their ability to handle more  simultaneous  calls and offer more
features, which will attract even more subscriber-minutes to the carriers.

     Some  examples of new  features  being  offered by the 2.5G and 3G networks
are: wireless access to the Internet for e-mail,  stock quotes,  weather/traffic
reports,  etc.;  SMS short  message  services,  particularly  popular with young
people;  location-based  services; and the growing wireless connectivity offered
by PDA manufacturers. Longer calls are being encouraged by million-minute plans,
free weekend calls, free roaming,  and other billing  incentives,  as well as by
increased coverage footprints.

     Wireless  infrastructures  will continue to expand for some time to come to
accommodate the increasing number of subscribers, increasing number of features,
and increasing  bandwidth required by many of the new features.  The 3G networks
typically  operate at higher  frequencies,  so their  coverage  area tends to be
smaller per base station,  requiring more base station and repeater equipment to
be deployed to achieve the same geographic coverage (although a larger number of
subscribers can be supported on each 3G base station).

     In an effort to further  increase  subscriber-minutes,  a growing number of
repeater systems (both high power repeaters and "pico-repeaters" for indoor use)
will be deployed to fill in coverage gaps in wireless network footprints.

     Wireless   technology   is  getting  more  complex  as  the  newer  network
technologies use limited bandwidth  (capacity) more efficiently.  And the market
is  getting  more  competitive,  as a small  but  growing  number  of  amplifier
companies pursue the business  worldwide.  This causes intense price competition
and resulting  lower gross profit  margins.  If we cannot continue to reduce our
manufacturing costs on all our products, our gross margins will decline.

     There are a number of emerging  technologies  that  promise to increase the
efficiency  of the RF systems  which carry the wireless  signals in cellular and
wireless  communications  networks. Some of these have the potential to be built
into the amplifiers, transparently increasing performance; others require larger
system-level  changes to the base station  equipment.  It is not clear which, if
any, of these  technologies  will be adopted,  or what effects they will have on
the suppliers of RF amplifiers.

     However,  the primary uncertainty in this market revolves around the timing
of the  infrastructure  build-out and the network type(s) that will be built. We
are aware of the timing  issue and are  developing  products,  and  establishing
alliances in order to secure the potential and/or technical  ability to react to
current and planned network architectures and amplifier technologies.

     The timing of major network build-outs is uncertain,  in different parts of
the world, for different reasons. In North America,  where a number of competing
network  technologies  coexist,  the move to 3G is expected to be slower than in
other geographies. In Europe, where a unified GSM system already exists, several
large carriers have committed huge amounts of money for 3G spectrum  allocation,
but now they may not be able to  afford  to build it out  quickly,  and the GPRS
2.5G system  offers many of the  benefits.  In Asia,  China is  beginning a very
large push to expand their 2G networks with virtually all suppliers in the world
competing for the business, and Korea is planning a 3G push this year (2002).

     There is general  consensus  that the 3G networks will prevail within a few
years, but there have been some  disappointments in the early technology trials,
and most of the  currently-envisioned  applications  can run well enough on 2.5G
networks.

     The overall  trend is for continued  growth of the wireless  communications
infrastructure   worldwide,   driven   primarily   by   increasing   numbers  of
subscriber-minutes and by new features which require more bandwidth. The primary
uncertainty in the market is the pace at which the new generation  networks will
roll out, and the geographic  sequence of the roll out.  Uncertainty of a lesser
concern surrounds the technology itself.



                                       20
<PAGE>

     We believe that our company is well  positioned to compete  aggressively in
the  worldwide  buildup of the  wireless  infrastructure.  Although  we have had
recent success in Asia , there can be no assurance that this trend will continue
and that the Chinese market buildup will be fast as first expected.  A slow down
of the  build-up  could be a  result  from a  mixture  of  political,  economic,
regulatory,  technical or market driven conditions.  Since a significant portion
of our revenues  originate in Asia,  our success could be negatively  materially
affected.

     Our operations have been  successfully  funded to date by cash flow, equity
funding and to a certain extent debt financing.  We are relying on these sources
of funding in order to provide our company with  sufficient  capital to continue
our fast  growth  strategy.  The can be no  assurance  that the past  trend will
continue,  which  would  significantly  affect the  financial  condition  of the
Company.

     Our business in Korea is transacted on the basis of "L/C at sight"  (letter
of credit, payable when the product ships our plant). As we expand and diversify
our business  geographically,  different  business  models are used by different
cultures.  Our US and  European  business is  typically  on "net 30" terms,  and
China-based  customers are demanding even longer payment terms.  As our business
grows and expands,  accounts receivable and financing sales become more relevant
cash management issues for the company.

     Current models of our products are required to be  individually  assembled,
tuned and tested in our manufacturing facility to meet the specifications of the
end-user.  This process is time  consuming  and labor  intensive and our ability
increase  manufacturing  output is limited by the size of our facilities and our
ability to hire, train and retain qualified personnel.  Currently, we believe we
have  sufficient  manufacturing  capacity  to fill our  orders  in 2002.  In the
future, we may be required to expand our facility, hire additional personnel and
automate  the  assembly,   tuning  and/or   testing   process  to  increase  our
manufacturing  capacity to meet demand for our  products.  Such  expansion  will
require  additional capital  investments and allocation of resources,  which may
affect our results of operations.  We cannot assure you that adequate  resources
will be available or that we will be able to increase our manufacturing capacity
in a timely manner, if at all.

     Inflation

     We do not  believe  that  inflation  has had a  significant  impact  on our
consolidated  results of operations  or financial  condition.  However,  we have
recently  experienced  some significant  price increases for certain  components
that are used in the wireless industry.

Critical Accounting Policies

     Our  discussion  and  analysis of our  financial  condition  and results of
operations,  including the  discussion on liquidity and capital  resources,  are
based on our  consolidated  financial  statements  that  have been  prepared  in
accordance with generally  accepted  accounting  principles.  The preparation of
these  financial  statements  requires us to make  estimates and judgments  that
affect  reported  amounts of assets,  liabilities,  revenues and  expenses,  and
related disclosure of contingent assets and liabilities. On an ongoing basis, we
reevaluate  our  estimates  and  judgments,  particularly  those  related to the
determination  of the  recoverability  of equipment,  and goodwill.  We base our
estimates and judgments on historical experience,  contractual  arrangements and
commitments,  and on various other assumptions that we believe are reasonable in
the  circumstances.  Changes in these  estimates and  judgments  will impact the
amounts recognized in the consolidated financial statements,  and the impact may
be material.

     We  believe  the  following  critical   accounting  policies  require  more
significant  estimates  and  judgments in the  preparation  of the  consolidated
financial statements.

     The  consolidated  financial  statements  have been  prepared  on the going
concern  basis,  which  assumes the  realization  of assets and  liquidation  of
liabilities  in the normal course of  operations.  The  continuation  as a going
concern for the  foreseeable  future is dependent  upon the  identification  and
successful  completion of additional debt or equity  financing or the generation
of positive cash flows from operating activities. Our ability to raise financing
is, in part, based on market  conditions that are outside of our control.  If we
are not able to  continue  as a going  concern,  we would  likely not be able to
realize on our assets at values  comparable  to the  carrying  value or the fair



                                       21
<PAGE>

value  estimates  reflected in the balances  set out in the  preparation  of the
consolidated  financial  statements.  Based on the  carrying  value of assets at
December 31, 2001,  the  inability to continue as a going  concern would require
liquidation  of assets not in the normal  course  which would  primarily  impact
inventory, equipment and goodwill's recoverable amounts.

     Inventory  is carried at the lower of cost,  determined  on an average cost
method,  and market.  We provide an allowance that it considers to be reasonable
for its  non-moving or slow moving  inventory  items and for items with expected
future  realizable  value  lower than  cost.  Changes in  customer  demands  and
requirements  in the short term could reduce  product demand and prices having a
material impact on future realizable value of inventory.

     Equipment and goodwill are recorded at cost less accumulated  depreciation.
We review these assets for impairments  when events or changes in  circumstances
indicate  that  the  carrying  amount  of  an  asset  may  not  be  recoverable.
Recoverability  of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future net cash flows expected to be generated by
the asset. As actual future net cash flows are uncertain, the estimation process
requires us to make  reasonable  assumptions  about future  economic  trends and
events. These trends and events are substantially outside of our control. To the
extent that the expected  future cash flows  generated by the asset are reduced,
we may be required to record an impairment  charge against the carrying value of
the equipment and goodwill.

     On  an  ongoing  basis,  we  record  our  best  estimate  of  our  warranty
obligations  related  to  products  sold.  These  estimates  are made  after the
consideration  of contractual  warranty  obligations and historical  experience.
Unforeseen events, including increased technological difficulties with products,
could occur that have not been anticipated in estimating the warranty provision.
Additional costs or estimates will be recognized as determinable.

     We  recognize  revenue  when  criteria   specified  in  generally  accepted
accounting  principles have been met.  Although we have no current  intention of
doing so,  changes in our business  model could impact the timing of recognition
in our consolidated financial statements.


ITEM 7. FINANCIAL STATEMENTS

     Reference  is made to the  financial  statements  listed  under the heading
"(a)(1) Financial  Statements" of Item 13 herein, which financial statements are
incorporated herein by reference in response to this Item 7.


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

     Ernst & Young LLP (E&Y) was dismissed  from its position as our  certifying
accountant  on  December  31,  2000.  KPMG LLP (KPMG) was  appointed  as our new
certifying accountant on the same day.

     E&Y's report on the financial  statements  for the years ended December 31,
1999 and 1998 did not contain an adverse opinion or a disclaimer of opinion, and
was not  qualified or modified as to  uncertainty,  audit scope,  or  accounting
principles,  except  for the  report  on the  1998  financial  statement,  which
contained an explanatory  paragraph  (after the opinion  paragraph)  that stated
that our recurring  losses from operations  raised  substantial  doubt about our
ability to continue as a going concern.  The 1998  financial  statements did not
include any adjustments that might result from the outcome of this  uncertainty.
The report on the 1999 financial  statement did not contain any such explanatory
paragraph as to uncertainty.

     The decision to change  accountants  was approved by our board of directors
pursuant to a consent board resolution dated December 31, 2000. We have an audit
committee,  but the decision to change  accountants  was not  considered by this
committee.

     During  the  Company's  years  ended  December  31,  1999  and 1998 and the
subsequent  interim  period  preceding  the  dismissal  of  E&Y,  there  were no
disagreements  with E&Y on any matter of  accounting  principles  or  practices,
financial statement disclosure, or auditing scope or procedure.



                                       22
<PAGE>

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS

     Our  directors,  executive  officers,  and  significant  employees  and the
significant employees of our subsidiary,  Unity Wireless Systems Corporation (UW
Systems), as of December 31, 2001, were as follows:

<TABLE>
NAME                     POSITION                                                           APPOINTMENT
----                     --------                                                           -----------
<S>                      <C>                                                                <C>
Mark Godsy               Director and Chairman of Board of Directors                        February 22, 2000
                         Director and Chairman of Board of Directors of UW Systems

John Robertson           Director, President and Chief Executive Officer (1)                November 17, 2000
                         Director, President and Chief Executive Officer of UW Systems(1)

Roland Sartorius         Director, Chief Financial Officer and Secretary                      August 15, 2000
                         Director, Chief Financial Officer and Secretary of UW Systems

Thomas Dodd              Director, Senior Vice President                                    February 22, 2000
                         Director, Senior Vice President of UW Systems

Raffi Antepyan           Vice President of UW Systems                                       February 19, 2001

Ilan Kenig               Vice President, Business Development(2)                             December 1, 2001

Ken Maddison             Director                                                            October 29, 1998

Robert W. Singer         Director                                                               June 22, 2001

Robert Fetherstonhaugh   Director(3)                                                            June 22, 2001


     (1)  Mr. Robertson resigned as President and Chief Executive Officer of the
          Corporation  and UW Systems  effective  March 31, 2002. Mr.  Robertson
          remains as a director of the Corporation.

     (2)  Mr.  Ilan Kenig was  appointed  President  of the  Corporation  and UW
          Systems effective April 1, 2002.

     (3)  Mr.  Fetherstonhaugh   resigned  as  a  director  of  the  Corporation
          effective March 31, 2002.
</TABLE>


     Mark Godsy - Age 47. Mr.  Godsy is a Director and the Chairman of the Board
of  Directors  of Unity  Wireless  and UW  Systems.  He  previously  served as a
Director  and the Chairman of the Board of Directors of UW Systems from May 1993
to November 1998, and as the Secretary of UW Systems from May 1993 to July 1995,
and from May 1997 to  November  1998.  Mr.  Godsy was also the  Chief  Executive
Officer from  February 2000 until  November 17, 2000.  His term as a Director of
Unity  Wireless runs until the next annual  meeting of the  shareholders  unless
earlier  terminated.  Mr. Godsy is an  experienced  entrepreneur  working in the
areas of  corporate  development  and  venture  capital.  He  practiced  law for
approximately five years before entering business and co-founding two successful
companies, ID Biomedical Corporation and Angiotech Pharmaceuticals Ltd., both of
which are leading Canadian  biotechnology  firms.  Mr. Godsy's  responsibilities
included building  executive  management teams,  coordinating  corporate finance
activities and strategic positioning.  Mr. Godsy is a graduate of the University
of British  Columbia and received his law degree from McGill  University.  He is
currently a member of the Law Society of British Columbia.



                                       23
<PAGE>

     John Robertson - Age 50. Mr.  Robertson is a Director of Unity Wireless and
the Chief  Executive  Officer of Unity  Wireless and of UW Systems.  His term as
Director of Unity  Wireless runs until the next annual  meeting of  shareholders
unless earlier  terminated.  Mr.  Robertson has over 18 years  experience in the
telecommunications  industry with both public and private companies. He has held
senior  executive  positions with Glentel,  Glenayre  Communications  and Uniden
Canada.  He  founded  Ultratech  Linear  Solutions  ("Ultratech")  in  mid-1999.
Ultratech was acquired in November 2000 by Unity Wireless.

     Roland  Sartorius - Age 49. Mr.  Sartorius is a Director of Unity  Wireless
and the Chief  Financial  Officer  and  Secretary  of Unity  Wireless  and of UW
Systems.  His term as  Director  of Unity  Wireless  runs until the next  annual
meeting of shareholders  unless earlier  terminated.  Mr.  Sartorius has over 12
years  experience in the position of Chief  Financial  Officer in several public
and private multinational  entities.  Most recently, he was based in Switzerland
and held the same position with a private  equity/venture  capital firm managing
several equity funds,  with  investments in various  European and North American
technological/industrial companies. His focus has been in the areas of corporate
finance, strategic planning, financial reporting and controls, international tax
planning, compliance and investor/shareholder  relations. From 1981 to 1988, Mr.
Sartorius was employed with KPMG,  initially as an auditor and subsequently as a
Management  Consultant in Corporate Finance. Mr. Sartorius,  a Certified General
Accountant,  holds a Bachelor of Commerce & Business  Administration degree from
the  University  of British  Columbia.  He currently  serves and has  previously
served on boards of directors for a variety of private companies.

     Thomas Dodd - Age 51. Mr. Dodd is a Director of Unity  Wireless  and Senior
Vice  President of Unity  Wireless and of UW Systems.  His term as a Director of
Unity  Wireless runs until the next annual  meeting of the  shareholders  unless
earlier  terminated.  Mr. Dodd is a senior  marketer/manager  with over 25 years
experience as an end user, OEM, consultant,  and manufacturer,  in roles ranging
from  field  technical  support  to  executive  management.  He has held  senior
executive  positions with Dynapro  Systems Inc. and Campbell  Technologies  with
primary  responsibilities in sales and marketing.  Currently, Mr. Dodd serves on
the Board of Directors of FutureFund (VCC) Capital Corp.

     Raffi Antepyan - Age 43. Mr. Antepyan is an Executive and Vice President of
Engineering.  He has over 20 years of wireless experience.  Recently he was Vice
President  and  managing  Director of  privately  held  Wavesat  Telecom,  which
specialized  in the  development  and  manufacture  of wireless  components  and
systems including  Cellular and PCS (personal  communication  service) amplifier
for  base  station  and  repeater  applications.  Mr.  Antepyan  has  also  held
engineering  and  management   positions  with  and  northern   Telecom  (Nortel
Networks),  Wavefront  Precision  Technologies,   Advantech  Advanced  microwave
Technologies  Inc., and Harris  Farinon  Canada.  Mr.  Antepyan holds a Master's
Degree in Electrical Engineering from Montreal's Concordia University.

     Mr.  Ilan  Kenig - Age 41.  Mr.  Kenig has over 17 years of legal,  venture
capital and investment  banking experience on Wall Street with specific emphasis
in the technology and  telecommunications  arena. Mr. Kenig, with his experience
in international business activities, corporate mergers and acquisitions, joined
the Company as Vice President of Business  Development in December 2001 and will
assume the position of President in April 2002. Prior to pursuing  international
finance activities in New York, Mr. Kenig was a founder of a successful law firm
in Tel-Aviv representing mostly technology and telecommunications interests. Mr.
Kenig holds a law degree from Bar-Ilan University.

     Ken Maddison - Age 61. Mr.  Maddison is a Director of Unity  Wireless.  His
term runs until the next  annual  meeting  of the  shareholders  unless  earlier
terminated. Mr. Maddison, a Chartered Accountant since 1966 and elected a Fellow
of the Institute of Chartered  Accountants of BC in 1975, retired in August 1997
after a lengthy  career as a partner with the  accounting  firm KPMG.  In public
practice over the past 32 years, Mr. Maddison provided auditing,  accounting and
business advisory  services to a wide range of clients in the hospitality,  real
estate,   construction,   non-profit  and  insurance  industries.  Mr.  Maddison
currently serves on the boards of International  Wayside Gold Mines Ltd., Island
Mountain  Gold  Mines  Ltd.,  Northern  Continental   Resources  Inc.,  Northern
Hemisphere Development Inc. and Golden Cariboo Resources Ltd.



                                       24
<PAGE>

     Robert W. Singer - Age 54. Senator Singer is a director of Unity  Wireless.
Senator  Singer is a New  Jersey  state  senator  and  serves  within the Senate
leadership  circle  as  Assistant  Majority  Leader.   Senator  Singer  is  also
Vice-Chairman of the Senate Commerce Committee and a member of the Senate Health
Committee. In his former duties as an elected representative in the Upper House,
Senator Singer was Chairman of the Senate Senior Citizens,  Veterans Affairs and
Agriculture Committee and was Vice-Chairman of the Senate Environment Committee,
and had been appointed to chair the Joint Legislative  Biotechnology  Task Force
and the Software Task  Committee.  Senator  Singer is presently  Chairman of the
Senate Task Force on Science and Technology, which was established in 2001. On a
national  level,  Senator  Singer was also  appointed  as a member of the Health
Committee of the Assembly on Federal Issues of the National  Conference of State
Legislatures.  Members of the  Assembly  on  Federal  Issues  meet with  federal
officials and play a key role in developing  recommendations  on a wide range of
national issues that affect state-federal  relations.  Senator Robert Singer has
distinguished  himself  among his national  peers  through his  recognition  and
understanding of high technology industries,  particularly biotechnology and the
economic development,  health care, agricultural and environmental benefits this
industry  offers his state and the nation.  The Senator has also been honored at
the national  and state level for his  leadership  and support in promoting  the
biotechnology industry. Senator Singer currently serves on the boards of Brocker
Technology Group and Healthchoice Incorporated.

     Robert Fetherstonhaugh - Age 46. Mr. Fetherstonhaugh is a director of Unity
Wireless and a chartered  accountant  with  executive  experience  in technology
companies and public  accounting.  He is presently  Executive  Vice President of
Claridge,  Inc.  Prior to Claridge,  Inc., he was Deputy  Chairman and Corporate
Secretary of  Trader.com,  a public  company in the business of online and print
publication,  which he joined in 1998. Mr.  Fetherstonhaugh  was responsible for
internet and media  acquisitions  in Canada,  the United  States,  Holland,  and
Russia,  and closed three such acquisitions in 1999. He was also responsible for
coordinating Trader.com's Russian operations,  which now generate $20 million in
free cash flows per year,  and has set up operation in China.  From 1978 to 1998
he served with KPMG and became  Partner in charge of the Financial  Institutions
Practice for Montreal. He also set up, led, and significantly  expanded the High
Technology  Practice in Montreal.  Mr.  Fetherstonhaugh  currently serves on the
board of Trader.com and Stake Technology.

     Our directors  are elected at the annual  meeting of the  shareholders  and
serve  until  their  successors  are elected  and  qualified,  or their  earlier
resignation  or removal.  Officers are  appointed by our Board of Directors  and
serve at the  discretion  of the  Board of  Directors  or  until  their  earlier
resignation or removal.

     There  are  no  family  relationships  among  our  directors  or  executive
officers.

Section 16(a) Beneficial Ownership Reporting

     For the fiscal year ended December 31, 2001,  all Section 16(a)  beneficial
ownership reports were filed in a timely manner.

     The  foregoing  disclosure is based solely on a review of Forms 3 and 4 and
amendments  thereto furnished to the Company under Rule 16a-3(e) during its most
recent fiscal year and Forms 5 and amendments  thereto  furnished to the Company
with  respect to its most recent  fiscal year,  and any written  representations
received by the Company referred to in paragraph (b)(2)(i) of Regulation S-B.


ITEM 10. EXECUTIVE COMPENSATION

     The  following  table sets  forth all  compensation  earned by all  persons
serving as our Chief  Executive  Officer  during the fiscal years ended December
31,  2001,  2000 and  1999.  None of our other  officers  or those of any of our
subsidiaries earned greater than $100,000 in total salary and bonus during 2001,
2000 or 1999.



                                       25
<PAGE>

<TABLE>
                                           Summary Compensation Table

                                Annual Compensation                     Long Term Compensation
                           --------------------------------------------------------------------------------
                                                                     Awards             Payouts
                                                               ---------------------------------
                                                                            Restricted
                                                                            Shares or
                                                               Securities   Restricted
    Name and      Fiscal                        Other Annual     under         Share      LTIP
   Principal       Year    Salary     Bonus     Compensation   Option/SAR      Units     Payouts   All Other
    Position      Ended    (US$)      (US$)         (US$)       Granted(#)     (US$)      (US$)   Compensation
--------------------------------------------------------------------------------------------------------------
<S>                <C>    <C>         <C>        <C>           <C>              <C>        <C>      <C>
John Robertson,    2001   107,137       0           0           100,000            0         0          0
Chief Executive    2000    10,300       0                       275,000(2)         0         0          0
Officer(1)         1999

Mark Godsy,
Chief Executive    2000         0       0                       200,000(4)    72,000         0          0
Officer(3)         1999

William Brogdon,
Chief Executive    1999    38,756       0           0                 0            0         0          0
Officer(5)
</TABLE>


<TABLE>
                        Annual Compensation ($)           Long-Term Compensation
                        -----------------------           ----------------------
                                                                                   Securities
                                                          Restricted Stock         Underlying
Name and Position         Year             Salary            Award ($)              Options(#)
-----------------         ----             ------            ---------             -----------
<S>                       <C>             <C>               <C>                    <C>
John Robertson            2001            107,137                  0                 100,000(2
                          2000(1)          10,300                  0                 275,000(2)

Mark Godsy                2001                  0                  0                   5,000(4)
                          2000(3)               0             72,000                 200,000(4)

William Brogdon           1999             38,756                  0                       0

William Brogdon           1998             64,167             61,480(5)              200,000


NOTES:
(1)  Mr.  Robertson,  served as served as Chief  Executive  Officer  during  the
     period November 17, 2001 to March 31, 2002.
(2)  Mr. Robertson received 200,000 options in December 2000 and 100,000 options
     in February  2001 as partial  compensation  for serving as Chief  Executive
     Officer of our company. He also received 75,000 options in December 2000 as
     compensation for serving as a director of our company.
(3)  Mr.  Godsy  served as Chief  Executive  Officer of our  company  during the
     period  February 22 - November  17, 2000.  At the end of this  period,  Mr.
     Godsy  was  paid  accrued  wages  in  restricted   stock  (171,428  shares)
     equivalent to $72,000 on the date of issue.
(4)  Mr. Godsy received  200,000  options in December 2000 as  compensation  for
     serving as the  Chairman of the Board of our  company and 5,000  options in
     June 2001 as compensation for serving on the Compensation Committee.
(5)  Mr. Brogdon served as Chief  Executive  Officer of UW Systems from February
     1, 1998 and our company from December, 1998. Both appointments concluded on
     February 22, 2000.
</TABLE>



                                       26
<PAGE>

     At the end of 2001, the named executive  officers held restricted  stock of
our company as follows.  The value of these  holdings  is  calculated  at $0.35,
which was the price of our stock on December 31, 2001.

<TABLE>
                                   Restricted shares held       Value of restricted shares held
                                   ----------------------       -------------------------------
<S>                                  <C>                           <C>
John Robertson(1)                          622,065                         $217,723
Mark Godsy(2)                            2,444,928                         $855,725
William Brogdon                                  0                               $0

(1)  Mr.  Robertson  served as our  President  and CEO from November 17, 2001 to
     March 31, 2002.
(2)  As of December 31, 2001, Mark Godsy also owned 307,151  unrestricted shares
     for a total of 2,752,079.
</TABLE>


Option Grants in 2001

Option/SAR Grants in Last Fiscal Year

<TABLE>
                                                           OPTION GRANTS

Individual Grants
-------------------------------------------------------------------------------------------------
             (a)                    (b)                (c)             (d)              (e)
                                 Number of
                                 Securities
                                 Underlying        % of Total      Exercise or
                              Options Granted    Options Granted    Base Price
             Name                   (#)                (1)            ($/Sh)      Expiration Date
-------------------------------------------------------------------------------------------------
<S>                             <C>               <C>              <C>            <C>
John Robertson,                 100,000(3)            6.1%          $0.17          Dec. 31, 2005
Chief Executive Officer(2)

Mark Godsy,                       5,000(4)            0.3%          $0.17          June 30, 2006
Chief Executive Officer
-------------------
(1)  The  denominator (of 1,629,500) was arrived at by calculating the net total
     number of new options awarded during the year.
(2)  Mr.  Robertson  served as our  President  and CEO from November 17, 2001 to
     March 31, 2002.
(3)  John Robertson  received 100,000 options at $0.51  (time-based  vesting) on
     February 6, 2001.  These  options  were  re-priced  on December 11, 2001 to
     $0.17.
(4)  Mark Godsy received 5,000 options at $0.38 (time-based vesting) on June 22,
     2001. These options were re-priced on December 11, 2001 to $0.17.
</TABLE>


Fiscal Year-End Option Value

     The following  table presents the value of  unexercised  options held as of
December  31,  2001 by each of the named  executive  officers  appearing  in the
Summary  Compensation  Table  in this  section.  None of these  named  executive
officers  exercised any of their options in 2001. Mr. Brogdon held no options as
of December 31, 2001.



                                       27
<PAGE>
<TABLE>
Aggregate Option Exercises in Last Fiscal Year and FY-End Option Values

                                         Aggregated Options Exercised
                               During the Financial Year Ended December 31, 2001
                                      and Financial Year-End Option Values

----------------------------------------------------------------------------------------------------------
          Name             Securities     Aggregate     Unexercised Options    Value of Unexercised in the
                          Acquired on       Value          At FY-End (#)         Money-Options at FY-End
                          Exercise (#)   Realized ($)      Exercisable/              ($) Exercisable/
                                                           Unexercisable            Unexercisable (1)

----------------------------------------------------------------------------------------------------------
<S>                       <C>           <C>             <C>                        <C>
John Robertson,               Nil           Nil         206,250 (exercisable)      $72,188 (exercisable)
Chief Executive                                         168,750 (unexercisable)    $59,063 (unexercisable)
Officer(2)
----------------------------------------------------------------------------------------------------------
Mark Godsy,                   Nil           Nil          84,166 (exercisable)      $29,458 (exercisable)
Chief Executive Officer                                 120,834 (unexercisable)    $42,292 (unexercisable)
----------------------------------------------------------------------------------------------------------
(1)  Based on NASD OTCBB closing price of $0.35 on December 31, 2001.
(2)  Mr.  Robertson  served as our  President  and CEO from November 17, 2001 to
     March 31, 2002.
</TABLE>


Compensation of Directors

     Our directors do not receive salaries or fees for serving as directors, nor
do they  receive  any  compensation  for  attending  meetings  of the  Board  of
Directors or serving on committees of the Board of Directors.  We may,  however,
determine to compensate  its directors in the future.  Directors are entitled to
reimbursement  of expenses  incurred in attending  meetings.  In  addition,  our
directors are entitled to  participate in our stock option plan. We have adopted
a policy  whereby  members of the Board of Directors  receive  initial grants of
options upon appointment or upon adoption of the policy, as follows:

          Chairman                                          200,000 options
          Director (other than Chairman)                    75,000 options
          Compensation Committee                            5,000 options
          Audit Committee                                   5,000 options
          Options Committee                                 2,500 options

Employment Agreements

     There are no employment  agreements  between us or any of our  subsidiaries
and William  Brogdon or Mark Godsy.  We had an  employment  agreement  with John
Robertson,  dated  November  16,  2000,  which was  replaced  with a  consulting
agreement on February 1, 2001 and further  replaced with a five year  employment
agreement  dated November 1, 2001.  Mr.  Robertson is entitled to, amongst other
things, an annual salary of Cdn $190,000 ($119,700)  reviewable  annually,  with
such increases as we deem appropriate. Mr. Robertson is also entitled to options
to  purchase  up to  375,000  shares  of our  common  stock,  benefits  that are
ordinarily made available to our employees,  and the reimbursement of reasonable
job-related expenses.  Mr. Robertson resigned from his position on President and
CEO of our Company  effective March 31, 2002 thereby  terminating his employment
agreement.

Report on Repricing of Options - December 11, 2001

     On December 11, 2001, our Board of Directors  determined that it was in the
best interest of the corporation to reprice issued and outstanding stock options
held by most of our employees,  officers and  directors.  Our Board of Directors
approved a stock option repricing program effective December 11, 2001. Under the
program,  each eligible holder of stock options (employed by us for the majority
of the period between July 1, 2001 and December 11, 2001)



                                       28
<PAGE>

granted  under our Stock Option Plan,  including  options held by directors  and
officers,  was entitled to exchange  their  existing stock option for a repriced
stock option to purchase the same number of shares at an exercise price of $0.17
per share.  The new  exercise  price was equal to the then market price of $0.17
per share of common stock.  Other than the lower exercise  price,  each repriced
stock option under the repricing program has terms  substantially  equivalent to
the terms of the original  grant,  including the same vesting  terms,  number of
shares and expiration  date.  Options to purchase a total of 4,253,250 shares of
common stock were  eligible to  participate  in the  program,  all of which were
repriced.  The Board of Directors approved the stock option repricing program as
a result of the significant reduction in the price of our common stock in fiscal
2001. The Board  determined  that our existing stock options no longer  provided
meaningful  incentive  to the  option  holders  to remain in our  employ  and to
maximize  shareholder  value.  The eligible  existing stock options had exercise
prices of $0.38 to $1.00 per share,  which  exercise  price exceeded the trading
prices of our common  stock prior to the date the option  repricing  program was
approved.  The Board  determined  that the exchange of new stock  options with a
lower  exercise  price for our existing  stock  options would once again provide
incentive  to our  officers,  directors  and  employees  to  continue to provide
services to us and to maximize shareholder value.

     For financial  reporting  purposes,  the repriced options will be accounted
for as  variable  plan  options  with  increases  in  the  market  price  of the
underlying common stock reflected as compensation  expense until the options are
exercised, expire or are forfeited.

     The following named executive officers held the following options that were
repriced:

<TABLE>
----------------------------------------------------------------------------------------------
                        Number of securities    Exercise Price under
Name                     underlying options        Original Grant       Reprice Exercise Price
----------------------------------------------------------------------------------------------
<S>                      <C>                      <C>                     <C>
John Robertson(1)              375,000                  $0.38                   $0.17
Mark Godsy                     205,000                  $0.38                   $0.17
------------------
(1)  Mr.  Robertson  served as our  President  and CEO from November 17, 2001 to
     March 31, 2002.

</TABLE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information regarding the beneficial
ownership  of our shares of common stock as of March 15, 2002 by (i) each person
who  is  known  by us to  beneficially  own  more  than  5% of  our  issued  and
outstanding shares of common stock; (ii) our chief executive officer and our two
former chief executive officers during our last fiscal year,  individually named
in the executive compensation table below; (iii) our directors;  and (iv) all of
our executive officers and directors as a group. Unless otherwise indicated, the
persons  named below have sole voting and  investment  power with respect to all
shares  beneficially  owned by them,  subject to community  property  laws where
applicable.  As of March 15, 2002, there were 30,915,704 of our shares of common
stock issued and  outstanding.  Each common share entitles the holder thereof to
one  vote  in  respect  of  any  matters  that  may  properly  come  before  our
shareholders.  To the best of our knowledge,  there exist no  arrangements  that
could cause a change in voting control of our corporation.



                                       29
<PAGE>

<TABLE>
                                                                              SHARES
TITLE OF         NAME AND ADDRESS               RELATIONSHIP TO             BENEFICIALLY   PERCENT
 CLASS              OF OWNER                        COMPANY                   OWNED        OWNED(1)
--------         ----------------               ---------------             ------------   --------
<S>              <C>                          <C>                            <C>           <C>
Common Stock     Mark Godsy                   Chairman, Director, 5%         3,269,996     10.58%
                 7575 Carnarvon Street        Shareholder and Past CEO
                 Vancouver, B.C.  V6N 1K6     (February 22, 2000 -
                                              November 17, 2000)
Common Stock     John Robertson               Director and CEO               1,432,482      4.63%
                 #203 - 728 Farrow Street     (November 17, 2000 -
                 Coquitlam, B.C.  V3J 3S6     March 31, 2002)
Common Stock     Roland Sartorius             Director and Executive          934,167       3.02%
                 4172 Yuculta Crescent        Officer
                 Vancouver, B.C.  V6N 3RS
Common Stock     Thomas Dodd                  Director and Executive          249,167       0.81%
                 808 Seymour Blvd.            Officer
                 North Vancouver, B.C.
                 V7J 2J6
Common Stock     Ken Maddison                 Director                        56,250        0.18%
                 2591 Lund Avenue
                 Coquitlam, B.C.  V3K 6J8
Common Stock     Robert W. Singer             Director                        43,750        0.14%
                 2110 West County Line Road
                 Jackson, NJ  08527
Common Stock     Robert Fetherstonhaugh       Director                        103,613       0.34%
                 20 Avenue Lilas
                 Dorval, Quebec  H9S 3L9
Common Stock     H. William Brogdon           Past CEO (February, 1999        550,000       1.80%
                 1817 Sleepy Hollow Lane      to February 22, 2000
                 Petaluma, CA 94954
Common Stock     Raffi Antepyan               Executive                       125,000       0.40%
                 2192 Loiseau
                 St. Laurent,
                 Quebec H2K 2K7
Common Stock     Wayne Gambell                5% Beneficial Owner            2,039,668      6.60%
                 1040 Memorial Dr., NW
                 Calgary, AB T2N 3E1
----------------------------------------------------------------------------------------------------
Common Stock     All directors and                                           6,214,425(1)   20.10%
                 executive officers as a
                 group (8 individuals)
</TABLE>



                                       30
<PAGE>

--------------------------
(1)  Includes for each beneficial owner or group the following numbers of shares
     of common  stock that may be acquired by the  exercise of stock  options or
     warrants that are now exercisable or will become exercisable within 60 days
     of January 31, 2002:

     o    Mark Godsy - 517,917 shares,  including 416,667 shares acquirable upon
          exercise of warrants and 101,250 shares  exercisable upon the exercise
          of options.

     o    John Robertson - 729,167 shares,  including  500,000 shares acquirable
          upon the exercise of warrants and 229,167 shares  acquirable  upon the
          exercise of options.

     o    Roland Sartorius - 584,167 shares, including 350,000 shares acquirable
          upon the exercise of warrants and 234,167 shares  acquirable  upon the
          exercise of options.

          o    Thomas  Dodd - 229,167  shares  acquirable  upon the  exercise of
               options.

          o    Ken  Maddison - 56,250  shares  acquirable  upon the  exercise of
               options.

          o    Robert  Singer - 18,750  shares  acquirable  upon the exercise of
               options.

          o    Robert  Fetherstonhaugh  -  21,250  shares  acquirable  upon  the
               exercise of options.

          o    Raffi Antepyan - 125,000 shares  acquirable  upon the exercise of
               options.

          o    Wayne Gambell - 833,284  shares  acquirable  upon the exercise of
               warrants.




                                       31
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     We have a November 2000 loan receivable from Cobratech  Industries  Inc., a
company  with which we had two former  directors  in  common,  in the  principal
amount of  $200,000.  Interest  is  payable  to us at 1% per  month,  calculated
monthly  not in  advance.  The loan is secured by a general  security  agreement
which  includes all of the personal and real property of Cobratech.  The loan is
repayable  upon  demand.  As of March 15,  2001,  $77,778 in  principal  remains
unpaid. We have sued Cobratech in the Supreme Court of British Columbia,  Canada
in respect of the remaining  balance.  The action has been stayed until May 2002
on the condition  that  Cobratech  Industries  Inc. pays 10 percent of all funds
received  from  financing  until May 2002,  in  excess  of  $100,000,  until the
outstanding amount has been paid. See "Legal Proceedings."

     The Board of Directors  agreed to advance  $90,000 to John  Robertson,  our
director and outgoing  President,and  CEO to enable him to subscribe for 500,000
units in conjunction with the private placement  completed on December 24, 2001.
The loan principal plus interest is due on December 24, 2003,  bears interest at
4% per annum and is secured by the subscribing shares. On maturity, the loan and
all interest owing on the loan may be repaid either in cash or by John Robertson
transferring to us, all of the securities  comprising of the units he subscribed
to. For financial statement reporting purposes,  this loan will be recorded as a
reduction in shareholders' equity.

     On  October  11,  2001,  we filed a  registration  statement  on Form  SB-2
covering  the resale of certain  shares of our Common Stock and shares of Common
Stock subject to warrants. This Form SB-2 covered 203,315 shares of Common Stock
held by John  Robertson and 21,428 shares of Common Stock held by Mark Godsy,  a
director.

     On  February  15,  2002,  we filed a  registration  statement  on Form SB-2
covering  the resale of certain  shares of our Common Stock and shares of Common
Stock  subject to warrants.  This Form SB-2 covered  1,203,315  shares of Common
Stock held by John  Robertson  and 854,762  shares of Common  Stock held by Mark
Godsy, a director.

     There are no other material related  transactions or related contracts with
a value of over $60,000.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     The  following  financial  statements of the  Registrant  and the Report of
Independent Auditors thereon are included herewith in response to Item 8 above.

     Consolidated Financial Statements

         Report of Independent Auditors
         Consolidated Balance Sheets
         Consolidated Statements of Operations
         Consolidated Statements of Changes in Stockholders' Equity
         Consolidated Statements of Cash Flows
         Notes to the Consolidated Financial Statements

     (a)  Pursuant to Rule 601 of  Regulation  SB, the  following  exhibits  are
included herein or incorporated by reference.

     Exhibit
     Number         Description
     ------         -----------
       3.1*         Amended and Restated  Certificate of  Incorporation of Unity
                    Wireless  Corporation  (incorporated by reference to Exhibit
                    3.1 to the Company's Form SB-2 filed on October 4, 2000)



                                       32
<PAGE>

     Exhibit
     Number         Description
     ------         -----------
       3.2*         Amended and Restated  Bylaws of Unity  Wireless  Corporation
                    (incorporated  by reference to Exhibit 3.2 to the  Company's
                    Form SB-2 filed on October 4, 2000)

       4.1*         Consulting  agreement among Mueller & Company,  Inc., Ideas,
                    Inc.,   Mark  Mueller,   Aaron  Fertig  and  Unity  Wireless
                    Corporation dated January 1, 2001 (incorporated by reference
                    to Exhibit 4.2 to the  Company's  Form 10-KSB filed on April
                    2, 2001)

       4.2*         Consulting agreement amendment among Mueller & Company, Inc.
                    and Unity  Wireless  Corporation  dated  November  15,  2001
                    (incorporated  by reference to Exhibit 4.2 to the  Company's
                    Form SB-2 filed on February 15, 2002)

      10.1*         Asset Purchase  Agreement  dated October 6, 2000 among Unity
                    Wireless Systems  Corporation,  a British  Columbia,  Canada
                    corporation,  568608 B.C. Ltd., a British  Columbia,  Canada
                    corporation,  Traffic  Systems,  L.L.C.,  an Arizona limited
                    liability company, Traffic Safety Products, Inc., an Arizona
                    corporation and James L. Hill  (incorporated by reference to
                    Exhibit 2.1 to the  Company's  Form 8-K filed on October 23,
                    2000)

      10.2*         Intellectual  Property  License  Agreement  dated October 6,
                    2000 between Unity  Systems as licensor and Traffic  Systems
                    as licensee (incorporated by reference to Exhibit 2.2 to the
                    Company's Form 8-K filed on October 23, 2000)

      10.3*         Share Purchase Agreement, dated November 16, 2000 among John
                    Robertson,    Mirza   Kassam,    Chris    Neumann,    Robert
                    Fetherstonhaugh,   Unity  Wireless   Corporation,   Stirling
                    Mercantile  Corporation,  Peter A. Scott Consulting Ltd., W.
                    Hugh Notman (incorporated by reference to Exhibit 2.1 to the
                    Company's Form 8-K filed on December 4, 2000)

      10.4*         Asset Purchase  Agreement,  dated for reference December 30,
                    2000,  among  Unity  Wireless  Integration   Corporation  as
                    vendor, Lyma Sales & Management Corp. as purchaser and Unity
                    Wireless  Corporation  (incorporated by reference to Exhibit
                    2.1 to the Company's Form 8-K filed on January 16, 2001)

      10.5*         Agreement   to   Redeem   Membership   Interest,    Transfer
                    Intellectual  Property and Amend Asset  Purchase  Agreement,
                    effective  April 9,  2001,  by and  among  Traffic  Systems,
                    L.L.C., Unity Wireless Systems  Corporation,  Traffic Safety
                    Products,  Inc. and Jim Hill  (incorporated  by reference to
                    Exhibit  10.5 to the  Company's  Form SB-2A  filed on May 3,
                    2001)

      10.6*         1999  Stock  Option  Plan,  as  amended   (incorporated   by
                    reference to Exhibit 10.6 to the Company's Form 10-KSB filed
                    on April 2, 2001)

      10.7*         Recommended  Stock  Option  Grant  Policy  for  the  Company
                    (incorporated  by reference to Exhibit 10.7 to the Company's
                    Form 10-KSB filed on April 2, 2001)

      21.1          Subsidiaries  of the Company

      23.1          Consent of KPMG LLP
-------------------
 * Previously filed



                                       33
<PAGE>

     (b) Reports on Form 8-K

     The  Company  filed a current  report on Form 8-K  January  8,  2001,  with
respect to a change in the registrant's certifying accountant. Ernst & Young LLP
(E&Y) was  dismissed  from its  position  as the  certifying  accountant  of the
registrant  December 31, 2000.  KPMG LLP (KPMG) was appointed the new certifying
accountant of the  registrant  the same day.  During the  registrant's  two most
recent fiscal years and the subsequent interim period preceding the dismissal of
E&Y, there were no disagreements with E&Y on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure.

     The  Company  filed a current  report on Form 8-K January  15,  2001,  with
respect  to the  disposition  of the  assets  of the  registrant's  wholly-owned
subsidiary Unity Wireless Integration Corporation (UWIC) to an unrelated company
controlled by a former  employee and director of the  registrant.  UWIC sold all
its  assets in return  for  $61,500  (Cdn.$92,000)  payable  within  one year of
closing in equal semi-annual  installments,  plus interest on the unpaid balance
at a rate equal to the prime rate of HSBC  Canada per annum.  In  addition,  the
purchaser  agreed  to repay a  $37,100  (Cdn.$54,000)  demand  loan  within  ten
business days of closing.  The loan was repaid as agreed.  The  financial  terms
represented  a fair  disposition  price for the  included  assets as  determined
through arms length negotiations.

     The Company filed an amended current report on Form 8-K/A January 22, 2001,
which amended a current report filed on Form 8-K January 10, 2001,  with respect
to the registrant's change in certifying accountant.  The amendment was filed to
include a letter from the registrant's  prior  independent  accountants  stating
they had no basis to agree or disagree with other statements of the registration
contained in the previously filed Form 8-K.

     The Company  filed an amended  current  report on Form 8-K/A  February  13,
2001,  which amended a current  report filed on Form 8-K December 4, 2000,  with
respect to the  registrant's  acquisition of Ultratech Linear Solutions Inc. and
the  inclusion  of  certain   financial   statements  and  pro  forma  financial
information as exhibits.

     The Company  filed a current  report on Form 8-K February  16,  2001,  with
respect  to the  pre-disclosed  disposition  of  significant  assets to  Traffic
Systems,  L.L.C.  It was determined  that warranty  obligations  retained by the
registrant  under an earlier  Asset  Purchase  Agreement  would be  substantial.
Therefore,  Traffic Systems L.L.C. agreed to assume the warranty  obligations in
consideration  of the  registrant's  residual  interest in certain  intellectual
property and the registrant's 37% membership  interest in Traffic Systems L.L.C.
It was further  determined that for accounting  purposes,  we did not expect the
disposition to result in a material loss or gain.

     The Company  filed a current  report on Form 8-K/A March 8, 2001,  to amend
its Form 8-K filed on January 16, 2001,  with respect to the  disposition of the
assets  and  liabilities  of  Unity  Wireless'  wholly-owned  subsidiary,  Unity
Wireless Integration Corporation.



                                       34
<PAGE>



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Report of Independent Auditors ....................................F-2

Consolidated Balance Sheets .......................................F-3

Consolidated Statements of Operations and Deficit  ................F-4

Consolidated Statements of Cash Flows .............................F-5

Notes to the Consolidated Financial Statements ....................F-6







                                      F-1
<PAGE>

AUDITORS' REPORT

To the Stockholders
Unity Wireless Corporation

We have audited the accompanying  consolidated  balance sheets of Unity Wireless
Corporation  as at  December  31,  2001 and 2000  and the  related  consolidated
statements of operations and comprehensive loss,  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 and in Canada.  U.S.  standards  require that we
plan and  perform the audit to obtain  reasonable  assurance  about  whether the
financial statements are free from material misstatement. An audit also includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
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 Unity  Wireless
Corporation and subsidiaries as at December 31, 2001 and 2000 and the results of
its  operations  and its cash flows for the years then ended in accordance  with
accounting principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  note 2 to the
financial statements,  the Company has incurred recurring losses from operations
and has a working  deficiency that raise  substantial doubt about its ability to
continue as a going concern.  Management's  plans in regard to these matters are
also  described  in  note  2.  The  financial  statements  do  not  include  any
adjustments that might result from the outcome of this uncertainty.

On March 1, 2002, we reported  separately to the  stockholders of the Company on
the consolidated financial statements as at and for the periods presented above,
which  consolidated  financial  statements  were  prepared  in  accordance  with
Canadian generally accepted accounting principles.







Chartered Accountants

Vancouver, Canada

March 1, 2002



                                      F-2
<PAGE>

UNITY WIRELESS CORPORATION
Consolidated Balance Sheets
(Expressed in United States dollars)
(Prepared in accordance with United States
generally accepted accounting principles)

December 31, 2001 and 2000


<TABLE>
====================================================================================================
                                                                          2001                 2000
----------------------------------------------------------------------------------------------------
<S>                                                             <C>                  <C>
Assets

Current assets:
     Cash and cash equivalents                                  $    1,012,430       $    2,002,084
     Restricted cash (note 11(b, c))                                    80,000              100,000
     Accounts receivable (less allowance for doubtful
       accounts of $26,128 in 2001 and $4,245 in 2000)                 263,747              232,591
     Loan receivable (note 7)                                                -              204,434
     Government grant receivable                                        26,457               13,905
     Inventory (note 8)                                                519,516              463,412
     Prepaid expenses and deposits                                      38,643               14,309
     Other receivable (note 5)                                          18,241               61,500
----------------------------------------------------------------------------------------------------
                                                                     1,959,034            3,092,235

Equipment, net (note 9)                                                276,909              221,651
Goodwill (net of accumulated amortization
   2001 - $185,399; 2000 - nil) (note 6)                               741,596              926,995
----------------------------------------------------------------------------------------------------
                                                                $    2,977,539       $    4,240,881
====================================================================================================
Liabilities and Stockholders' Equity

Current liabilities:
     Bank indebtedness                                          $      238,667       $      276,811
     Accounts payable and accrued liabilities (note 10)                658,583              728,807
     Loans payable (note 11)                                                 -               42,312
     Product warranty (note 3(m))                                       31,500              623,497
     Obligations under capital leases (note 12)                         45,900                    -
----------------------------------------------------------------------------------------------------
                                                                       974,650            1,671,427

Loans payable (note 11)                                                 74,451              115,781
Obligations under capital leases (note 12)                               3,488                    -
----------------------------------------------------------------------------------------------------
                                                                     1,052,589            1,787,208
Stockholders' equity:
     Common stock, $0.001 par value 100,000,000 authorized,
       30,916,000 (2000 - 25,743,153) issued and outstanding            30,916               25,743
     Additional paid-in capital                                     14,896,893           13,251,498
     Share subscription receivable (note 14)                           (90,600)                   -
     Deferred stock compensation                                      (199,198)             (89,719)
     Accumulated deficit                                           (12,830,289)         (10,732,275)
     Cumulative translation adjustments                                117,228               (1,574)
----------------------------------------------------------------------------------------------------
                                                                     1,924,950            2,453,673
----------------------------------------------------------------------------------------------------
                                                                $    2,977,539       $    4,240,881
====================================================================================================
</TABLE>


Future operations (note 2)
Commitments (note 15)
Subsequent event (notes 13(a) and 19)
Contingent liabilities (note 20)

See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>

UNITY WIRELESS CORPORATION
Consolidated Statements of Operations and Comprehensive Loss
(Expressed in United States dollars)
(Prepared in accordance with United States
generally accepted accounting principles)

Years ended December 31, 2001 and 2000


<TABLE>
========================================================================================================
                                                                                 2001              2000
--------------------------------------------------------------------------------------------------------
<S>                                                                      <C>               <C>
Net sales                                                                $  3,544,770      $    474,003
Cost of goods sold (includes stock-based compensation
   $30,548 in 2001 and $354 in 2000)                                        2,570,454           364,423
--------------------------------------------------------------------------------------------------------
                                                                              974,316           109,580
Expenses:
     Research and development (includes stock-based
       compensation $152,436 in 2001 and $238,655 in 2000)                    842,487                 -
     Government grant (note 16)                                               (52,036)                -
     Sales and marketing (includes stock-based compensation
       $112,331 in 2001 $88,766 in 2000)                                      515,305            10,745
     Depreciation and amortization                                            288,924             2,024
     Exchange gain                                                            (49,258)           (3,036)
     Interest expense                                                           5,890               659
     General and administrative (includes stock-based
       compensation $360,139 in 2001 and $354,426 in 2000)                  1,844,146         1,952,469
     ---------------------------------------------------------------------------------------------------
                                                                            3,395,458         1,962,861
--------------------------------------------------------------------------------------------------------
Operating loss for the year                                                (2,421,142)       (1,853,281)

Interest income                                                                43,545             3,855

Other income                                                                   12,079            10,217
--------------------------------------------------------------------------------------------------------
Loss from continuing operations                                            (2,365,518)       (1,839,209)

Discontinued operations:
     Gain (loss) from discontinued operations (note 5)                        267,504        (3,479,424)
--------------------------------------------------------------------------------------------------------
Loss for the year                                                        $ (2,098,014)     $ (5,318,633)
========================================================================================================
Comprehensive loss:
     Loss for the year                                                   $ (2,098,014)     $ (5,318,633)
     Currency translation adjustment                                          118,802            34,018
--------------------------------------------------------------------------------------------------------
Comprehensive loss                                                       $ (1,979,212)     $ (5,284,615)
========================================================================================================
Basic and diluted earnings (loss) per common share (note 13(c)):
     Continuing operations                                               $      (0.09)     $      (0.08)
     Discontinued operations                                                     0.01             (0.14)
--------------------------------------------------------------------------------------------------------
                                                                         $      (0.08)     $      (0.22)
========================================================================================================
</TABLE>



See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>

UNITY WIRELESS CORPORATION
Consolidated Statements of Stockholders' Equity
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)


<TABLE>
====================================================================================================================================
                                       Common                                                                  Other
                                        stock   Additional                     Deferred                  accumulated         Total
                          Common   issued and      paid-in   Subscription         stock   Accumulated  comprehensive   stockholders'
                           stock  outstanding      capital     receivable  compensation       deficit  (loss) income         equity
------------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>           <C>        <C>            <C>           <C>          <C>             <C>             <C>
Balance
 December 31, 1999    20,588,725    $ 20,589   $ 5,909,624    $       -     $        -   $ (5,413,642)   $  (35,592)     $  480,979

Issued for debt
 settlement               65,000          65       117,903            -              -              -             -         117,968
Issued for services
 rendered (note 13(a))   254,428         254       142,886            -              -              -             -         143,140
Issued pursuant to
 private placement     3,850,000       3,850     5,771,150            -              -              -             -       5,775,000
Issued for cost of
 share issuance
 (note 13(a))            285,000         285       427,215            -              -              -             -         427,500
Share issue costs              -           -      (427,500)           -              -              -             -        (427,500)
Shares issued on
 acquisition of
 Ultratech               700,000         700       538,300            -              -              -             -         539,000
Compensation expense
 of options and
 warrants                      -           -       682,201            -              -              -             -         682,201
Deferred stock
 compensation                  -           -        89,719            -        (89,719)             -             -               -
Loss for the year              -           -             -            -              -     (5,318,633)            -      (5,318,633)
Currency translation
 adjustment                    -           -             -            -              -              -        34,018          34,018
------------------------------------------------------------------------------------------------------------------------------------

Balance
 December 31, 2000    25,743,153      25,743    13,251,498            -        (89,719)   (10,732,275)       (1,574)      2,453,673

Issued for services
 rendered (note 13(a))    25,000          25         6,975            -              -              -             -           7,000
Issued pursuant to
 private placement     5,147,551       5,148       921,389            -              -              -             -         926,537
Share issue costs              -           -       (47,902)           -              -              -             -         (47,902)
Compensation expense
 of options and
 warrants                      -           -       655,454            -              -              -             -         655,454
Deferred stock
 compensation                  -           -       109,479            -       (109,479)             -             -               -
Loss for the year              -           -             -                           -     (2,098,014)            -      (2,098,014)
Currency translation
  adjustment                   -           -             -                           -              -       118,802         118,802
Share subscription
 receivable for issuance
 pursuant to private
 placement                     -           -             -      (90,600)             -              -             -         (90,600)
------------------------------------------------------------------------------------------------------------------------------------

Balance
 December 31, 2001    30,915,704    $ 30,916   $14,896,893    $ (90,600)    $ (199,198)  $(12,830,289)   $  117,228      $1,924,950
====================================================================================================================================
</TABLE>


See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>

UNITY WIRELESS CORPORATION
Consolidated Statements of Cash Flows
(Expressed in United States dollars)
(Prepared in accordance with United States
generally accepted accounting principles)

Years ended December 31, 2001 and 2000


<TABLE>
=====================================================================================================
                                                                             2001                2000
-----------------------------------------------------------------------------------------------------
<S>                                                                   <C>                 <C>
Operating activities:
  Loss for the year                                                   $(2,098,014)        $(5,318,633)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
      Amortization of goodwill                                            185,399                   -
      Amortization of patents                                                   -              66,657
      Depreciation of equipment                                           103,525              12,578
      Write down of assets and investment                                       -             581,800
      Shares issued for services rendered (note 13(a))                      7,000             143,140
      Stock based compensation                                            655,454             682,201
      Loss on sale of business (note 5)                                         -              80,726
      Provision for loan receivable (note 7)                               85,611                   -
  Changes in non-cash working capital relating to operations:
    Accounts receivable and government grant receivables                  (43,708)           (146,824)
    Investment tax credit receivable                                            -             123,245
    Inventory                                                             (56,104)             27,224
    Prepaid expenses                                                      (24,334)            (13,283)
    Accounts payable and accrued liabilities                              (70,224)            109,129
    Product warranty                                                     (591,997)            554,211
-------------------------------------------------------------------------------------------------------
                                                                       (1,847,392)         (3,097,829)
Investments:
  Acquisition of equipment                                                (96,545)           (200,941)
  Increase in patents                                                           -              (5,050)
  Other receivable                                                         43,259              10,024
  Sale of business, net cash and cash equivalents
    disposed of (note 5)                                                        -            (314,990)
-------------------------------------------------------------------------------------------------------
                                                                          (53,286)           (510,957)
Financing:
  Loan receivable                                                         118,823            (204,434)
  Bank overdraft                                                          (38,144)            115,001
  Restricted cash (note 11(b, c))                                          20,000            (100,000)
  Repayment of loan payable                                               (83,642)            (49,603)
  Repayment of capital lease obligation                                   (12,850)                  -
  Cash proceeds on issuance of common shares                              835,937           5,775,000
  Share issue costs                                                       (47,902)                  -
-------------------------------------------------------------------------------------------------------
                                                                          792,222           5,535,964

Effect of foreign exchange rate changes on cash and cash equivalents      118,802              41,936
-------------------------------------------------------------------------------------------------------
Increase (decrease) in cash                                              (989,654)          1,969,114

Cash, beginning of year                                                 2,002,084              32,970
-------------------------------------------------------------------------------------------------------
Cash, end of year                                                     $ 1,012,430         $ 2,002,084
=====================================================================================================
Supplementary information:
  Cash paid for:
    Interest                                                                5,890         $    26,749
    Income taxes                                                                -                   -
  Non-cash financing and investing activities:
    Shares issued in acquisition of business (note 6)                           -             539,000
    Shares issued for services rendered (note 13(a))                        7,000             143,140
    Shares issued on settlement of debt                                         -             117,968
    Share issue cost                                                            -             427,500
    Sale of assets for 37% interest in Traffic Systems (note 4)                 -             150,000
    Receivable on sale of business (note 5)                                     -              61,500
    Purchase of equipment funded by obligation under
      capital lease (note 9)                                               62,237                   -
=====================================================================================================
</TABLE>



See accompanying notes to consolidated financial statements.


                                      F-6
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


1.   Nature of business:

     Unity Wireless Corporation (the "Corporation") was incorporated in Delaware
     on  October  1,  1998  under the name  Sonic  Systems  Corporation  ("Sonic
     Delaware").  Sonic Delaware changed its name to Unity Wireless  Corporation
     on July 17, 2000. The Corporation is a designer, developer and manufacturer
     of wireless technologies and produces its Ultratech high power linear radio
     frequency  (RF)  amplifiers.  Ultratech high power linear RF amplifiers are
     used in both  mobile  and  fixed  wireless  voice,  Internet  and data base
     station  and  repeater  networks  and  support   Cellular,   PCS  (Personal
     Communications Services), Paging and WLL (Wireless Local Loop) frequencies.


2.   Future operations:

     During the year, the Corporation  incurred a loss, inclusive of stock-based
     compensation, of $2,098,014 (2000 - $5,318,633) and used cash in operations
     of $1,847,392 (2000 - $3,097,829).

     The Corporation is investing in new  technologies  for medium and long-term
     strategic  positioning.   A  recent  licensing  partnership,   and  ongoing
     investigations  of new technologies  designed to increase the linearity and
     efficiency of RF amplifiers when designed into the Corporation's  products,
     is expected to provide a competitive  edge in both pricing and performance.
     The resulting  products,  planned for  introduction  starting in the second
     half of 2002,  will be sold to existing  customers and are also expected to
     open new  opportunities  for the  Corporation  as the  market for 3G infill
     products  (repeaters,  micro-cells and smart  antennas)  begins an expected
     growth phase in 2003. The Corporation's medium term strategy is to leverage
     this  technology to increase sales and establish  technical  credibility in
     the 3G market over the next nine to eighteen months.

     The  Corporation's  3G feedforward  LPA, being  introduced in the spring of
     2002,  is also  expected  to open  new  markets  for  the  Corporation,  in
     particular with base station  manufacturers,  in the medium to longer term.
     The  feedforward  and other new  technologies  will target OEMs of cellular
     systems and will be design-in products.

     These  financial  statements  have been prepared on the going concern basis
     under  which an entity is  considered  to be able to realize its assets and
     satisfy its liabilities in the ordinary  course of business.  Operations to
     date  have  been   primarily   financed  by   long-term   debt  and  equity
     transactions.  The  Corporation's  future operations are dependent upon the
     identification  and  successful   completion  of  additional  long-term  or
     permanent  equity  financing,   the  continued  support  of  creditors  and
     shareholders,  and, ultimately,  the achievement of profitable  operations.
     There can be no assurances that the Corporation  will be successful.  If it
     is not, the Corporation will be required to reduce  operations or liquidate
     assets.   The   Corporation   will   continue  to  evaluate  its  projected
     expenditures relative to its available cash and to seek additional means of
     financing  in  order  to  satisfy  its  working   capital  and  other  cash
     requirements.  The  consolidated  financial  statements  do not include any
     adjustments  relating to the recoverability of assets and classification of
     assets and  liabilities  that might be necessary  should the Corporation be
     unable to continue as a going concern.



                                      F-7
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


3.   Significant accounting policies:

     (a)  Principles of consolidation:

          The  consolidated  financial  statements  include the  accounts of the
          Corporation and its  wholly-owned  subsidiary,  Unity Wireless Systems
          Corp.   ("Unity   Systems").   The   Statements  of   Operations   and
          Comprehensive  Loss  also  includes  the  accounts  of Unity  Wireless
          Singapore from April 1, 2000 (date of incorporation).  All significant
          intercompany accounts and transactions have been eliminated.

          On  December  31,  2000 the  Corporation  amalgamated  three  Canadian
          subsidiaries: Unity Wireless Systems Corp., Ultratech Linear Solutions
          Inc., and 568608 B.C. Ltd.,  with Unity  Wireless  Systems Corp.,  the
          surviving entity.

     (b)  Use of estimates:

          The preparation of the consolidated financial statements in conformity
          with generally accepted  accounting  principles requires management to
          make  estimates and  assumptions  that affect the reported  amounts of
          assets,  particularly the  recoverability of inventory,  equipment and
          goodwill,  and  liabilities  (particularly  product  warranty) and the
          disclosure of  contingent  assets and  liabilities  at the date of the
          financial statements and the reported amounts of revenues and expenses
          during the reporting  period.  Actual  results could differ from these
          estimates.

     (c)  Financial instruments:

          At December 31, 2001,  the  Corporation  has the  following  financial
          instruments:  cash and cash equivalents,  accounts  receivable,  other
          receivable,  accounts  payable  and  accrued  liabilities,  and  loans
          payable.  The  carrying  value  of  these  financial   instruments  is
          considered to approximate fair value based on their short-term nature.

          The  Corporation  adopted  SFAS No. 133,  "Accounting  for  Derivative
          Instruments and for Hedging  Activities" in fiscal 2001. SFAS No. 133,
          as amended,  requires the Corporation to recognize  derivatives on the
          balance  sheet at fair  value.  The  gains or  losses  resulting  from
          changes in the fair value of  derivative  instruments  will  either be
          recognized  in  current  earnings  or in other  comprehensive  income,
          depending  on the  use of  the  derivative  and  whether  the  hedging
          instrument is effective or  ineffective  when hedging  changes in fair
          value.  For a derivative not designated as a hedging  instrument,  the
          gain or loss is  recognized  in  earnings  in the  period of change of
          value. The Corporation did not hold any derivative instruments and was
          not involved in any hedging activities at December 31, 2001.



                                      F-8
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


3.   Significant accounting policies (continued):

     (d)  Cash and cash equivalents:

          Cash equivalents  include  short-term  deposits,  which are all highly
          liquid securities with a term to maturity of three months or less when
          acquired. Short-term deposits are valued at cost.

     (e)  Inventory:

          Inventory  is carried at the lower of cost,  determined  on an average
          cost method,  and market.  Market is considered to be replacement cost
          for raw  materials and net  realizable  value for work in progress and
          finished  goods.  The  cost of work in  progress  and  finished  goods
          includes the cost of raw material,  direct labour,  and an appropriate
          allocation of related overhead.

     (f)  Equipment:

          Equipment is stated at cost.  Depreciation  is computed on a declining
          balance  basis  over  the  estimated  useful  lives of the  assets  as
          follows:

          ------------------------------------------------------
          Asset                                            Rate
          ------------------------------------------------------
          Computer equipment and software                   30%
          Furniture and fixtures                            20%
          Production and R&D equipment                      20%
          ------------------------------------------------------

          Leasehold  improvements  are stated at cost and  depreciated  over the
          five-year term of the lease on a straight-line basis.

     (g)  Goodwill:

          Goodwill arising on business combinations represents the excess of the
          purchase  price  over  the  fair  values  of net  identifiable  assets
          acquired,  and is  amortized  on a  straight-line  basis over 5 years.
          Management  periodically  reviews the  valuation and  amortization  of
          goodwill, taking into consideration any events and circumstances which
          may impair its value.  If it is determined  that  undiscounted  future
          cash flows do not exceed the carrying value of goodwill, an impairment
          charge is recorded to the extent that the carrying  value  exceeds the
          asset's fair value.



                                      F-9
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


3.   Significant accounting policies (continued):

     (h)  Impairment of long-lived assets:

          The Corporation  accounts for long-lived assets in accordance with the
          provisions  of  SFAS  No.  121,  "Accounting  for  the  Impairment  of
          Long-Lived  Assets and for Long-Lived  Assets to Be Disposed Of." This
          Statement  requires that  long-lived  assets and certain  identifiable
          intangibles be reviewed for impairment  whenever  events or changes in
          circumstances indicate that the carrying amount of an asset may not be
          recoverable.  Recoverability of assets to be held and used is measured
          by a comparison of the carrying  amount of an asset to future net cash
          flows  expected  to be  generated  by the  asset.  If such  assets are
          considered to be impaired, the impairment to be recognized is measured
          by the amount by which the carrying  amount of the assets  exceeds the
          fair value of the assets. Assets to be disposed of are reported at the
          lower of the carrying amount or fair value less costs to sell.

     (i)  Income taxes:

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

     (j)  Advertising costs:

          Advertising costs are expensed as incurred.  The Corporation  incurred
          advertising expenses of $95,259 in 2001 and $19,022 in 2000.

     (k)  Foreign currency translation:

          The  Corporation's  functional  or primary  operating  currency is the
          Canadian  dollar  while the  reporting  currency  in the  consolidated
          financial  statements is the United States dollar.  The  Corporation's
          financial   statements   are  prepared  in  Canadian   dollars  before
          translation to the U.S.  dollar  reporting  currency.  The Corporation
          translates  transactions in currencies  other than the Canadian dollar
          at the  exchange  rate in effect  on the  transaction  date.  Monetary
          assets  and  liabilities  denominated  in a  currency  other  than the
          Canadian  dollar are translated at the exchange rates in effect at the
          balance  sheet  date.  The  resulting  exchange  gains and  losses are
          recognized in earnings.



                                      F-10
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


3.   Significant accounting policies (continued):

     (k)  Foreign currency translation (continued):

          Amounts  reported in Canadian  dollars have been  translated into U.S.
          dollars as follows:  assets and  liabilities  are translated into U.S.
          dollars at the rate of exchange  in effect at the  balance  sheet date
          and revenue and expense items are  translated at the average rates for
          the period. Unrealized gains and losses resulting from the translation
          to the reporting  currency are  accumulated in cumulative  translation
          adjustments, a separate component of shareholders' equity.

     (l)  Revenue recognition:

          Revenue from products is recognized  once a sale  arrangement  exists,
          delivery has occurred,  the revenue is determinable and collectibility
          is  reasonably  assured  which is upon the later of  shipment  or when
          title passes to the customer  depending on the contractual  terms. The
          Corporation  does  not  enter  into  sales  arrangements  having  post
          contract customer support or rights of return. The Corporation records
          deferred  revenue  when cash is  received  in advance  of the  revenue
          recognition criteria being met.

     (m)  Product warranty:

          A liability for estimated  warranty expense is established by a charge
          against  cost of  goods  sold at the time  revenue  is  recognized  as
          products are sold. The subsequent  costs incurred for warranty  claims
          serve to reduce the product  warranty  liability.  The actual warranty
          costs the Corporation will ultimately pay could differ materially from
          this estimate.

     (n)  Research and development:

          Research and development costs are expensed as incurred.

     (o)  Stock option plan:

          The Corporation applies the intrinsic value-based method of accounting
          prescribed by  Accounting  Principles  Board  ("APB")  Opinion No. 25,
          "Accounting   for   Stock   Issued   to   Employees",    and   related
          interpretations  including FASB Interpretation No. 44, "Accounting for
          Certain Transactions involving Stock Compensation an interpretation of
          APB Opinion No. 25" issued in March 2000,  to account for its employee
          plan stock option grants.  Under this method,  compensation expense is
          recorded on the date of grant only if the current  market price of the
          underlying   stock  exceeded  the  exercise   price.   SFAS  No.  123,
          "Accounting for Stock-Based Compensation",  established accounting and
          disclosure  requirements using a fair value-based method of accounting
          for stock-based  employee  compensation  plans. As allowed by SFAS No.
          123, the  Corporation  has elected to continue to apply the  intrinsic
          value-based method of accounting  described above, and has adopted the
          disclosure requirements of SFAS No. 123. Stock compensation granted to
          non-employees  is  recognized  at its fair value as the  services  are
          provided and the options are earned.



                                      F-11
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


3.   Significant accounting policies (continued):

     (o)  Stock option plan (continued):

          If the exercise  price of fixed employee stock option award is reduced
          or if the exercise  price is not fixed in the  functional  currency of
          the  Corporation or in the currency the employee is paid, the award is
          accounted  for as a  variable  award  until  the  award is  exercised,
          forfeited,  or expires unexercised.  The Corporation measures variable
          plan stock compensation as the amount by which the quoted market value
          of the common shares of the  Corporation's  stock covered by the grant
          exceeds the option price with changes in the market price  included in
          the measurement of loss.

     (p)  Loss per common share:

          The basic loss per share is computed by dividing the loss attributable
          to common stockholders by the weighted average number of common shares
          outstanding  for  that  period.   The  Corporation  has  not  included
          potential common shares  representing  performance shares in the basic
          loss per share  computation.  Escrow  shares with  time-based  vesting
          which are not  contingently  returnable are included in the basic loss
          per share  computation.  Diluted loss per share is computed  using the
          treasury stock method,  giving effect to all dilutive potential common
          shares that were  outstanding  during the period  except to the extent
          where anti-dilutive.

     (q)  Government grants:

          Government grants are recognized when there is a reasonable  assurance
          that grant will be received.

     (r)  Comprehensive (loss) income:

          Comprehensive  (loss)  income  measures  all changes in  stockholders'
          equity  excluding  capital  transactions.  For the periods  presented,
          other  comprehensive  (loss) income comprises of only foreign currency
          translation.

     (s)  Comparative figures:

          Certain  comparative  figures have been reclassified to conform to the
          presentation adopted in the current year.



                                      F-12
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


3.   Significant accounting policies (continued):

     (t)  Recent pronouncements:

          During  2001,  the  Financial  Accounting  Standards  Board issued the
          following new pronouncements:

          o    Statement  141,  Business  Combinations,  requires  the  purchase
               method or accounting for an business  combinations and applies to
               all business  combinations  initiated  after June 30, 2001 and to
               all business  combinations  accounted for by the purchase  method
               that are completed after June 30, 2001.

          o    Statement 142,  Goodwill and Other  Intangible  Assets,  requires
               that goodwill as well as other indefinite life intangible  assets
               not be amortized  but be tested  annually for  impairment  and is
               effective for fiscal years beginning after December 15, 2001.

          o    Statement  144,  Accounting  for the  Impairment  or  Disposal of
               Long-Lived Assets, provides that long-lived assets to be disposed
               of by sale be measured  at the lower of  carrying  amount or fair
               value  less  cost  to  sell,   whether   reported  in  continuing
               operations  or  in  discontinued   operations  and  broadens  the
               reporting of discontinued operations to include all components of
               an entity with operations that can be distinguished from the rest
               of the  entity  and that  will be  eliminated  from  the  ongoing
               operations of the entity in a disposal transaction. Statement 144
               is effective for fiscal years beginning after December 15, 2001.

          The  adoption  of  Statement  141  will  not  have  an  effect  on the
          historical  consolidated  financial  statements.  The  Corporation  is
          currently  assessing the impact of adopting  Statements 142 and 144 on
          its financial condition and results of operations.


4.   Disposal of Sonem business:

     On October 6, 2000,  the  Corporation  disposed of its  acoustic  emergency
     traffic preemption business to Traffic Systems LLC ("Traffic Systems"),  an
     Arizona  corporation.  Unity Systems sold or licensed  substantially all of
     its assets and  undertaking  involved  in its  acoustic  emergency  traffic
     preemption business. The assets include equipment, inventory,  distribution
     contracts,  customer  lists,  marketing  materials  and the goodwill of the
     business.  Unity Systems retained  ownership of the  intellectual  property
     used in connection with the acoustic emergency traffic preemption business,
     including software,  patents and know-how,  other than certain trade marks.
     The  intellectual  property is being  licensed to Traffic  Systems under an
     intellectual  property license agreement dated October 6, 2000. The license
     is  royalty-free  and has a term expiring on the earlier of October 5, 2020
     and the date of the final  payment of the purchase  price at which time the
     intellectual property will be transferred to Traffic Systems.



                                      F-13
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


4.   Disposal of Sonem business (continued):

     As consideration  for the sale of the traffic  preemption  business,  Unity
     Systems received a 37% interest in the purchaser,  Traffic Systems,  and is
     entitled  to  receive  up  to  $2,000,000,   subject  to  certain   upwards
     adjustments,  payable in quarterly  installments  equal to 10% of the gross
     profits of Traffic  Systems for the relevant  quarter.  If Traffic  Systems
     becomes a publicly  traded entity before or after payment of the $2,000,000
     (as  adjusted),  Unity  Systems  will be entitled to a 25%  interest in the
     public entity.  In addition to the foregoing,  if Traffic Systems becomes a
     publicly traded entity before payment of the  $2,000,000,  then the balance
     owing will be converted into an initial public offering interest of Traffic
     Systems at a 20% discount to the pricing of the offering.  The  Corporation
     has not  recorded  the  $2,000,000  consideration  as it is  contingent  on
     Traffic Systems generating gross profits.

     The net book value of assets disposed of were as follows:

     -----------------------------------------------------------------------
     Inventory                                              $      150,000
     -----------------------------------------------------------------------

     Since the  Corporation  has a 37% interest in Traffic Systems over which it
     can exert  significant  influence,  the sale of the Sonem  business was not
     considered at October 6, 2000 to be a discontinued operation.

     Also under the Asset Purchase  Agreement,  Traffic  Systems was responsible
     for warranty work on Unity Systems' acoustic  emergency traffic  preemption
     products already installed,  except Unity Systems had advanced $100,000 for
     costs in connection with such work.  Traffic Systems is responsible for any
     costs in  excess  of  $100,000,  but Unity  Systems  will  fund such  costs
     initially and Traffic  Systems will  reimburse  Unity Systems by adding the
     costs over the initial $100,000 to the $2,000,000 otherwise payable as part
     of the purchase price. The $100,000 for the initial warranty costs was paid
     by Unity Systems on closing and is  non-refundable  regardless of the costs
     incurred by Traffic Systems.

     On April 30, 2001, the Corporation  disposed of its 37% interest in Traffic
     System and all  remaining  intellectual  property  related to the  acoustic
     business and in return the purchaser assumed the warranty liability related
     to the acoustic business. The warranty as at June 30, 2001 was estimated to
     be  $383,091.  As a result,  the  Corporation  has no  direct  or  indirect
     continuing interest in the acoustic business.



                                      F-14
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


5.   Discontinued operations:

     Effective  December  30,  2000,  Unity  Wireless  Integration   Corporation
     ("UWIC"), a wholly-owned subsidiary of the Corporation,  disposed of all of
     its assets and  obligations,  including its 100%  shareholding  interest in
     Unity  Wireless   Integration  (S)  Pte  Ltd.,  a  Singapore  company  ("UW
     Singapore") to Lyma Sales & Management Corp.  ("Lyma"), a British Columbia,
     Canada  company.  Unity  Wireless  Integration  (S) Pte Ltd.  commenced its
     operations during 2000.

     Under the terms of the Asset Purchase  Agreement,  UWIC sold all its assets
     in return for $61,500 (Cdn.  $92,000),  payable within one year of closing,
     in equal semi-annual  instalments of $30,730 (Cdn. $46,000),  plus interest
     on the unpaid  balance at a rate equal to the prime rate of HSBC Canada per
     annum. As at December 31, 2001, Lyma Paid $43,259 (Cdn.  $65,112),  and has
     agreed  with  the  Corporation  to pay  the  remainder  in  2002.  Also  in
     consideration  of the  purchase  of assets,  Lyma agreed to repay a $37,100
     (Cdn.  $54,000)  demand loan within ten business days of closing.  The loan
     has been repaid as agreed.

     The disposition price was arrived at through arm's length  negotiations and
     management's  determination  that  the  purchase  price  of  $61,500  (Cdn.
     $92,000) represented a fair disposition price for the included assets.

     The net book value of assets disposed of were as follows:

     -----------------------------------------------------------------
     Cash and cash equivalents                         $      314,990
     Accounts receivable                                       20,396
     Prepaid expenses                                           9,977
     Equipment                                                 26,178
     Accounts payable                                        (229,315)
     -----------------------------------------------------------------
                                                       $      142,226
     -----------------------------------------------------------------

     Lyma is  wholly-owned  by an  ex-director of the  Corporation  who was also
     responsible  for management of the operations of UWIC and its  wholly-owned
     subsidiary UW Singapore.

     Sales from UWIC during 2000 was $383,214.



                                      F-15
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


5.   Discontinued operations (continued):

     As discussed in note 4, on April 30, 2001, the Corporation  disposed of its
     remaining interest in Sonem. As a result,  the 2000 consolidated  financial
     statement figures have been  retroactively  restated to present the results
     of operations in the Sonem business as a discontinued operation.  Sales for
     Sonem products during 2001 was nil (2000 - $120,741).

     On June 12, 2001, the Corporation  also disposed of its last  non-amplifier
     operation,  the Unilinx business,  to Horton Automation Inc. ("Horton"),  a
     British  Columbia,  Canada  corporation.  The  Corporation  sold all of its
     assets  and  undertakings  involved  in the  Unilinx  business.  The assets
     involved  include  inventory,  equipment and  intellectual  property of the
     business.  The purchase  price is being paid over time on a  percentage  of
     future sales basis  within a period of two years until June 12,  2003.  The
     Corporation  has not  recorded the  consideration  as it is  contingent  on
     Horton  generating  sales  for  the  Unilinx  product.   Consequently,  the
     Corporation  recorded a loss on the  disposition  of the Unilinx  business.
     Sales for Unilinx products during 2001 was nil (2000 - $125,425).

     Therefore,  in  summary,  the  gain  (loss)  from  discontinued  operations
     presented in the consolidated statements of operations are comprised of the
     following:

<TABLE>
     --------------------------------------------------------------------------------------------------------------------------
                                                                   2001                                                2000
                                    Unilinx   Sonem     UWIC       Total      Unilinx       Sonem         UWIC         Total
     --------------------------------------------------------------------------------------------------------------------------
     <S>                        <C>          <C>        <C>      <C>        <C>          <C>           <C>        <C>
     Gain (loss) on disposal    $ (165,125)  $432,629   $   -    $ 267,504  $         -   $         -   $      -   $         -
     Gain (loss) from
       discontinued operations           -          -       -            -   (1,803,986)   (1,619,806)   (55,632)   (3,479,424)
     --------------------------------------------------------------------------------------------------------------------------
     Gain (loss) on disposal    $ (165,125)  $432,629   $   -    $ 267,504  $(1,803,986)  $(1,619,806)  $(55,632)  $(3,479,424)
     --------------------------------------------------------------------------------------------------------------------------
</TABLE>


6.   Business acquisition:

     On  November  16,  2000,  the  Corporation  acquired  all  the  issued  and
     outstanding  shares  of  Ultratech  Linear  Solutions  Inc.  ("Ultratech").
     Ultratech,  founded in May,  1999 and based in Burnaby,  British  Columbia,
     Canada,  is  a  wireless  communications  technology  designer,  developer,
     manufacturer and marketer specializing in radio frequency high power linear
     amplifiers.

     The  acquisition  was recorded by the  purchase  method with the results of
     Ultratech included in the financial statements from the date of acquisition
     (November 16, 2000). The total  consideration paid was allocated,  based on
     estimated fair values of the assets acquired and the liabilities assumed on
     November 16, 2000 as follows:



                                      F-16
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


6.   Business acquisition (continued):

     -------------------------------------------------------------------------
     Net assets acquired at assigned values:
       Bank indebtedness                                            $(143,590)
       Accounts receivable                                             68,083
       Inventories                                                    111,108
       Intellectual property                                              606
       Equipment                                                       17,114
       Accounts payable and accrued liabilities                      (393,316)
       Loans payable to shareholders of Ultratech                     (48,000)
       Goodwill                                                       926,995
     -------------------------------------------------------------------------
                                                                    $ 539,000
     -------------------------------------------------------------------------
     Consideration:
       Issuances of shares (700,000 common shares at
         $0.77 per share)                                           $ 539,000
     -------------------------------------------------------------------------


     Shares issued on the combination  were valued at $0.77, the market price of
     the shares at the date the  acquisition  was  announced to the public.  The
     Corporation  repaid the loans payable to the  shareholders of Ultratech for
     $48,000 (Cdn. $72,000).

     All of  Ultratech's  management  and  key  employees  have  been  retained.
     Ultratech  has  combined  its  operations  with  Unity  Systems  through an
     amalgamation on December 31, 2000 (note 3(a)).


7.   Loan receivable:

     The  Corporation  has a loan  receivable  from  Cobratech  Industries  Inc.
     ("Cobratech"),  a company with two common directors, the original principal
     amount being  $200,000.  Interest is payable to the  Corporation  at 1% per
     month,  calculated monthly not in advance. The loan is secured by a general
     security  agreement which includes all of the personal and real property of
     Cobratech.  The  loan  is  repayable  upon  demand.  Cobratech  repaid  the
     Corporation  $122,222 in 2001, and has agreed to repay the balance in 2002,
     repaying 10% of all funds  received from any future  financing it receives.
     As at December 31, 2001, the Corporation has recorded an $85,611  provision
     on the remaining balance for  uncollectibility  because of uncertainty with
     regard to future operations, profitability and cash flows of Cobratech.



                                      F-17
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


8.   Inventory:

     ---------------------------------------------------------------------------
                                                        2001              2000
     ---------------------------------------------------------------------------
     Raw materials                               $   261,220       $   248,863
     Work in progress                                      -           195,504
     Finished goods                                  258,296            19,045
     ---------------------------------------------------------------------------
                                                 $   519,516       $   463,412
     ---------------------------------------------------------------------------


9.   Equipment:

     Equipment consists of the following:

<TABLE>
     ---------------------------------------------------------------------------------------------------
                                                     2001                               2000
     ---------------------------------------------------------------------------------------------------
                                                         Accumulated                       Accumulated
                                               Cost     depreciation           Cost       depreciation
     ---------------------------------------------------------------------------------------------------
    <S>                                  <C>           <C>                <C>              <C>
     Computer equipment                  $  162,004    $    70,479        $  150,475       $   38,331
     Computer software                       48,406         39,386            27,073                -
     Furniture and fixtures                  43,116         12,379            33,784            6,825
     Leasehold improvements                  23,623          2,784            12,172                -
     Production and R&D equipment           154,894         30,106            56,783           13,480
     ---------------------------------------------------------------------------------------------------
                                         $  432,043    $   155,134        $  280,287       $   58,636
     ---------------------------------------------------------------------------------------------------
     Net book value                              $   276,909                        $  221,651
     ---------------------------------------------------------------------------------------------------
</TABLE>


     Included  in  equipment  are capital  leases  consisting  of  research  and
     development  equipment at cost of $62,237 with accumulated  depreciation of
     $6,224. The Corporation recorded $6,224 of depreciation during 2001.


10.  Accounts payable and accrued liabilities:

     -------------------------------------------------------------------------
                                                        2001             2000
     -------------------------------------------------------------------------
     Trade accounts payable                       $  415,164       $  468,866
     Accrued liabilities                             243,419          259,941
     -------------------------------------------------------------------------
                                                  $  658,583       $  728,807
     -------------------------------------------------------------------------



                                      F-18
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


11.  Loans payable:

<TABLE>
     --------------------------------------------------------------------------------
                                                                 2001           2000
     --------------------------------------------------------------------------------
     <S>                                                     <C>          <C>
     Government of Canada - Ministry of Western Economic
       Diversification (d)                                   $ 74,451     $   74,451
     Royal Bank of Canada (b)                                       -         83,642
     --------------------------------------------------------------------------------
                                                               74,451        158,093
     Current portion                                                -         42,312
     --------------------------------------------------------------------------------
                                                             $ 74,451     $  115,781
     --------------------------------------------------------------------------------
</TABLE>

     (a)  Government of British Columbia:

          The  Corporation  agreed to perform  certain  specified  research  and
          development work and the British Columbia  Advanced Systems  Institute
          ("ASI")  agreed to assist in the  funding  of this work up to  $69,286
          (Cdn. $100,000). As of February 22, 2000, ASI had advanced the maximum
          amount under this  agreement.  In  addition,  $24,250  (Cdn.  $35,000)
          became payable on March 31, 2000.

          The Corporation  discharged all of its obligations  under this loan by
          converting the outstanding  balance $93,536 (Cdn.  $135,000) to equity
          by issuing 45,000 shares to ASI on February 22, 2000.

     (b)  Royal Bank of Canada:

          As of December 31, 2000, the Corporation had a $83,642 (Cdn. $125,288)
          loan with the Royal Bank of Canada with an  interest  rate of Canadian
          prime plus 1%. The Corporation discharged all of its obligations under
          this loan on January 29, 2001.

          The loan was secured by a $100,000  term  deposit with the Royal Bank.
          There were also various covenants,  financial reporting  requirements,
          and  conditions   precedent   associated  with  the  above  loan.  The
          Corporation  was in compliance with these covenants as at December 31,
          2000.

          Canadian bank prime rate at December 31, 2000 was 6.0%.



                                      F-19
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


11.  Loans payable (continued):

     (c)  HSBC Bank Canada:

          As of December 31, 2001, the Corporation has a $79,263 (Cdn. $125,000)
          revolving  operating  line with the HSBC Bank  Canada with an interest
          rate at the bank's prime rate plus 0.25% per annum.

          The revolving operating line is secured by a $80,000 term deposit with
          the HSBC Bank  Canada.  There were also various  covenants,  financial
          reporting  requirements and conditions  precedent  associated with the
          share loan. The  Corporation was in compliance with these covenants as
          at December 31, 2001.

          HSBC Bank Canada bank prime rate at December 31, 2001 was 4.0%.

     (d)  Government of Canada:

          Ministry of Western Economic Diversification:

               The Corporation, through its subsidiary 321373 B.C. Ltd., entered
               into an unsecured  loan  agreement  with the Federal  Ministry of
               Western Economic Diversification,  whereby the Ministry agreed to
               make  financial  contributions  to assist in the  development  of
               certain research and development projects. Under the terms of the
               original agreement, the total loan was to be repaid in five equal
               semi-annual  installments  commencing  October 30,  1993.  If not
               repaid,  each installment will incur interest  compounded monthly
               at the Bank of Canada's prime rate plus 3%.

               321373 B.C. Ltd. had agreed to repay this loan by allocating  40%
               of royalty payments from Unity Systems. Royalties were payable by
               Unity  Systems at the rate of 3.5% of net sales of Sonem by Unity
               Systems, including a deduction for warranty or replacement costs.
               As of the date of the  disposal  of the Sonem  business  by Unity
               Systems (see note 4), royalties owing to 321373 B.C. Ltd. did not
               exceed  accumulated  warranty or replacement costs, and following
               this date no further  royalties became payable.  321373 B.C. Ltd.
               has  assets  valued  at Cdn.  $1 and is in the  process  of being
               liquidated.  Until the loan is fully repaid,  the Corporation has
               agreed  to  comply  with  certain  contractual  responsibilities,
               including the following:

               (i)  to maintain  adequate  insurance  coverage for the projects;
                    and

               (ii) to not issue dividends,  repay shareholder  advances or make
                    significant  changes in ownership  or financing  without the
                    approval of the Ministry.



                                      F-20
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


12.  Obligations under capital leases:

     The  Corporation  leases R&D  equipment  under capital  leases  expiring at
     various  dates to 2005.  As at December  31,  2001,  future  minimum  lease
     payments under capital leases are as follows:

     --------------------------------------------------------------------------
     2002                                                      $       47,784
     2003                                                               3,628
     --------------------------------------------------------------------------
                                                                       51,412

     Amount representing interest                                       2,024
     --------------------------------------------------------------------------
                                                                       49,388

     Current portion                                                   45,900
     --------------------------------------------------------------------------

                                                               $        3,488
     --------------------------------------------------------------------------


     Interest  rates on the capital leases average  approximately  8%.  Interest
     expense on capital lease  obligations  for the year ended December 31, 2001
     is $1,555 (2000 - nil).


13.  Common stock:

     Authorized share capital:

          100,000,000 common stock at par value of $0.001 per share

          5,000,000 preferred stock at par value of $0.001 per share

     (a)  Shares issued for services:

          In 2001, the Corporation  issued 25,000 (2000 - 254,428) common shares
          having a  market  value  of  $7,000  (2000 -  $143,140)  for  services
          rendered. The shares were assigned a value equal to their market value
          determined  by the closing  trading  price of the common  stock on the
          date of issuance.  The value  assigned  has been  recorded by a charge
          against operations.

          In 2000, 285,000 shares were issued to consultants  providing services
          in connection with the private placement of $5,775,000 in April, 2000.
          The shares  were  issued and  assigned a value  equal to the per share
          value  of the  shares  issued  in the  private  placement.  The  value
          assigned was recorded by a charge against the proceeds pursuant to the
          private placement.



                                      F-21
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


13.  Common stock (continued):

     (b)  Escrowed shares:

          (i)  700,000 escrowed shares ("Indemnity  Shares") were held in Escrow
               pursuant to the terms of the Escrow  Agreement until the 11th day
               of June,  2000,  at which  time  420,000  Indemnity  Shares  were
               released from the terms of this Escrow Agreement.  Thereafter, an
               additional  140,000 Indemnity Shares were released from the terms
               of this Escrow Agreement and in 2000 and 140,000 Indemnity Shares
               were released in 2001.

          (ii) 1,800,000  escrowed  shares  were held in escrow  pursuant to the
               terms of the Escrow  Agreement  until December 11, 1999, at which
               time 720,000 escrowed shares were released from the terms of this
               Escrow  Agreement.  Thereafter,  an additional  720,000  escrowed
               shares were released  from the terms of this Escrow  Agreement in
               2000 and 360,000 Indemnity Shares were released in 2001.

          (iii)301,982  shares  are held in escrow  pursuant  to the terms of an
               Escrow Agreement dated December 24, 2001 until November 16, 2003.
               On May 16, 2002, 75,495 escrowed shares will be released from the
               terms of the Escrow Agreement.  Thereafter,  an additional 75,495
               escrowed  shares will be released every six months until November
               16, 2003.

     (c)  Loss per share:

          The following  table sets forth the  computation  of basic and diluted
          loss per share:

<TABLE>
         ----------------------------------------------------------------------------------------
                                                                           2001             2000
         ----------------------------------------------------------------------------------------
         <S>                                                       <C>              <C>
         Numerator:
              Loss from continuing operations                      $ (2,365,518)    $ (1,839,209)
              Gain (loss) from discontinued operations                  267,504       (3,479,424)
         Denominator:
              Weighted average number of:
                  Common shares outstanding                          25,855,025       23,680,518
         ----------------------------------------------------------------------------------------
         Basic and diluted earnings (loss) per common share:
              Continuing operations                                $      (0.09)    $      (0.08)
              Discontinued operations                                      0.01            (0.14)
         ----------------------------------------------------------------------------------------
</TABLE>

          For  the  years  ended   December  31,  2001  and  2000,  all  of  the
          Corporation's  common  shares  issuable  upon  the  exercise  of stock
          options and warrants were excluded from the  determination  of diluted
          loss per share as their effect would be anti-dilutive.



                                      F-22
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


13.  Common stock (continued):

     (d)  Stock option plan:

          During the year ended December 31, 1998 the Corporation  established a
          stock  option plan  pursuant  to which  3,000,000  common  shares were
          reserved for issuance. This plan was replaced and on December 6, 1999,
          the  Corporation  adopted a new stock  option  plan  pursuant to which
          5,000,000  common shares were reserved for issuance.  On July 5, 2000,
          the  stockholders  approved a change in the maximum  number of options
          issuable  under  this  plan  to 20% of the  number  of  common  shares
          outstanding  including shares of common stock issuable under the plan.
          As of December 31, 2001, this maximum number was 7,729,000.

          Where options  issued after January 18, 2001 have an exercise price in
          a  currency  that is not  either the (a)  functional  currency  of the
          Corporation  of (b) the  currency in which the  employee is paid,  the
          options  are  to  be  accounted  for  as  variable  plan  options  and
          compensation  expense will be recorded  equal to changes in the market
          value of the underlying common shares at each reporting period.

          During the year ended  December  31,  2001,  the  Corporation  granted
          options  in  U.S.   dollars  when  the  functional   currency  of  the
          Corporation  and the  currency  in  which  employees  are  paid is the
          Canadian dollar. Accordingly, these employee options are considered to
          be variable options. In addition,  compensation  expense is recognized
          to the extent that options are granted  having an exercise  price less
          than the market price of the underlying share on the date of grant.

          Stock option transactions for the respective periods and the number of
          stock options outstanding are summarized as follows:

<TABLE>
          -----------------------------------------------------------------------------------------
                                                                        Outstanding options
                                                             -------------------------------------
                                                    Shares
                                                  available          Number of            Weighted
                                              to be granted             common             average
                                               under option    shares issuable      exercise price
          -----------------------------------------------------------------------------------------
         <S>                                    <C>                 <C>                     <C>
         Balance, December 31, 1999               2,390,500          2,384,500           $   1.01

         Options granted                         (5,912,957)         5,912,957               1.24
         Options expired                          3,842,791         (3,842,791)             (1.65)
         Increase in reserved for issuance        1,660,789                  -                   -
          -----------------------------------------------------------------------------------------

         Balance, December 31, 2000               1,981,123          4,454,666                0.67
         Options granted                         (2,084,500)         2,084,500                0.18
         Options expired                          2,198,416         (2,198,416)              (1.12)
         Increase in reserved for issuance        1,293,211                  -                   -
          -----------------------------------------------------------------------------------------

         Balance, December 31, 2001               3,388,250          4,340,750           $    0.20
          -----------------------------------------------------------------------------------------
</TABLE>



                                      F-23
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


13.  Common stock (continued):

     (d)  Stock option plan (continued):

          The following table summarizes  information  about stock options under
          the plan outstanding at December 31, 2001:

<TABLE>
        -------------------------------------------------------------------------------------------------
                                           Options outstanding                   Options exercisable
                           -----------------------------------------------  ----------------------------
                                                  Weighted
                                   Number          average        Weighted           Number     Weighted
                           outstanding at        remaining         average   outstanding at      average
         Range of            December 31,      contractual        exercise     December 31,     exercise
         exercise prices             2001       life (yrs)           price             2001        price
        -------------------------------------------------------------------------------------------------
         <S>               <C>                 <C>               <C>         <C>              <C>
         $0.17                  3,937,000           3.94              0.17        1,599,665        $0.17
         $0.21                     20,000           5.00              0.21                -        $0.21
         $0.22                     15,000           5.00              0.22                -        $0.22
         $0.23                    155,000           5.00              0.23                -        $0.23
         $0.25                     20,000           5.00              0.25                -        $0.25
         $0.38                     50,000           3.75              0.38           20,833        $0.38
         $1.00                    143,750           0.86              1.00          143,750        $1.00
        -------------------------------------------------------------------------------------------------
                                4,340,750           3.88             $0.20        1,764,248        $0.24
        -------------------------------------------------------------------------------------------------
</TABLE>


          Stock options become  exercisable at dates  determined by the Board of
          Directors at the time of granting the option.

          Stock options have initial terms of five years.

          Had  compensation  cost been determined based on the fair value at the
          grant dates for those  options  issued to employees  and  consultants,
          consistent   with  the  method   described   in  SFAS  No.  123,   the
          Corporation's loss and loss per common share would have been increased
          to the pro forma amounts indicated below.

<TABLE>
        -----------------------------------------------------------------------------------------
                                                                       2001                 2000
        -----------------------------------------------------------------------------------------
        <S>                                                 <C>                  <C>
         Loss for the year, as reported                      $   (2,098,014)      $   (5,318,633)
         Pro forma loss                                          (2,942,434)          (7,059,379)
        -----------------------------------------------------------------------------------------
         Basic and diluted loss per common shares,
           net as reported                                   $        (0.08)      $       (0.22)
         Pro forma                                                    (0.11)              (0.30)
        -----------------------------------------------------------------------------------------
</TABLE>



                                      F-24
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


13.  Common stock (continued):

     (d)  Stock option plan (continued):

          The fair value of each option  granted in 2001 and 2000 was  estimated
          on the date of the grant using the Black-Scholes  option-pricing model
          with the following  weighted-average  assumptions:  no dividend yield;
          volatility  of  156%  (2000 -  139%)  based  on  weekly  stock  price;
          risk-free  interest  rate of 3.25% (2000 - 5.00%) and an expected life
          of four years.

          The  weighted-average  fair value of options  granted  during 2001 and
          2000 was $0.33 and $0.95 respectively.

     (e)  Warrants:

          The Corporation has warrants  outstanding to purchase 5,747,551 common
          shares at $0.29 to $0.38 per share. 5,147,551 warrants may be callable
          for exercise by the  Corporation  at any time after the closing  price
          for the Corporation's common stock is equal to or exceeds $0.75 for at
          least  ten  consecutive  trading  days.  After the  issuance  of these
          warrants,  the share price level have reached  $0.75.  These  warrants
          expire in December 2003. Of the remaining  600,000  warrants,  225,000
          warrants are fully vested and expire in December 2002, 75,000 warrants
          vest until December 2002 and expire in March 2005 and 300,000 warrants
          vest until March 2004 and expire March 2005.

14.  Share subscription receivable:

     The Corporation  advanced  $90,000 to an officer of the Corporation for the
     subscription  of 500,000 units in  conjunction  with the private  placement
     completed on December 24, 2001.  The loan  principal  plus  interest due on
     December  24,  2003,  bears  interest at 4% per annum and is secured by the
     subscribing shares.

15.  Commitments:

          The Corporation has the following future minimum lease commitments for
          premises and equipment:

             --------------------------------------------------
             2002                               $      231,044
             2003                                      130,615
             2004                                      121,891
             2005                                       79,975
             2006                                            -
             Thereafter                                      -
             --------------------------------------------------
                                                $      563,525
             --------------------------------------------------

          In 2001, rent expense was $180,000 (2000 - $43,526).



                                      F-25
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


16.  Government grant:

     During the year ended  December 31,  2000,  the  Corporation  was awarded a
     contribution  toward  export  marketing  expenses  of up to  $33,178  (Cdn.
     $55,000)  from the  Government  of Canada.  Of this amount,  $27,470  (Cdn.
     $40,757) (1999 - nil) has been  contributed  up to December 31, 2001.  This
     contribution is repayable if the Corporation  achieves incremental sales to
     the target market, at the rate of 4% of such incremental  sales. The amount
     awarded has been  recognized as a liability and is grouped  within  accrued
     liabilities.

17.  Income taxes:

     At December 31, 2001,  the  Corporation  has U.S. tax net operating  losses
     approximating  $1,769,000,   which  will  begin  to  expire  in  2019.  The
     Corporation may have incurred  "ownership  changes"  pursuant to applicable
     Regulations  in effect under Section 382 Internal  Revenue Code of 1986, as
     amended.  Therefore,  the  Corporation's use of losses incurred through the
     date of these  ownership  changes  may be limited  during the  carryforward
     period.

     The  Corporation  has Canadian tax net  operating  losses of  approximately
     $7,550,000 which expire as follows:

     --------------------------------------------------------------------
     2002                                                 $      101,000
     2003                                                        509,000
     2004                                                        620,000
     2005                                                      1,478,000
     2006                                                      1,250,000
     2007                                                      2,610,000
     2008                                                        982,000
     --------------------------------------------------------------------


     Deferred  income  taxes  reflect the net effects of  temporary  differences
     between  the  carrying  amounts of assets  and  liabilities  for  financial
     reporting  purposes  and the  amounts  used for  income tax  purposes.  The
     Corporation has recognized a valuation  allowance equal to the deferred tax
     assets due to the  uncertainty  of  realizing  the  benefits of the assets.
     Significant  components  of the  Corporation's  deferred  tax  assets as of
     December 31 are as follows:

     ---------------------------------------------------------------------------
                                                         2001              2000
     ---------------------------------------------------------------------------

     Deferred tax assets:
     Net operating loss carry forwards           $  3,375,571      $  4,150,672
     Depreciation/amortization                        133,112           121,713
     Other                                            463,492            40,129
     ---------------------------------------------------------------------------
     Total deferred tax assets                      3,972,175         4,312,514
     Valuation allowance                           (3,972,175)       (4,312,514)
     ---------------------------------------------------------------------------
     Net deferred taxes                          $          -      $          -
     ---------------------------------------------------------------------------



                                      F-26
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


18.  Segmented information:

     (a)  Segment information:

          During  1999,  the  Corporation  was only  operating  in the  acoustic
          product segment.

          During 2001, the Corporation sold its contract services business (note
          5)  and  its  continuing  operations  presented  in  the  consolidated
          statements  of  operations  for all periods  relate solely to wireless
          products.  As at December 31, 2000, the  Corporation  was operating in
          the wireless product and acoustic product segments.

     (b)  Geographic information:

          Substantially  all assets and operations  are in Canada.  A summary of
          sales by region of customer location is as follows ($000):

          -------------------------------------------------------------------
                                                  2001                 2000
          -------------------------------------------------------------------
          Korea                               $   3,085              $   474
          China                                     159                    -
          Canada                                     14                    -
          United States                             268                    -
          Other                                      19                    -
          -------------------------------------------------------------------
          Total sales                        $    3,545             $    474
          -------------------------------------------------------------------


     (c)  Major customers:

          Sales to customers representing greater than 10% of total sales are as
          follows ($000):

          -------------------------------------------------------------------
                                                  2001                 2000
          -------------------------------------------------------------------
          Customer A                         $    1,582             $    409
          Customer B                                851                   65
          -------------------------------------------------------------------


19.  Subsequent event:

     (a)  In January,  2002,  the  Corporation  granted  80,000  options  having
          exercise   prices  between  $0.33  and  $0.40  per  share  to  various
          employees.

     (b)  In February 2002, the HSBC Bank of Canada revolving operating line was
          replaced with a U.S. $78,616 (Cdn.  $125,000) operating line from CIBC
          Bank, at an interest rate of prime and secured by a U.S. $78,616 (Cdn.
          $125,000)  guaranteed  investment  certificate.  In  March  2002,  the
          Corporation  arranged for a U.S. $750,000  accounts  receivable credit
          facility  with CIBC at an  interest  rate of CIBC prime plus 1% and an
          administrative fee of 1% of invoice value.



                                      F-27
<PAGE>

UNITY WIRELESS CORPORATION
Notes to Consolidated Financial Statements
(Expressed in United States dollars)
(Prepared in accordance with United States
  generally accepted accounting principles)

Years ended December 31, 2001 and 2000
================================================================================


20.  Contingent liabilities:

     The  Corporation  is currently a party to an action in the Supreme Court of
     British Columbia,  Vancouver Registry, brought by an optionholder seeking a
     declaration  that 500,000 options to purchase shares in the common stock of
     the Corporation held by it have a term of unlimited duration.

     The Corporation  provides for costs related to contingencies when a loss is
     probable and the amount is  reasonably  determinable.  It is the opinion of
     management,  based in part on advice of legal  counsel,  that the  ultimate
     resolution of this contingency,  to the extent not previously provided for,
     will not have a material  adverse effect on the financial  condition of the
     Corporation.




                                      F-28
<PAGE>

                                   SIGNATURES

     In accordance  with Section 12 of the  Securities  Exchange Act of 1934, as
amended,  the registrant caused this annual report to be signed on its behalf by
the undersigned, thereunto duly authorized.

UNITY WIRELESS CORPORATION
(Registrant)


Date  March 27, 2002                   By  /s/ Roland  Sartorius
                                          -------------------------------------
                                          Roland Sartorius, Chief Financial
                                          Officer, Secretary and Director



By /s/  Mark Godsy                    By  /s/ John Robertson
   --------------------------             --------------------------
        (Signature)                               (Signature)
   Mark Godsy, Chairman                   John Robertson, Chief Executive
                                          Officer, President and Director



By /s/ Ken Maddison                   By  /s/ Tom Dodd
   --------------------------             --------------------------
        (Signature)                               (Signature)
   Ken Maddison, Director                 Tom Dodd, Senior V.P and Director




                                       35
<PAGE>

                                 EXHIBIT INDEX

     Exhibit
     Number         Description
     ------         -----------
       3.1*         Amended and Restated  Certificate of  Incorporation of Unity
                    Wireless  Corporation  (incorporated by reference to Exhibit
                    3.1 to the Company's Form SB-2 filed on October 4, 2000)

       3.2*         Amended and Restated  Bylaws of Unity  Wireless  Corporation
                    (incorporated  by reference to Exhibit 3.2 to the  Company's
                    Form SB-2 filed on October 4, 2000)

       4.1*         Consulting  agreement among Mueller & Company,  Inc., Ideas,
                    Inc.,   Mark  Mueller,   Aaron  Fertig  and  Unity  Wireless
                    Corporation dated January 1, 2001 (incorporated by reference
                    to Exhibit 4.2 to the  Company's  Form 10-KSB filed on April
                    2, 2001)

       4.2*         Consulting agreement amendment among Mueller & Company, Inc.
                    and Unity  Wireless  Corporation  dated  November  15,  2001
                    (incorporated  by reference to Exhibit 4.2 to the  Company's
                    Form SB-2 filed on February 15, 2002)

      10.1*         Asset Purchase  Agreement  dated October 6, 2000 among Unity
                    Wireless Systems  Corporation,  a British  Columbia,  Canada
                    corporation,  568608 B.C. Ltd., a British  Columbia,  Canada
                    corporation,  Traffic  Systems,  L.L.C.,  an Arizona limited
                    liability company, Traffic Safety Products, Inc., an Arizona
                    corporation and James L. Hill  (incorporated by reference to
                    Exhibit 2.1 to the  Company's  Form 8-K filed on October 23,
                    2000)

      10.2*         Intellectual  Property  License  Agreement  dated October 6,
                    2000 between Unity  Systems as licensor and Traffic  Systems
                    as licensee (incorporated by reference to Exhibit 2.2 to the
                    Company's Form 8-K filed on October 23, 2000)

      10.3*         Share Purchase Agreement, dated November 16, 2000 among John
                    Robertson,    Mirza   Kassam,    Chris    Neumann,    Robert
                    Fetherstonhaugh,   Unity  Wireless   Corporation,   Stirling
                    Mercantile  Corporation,  Peter A. Scott Consulting Ltd., W.
                    Hugh Notman (incorporated by reference to Exhibit 2.1 to the
                    Company's Form 8-K filed on December 4, 2000)

      10.4*         Asset Purchase  Agreement,  dated for reference December 30,
                    2000,  among  Unity  Wireless  Integration   Corporation  as
                    vendor, Lyma Sales & Management Corp. as purchaser and Unity
                    Wireless  Corporation  (incorporated by reference to Exhibit
                    2.1 to the Company's Form 8-K filed on January 16, 2001)

      10.5*         Agreement   to   Redeem   Membership   Interest,    Transfer
                    Intellectual  Property and Amend Asset  Purchase  Agreement,
                    effective  April 9,  2001,  by and  among  Traffic  Systems,
                    L.L.C., Unity Wireless Systems  Corporation,  Traffic Safety
                    Products,  Inc. and Jim Hill  (incorporated  by reference to
                    Exhibit  10.5 to the  Company's  Form SB-2A  filed on May 3,
                    2001)

      10.6*         1999  Stock  Option  Plan,  as  amended   (incorporated   by
                    reference to Exhibit 10.6 to the Company's Form 10-KSB filed
                    on April 2, 2001)

      10.7*         Recommended  Stock  Option  Grant  Policy  for  the  Company
                    (incorporated  by reference to Exhibit 10.7 to the Company's
                    Form 10-KSB filed on April 2, 2001)

      21.1          Subsidiaries  of the Company

      23.1          Consent of KPMG LLP
-------------------
 * Previously filed