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

                                   FORM 10-KSB

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
     1934

For the fiscal year ended December 31, 2000.

[ ] TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

For the transition period from ____________ to ____________________.

                     Commission file number _______________

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

         DELAWARE                                       91-1940650
-------------------------------             ------------------------------------
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or Organization)

              19000 N.E. 4th Street, Suite 2300, Bellevue, WA 98004
              ------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                 1 800 337-6642
                           (Issuer's Telephone Number)

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

Securities registered under Section 12(g) of the Act:

                         Common Stock, $.001 par value
                         ------------------------------
                                (Title of Class)

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

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

State issuer's revenues for its most recent fiscal year. $720,162

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
27, 2000 was $8,635,662.

As of March 15,  2001,  25,743,153  shares of the  issuer's  Common  Stock  were
outstanding.

Transitional Small Business Disclosure Format (Check one): Yes ____; No __X__



<PAGE>
                                TABLE OF CONTENTS

                          POPSTAR COMMUNICATIONS, INC.
                      INDEX TO ANNUAL REPORT ON FORM 10-KSB
                        FOR YEAR ENDED DECEMBER 31, 2000


                                                                           Page
                                                                           ----
Part I.......................................................................1

   Item 1:      Business.....................................................1

   Item 2:      Properties...................................................11

   Item 3:      Legal Proceedings............................................12

   Item 4:      Submission of Matters to a Vote of Security Holders..........12

Part II......................................................................12

   Item 5:      Market for Registrant's Common Stock and Related
                Stockholder Matters..........................................12

   Item 6:      Plan of Operation............................................15

   Item 7:      Consolidated Financial Statements............................21

   Item 8:      Changes in and Disagreements With Accountants on
                Accounting and  Financial Disclosure.........................21

Part III.....................................................................22

   Item 9:      Directors, Executive Officers, Promoters and
                Control Persons; Compliance With Section 16(a) of
                the Exchange Act.............................................22

   Item 10:     Executive Compensation.......................................25

   Item 11:     Security Ownership of Certain Beneficial Owners
                and Management...............................................30

   Item 12:     Certain Relationships and Related Transactions...............32

   Item 13:     Exhibits and Reports on Form 8-K.............................33




                                       i
<PAGE>


                                     PART I

     For  a  full  understanding  of  the  Unity  Wireless   Corporation's  (the
"Company's")  financial condition and results of operations and the risk factors
inherent  in an  investment  in  shares  of the  Company's  common  stock,  this
commentary  should be read in  conjunction  with the Company's  Form 10-SB filed
December 14, 1999, as amended, and the Company's SB-2 filed October 4, 2000.


FORWARD LOOKING STATEMENTS

     This Form 10-KSB contains forward-looking statements. The words anticipate,
believe,  expect,  plan, intend,  estimate,  project,  could, may, foresee,  and
similar expressions are intended to identify forward-looking  statements.  These
statements include information  regarding expected  development of the Company's
business, lending activities,  relationship with clients, and development of the
industry in which the Company will focus its marketing efforts.  Such statements
reflect the Company's  current views with respect to future events and financial
performance  and involve  risks and  uncertainties.  Should one or more of these
risks or uncertainties occur, or should underlying  assumptions prove incorrect,
actual  results  may vary  materially  and  adversely  from  those  anticipated,
believed, estimated or otherwise indicated.

Item 1. Business

                                     GENERAL

     Unity  Wireless   Corporation  ("Unity  Wireless"  or  the  "Company")  was
incorporated  in the State of Delaware on October 1, 1998,  under the name Sonic
Systems Corporation.  The Company is the successor to M&M International  Realty,
Inc., a Florida  corporation,  which  effected a  reincorporation  as a Delaware
corporation  by merger on  December 1, 1998,  with the Company as the  surviving
corporation.  Before the  merger,  the Florida  corporation  had had no material
commercial activity. On December 11, 1998 the Company acquired all of the issued
and outstanding stock of Unity Wireless Systems  Corporation,  ("UW Systems") in
exchange for 11,089,368 shares of Company common shares. As a result, the former
shareholders of UW Systems owned a majority of the Company's  outstanding stock.
Therefore,  for accounting purposes,  UW Systems was deemed to have acquired the
Company.

     In connection with the acquisition of UW Systems, the Company formed 568608
B.C. Ltd.  ("568608") to act as an acquisition  vehicle.  The Company's original
business,  commercialization  of  a  technology  for  providing  traffic  signal
preemption for emergency vehicles (the "Sonem" technology), was de-emphasized in
favour of more  promising RF wireless  communication  technology  including  the
Company's "UniLinx"  communication card. On October 6, 2000, UW Systems sold the
Sonem business,  and on November 16, 2000 the Company acquired  Ultratech Linear
Solutions,  Inc.  ("Ultratech"),  a  developer  and  manufacturer  of  RF  power
amplifiers for cellular networks. As of December 31, 2000, 568608, Ultratech and
UW Systems were merged, with UW Systems remaining as the surviving  corporation.
Also,  on December  30, 2000,  the Company  sold its interest in Unity  Wireless
Integration  Corporation  ("UW  Integration"),   a  Washington  subsidiary  with
activity in  Singapore  providing  systems  integration  support,  warranty  and
maintenance services for a bus management system, to focus fully on its RF power
amplifier and its RF communication card businesses. See Recent Developments.



                                       1
<PAGE>

     In keeping with its decision to focus on wireless technologies, the Company
changed its 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. The Company began using the new name as a "dba" in March, 2000.

     The Company's fiscal year end is December 31.


                          PRINCIPAL PRODUCTS & SERVICES

     The  Company  currently  has two  product  lines  that  are  being  offered
commercially:  the  UltraTech  line of high power  linear radio  frequency  (RF)
amplifiers and a line of UniLinx(TM) wireless data communications devices.

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 of adjacent channels in a cell increases.

     The following table identifies currently marketed UltraTech products:

PRODUCT:           DESCRIPTION:                            FREQUENCY RANGE:
==========================================================================
Black Bear         4 Channel, 25 Watt Amplifier            1840-1870 MHz

Dolphin            2 Channel, 12 Watt Amplifier            1840-1870 MHz

Otter              4 Channel, 30 Watt Amplifier            1840-1870 MHz

Cougar             W-CDMA, 15 Watt Amplifier               2110-2170 MHz

Manx               10 Watt Amplifier                       1930-1990 MHz

Buffalo            4 Channel, 30 Watt Amplifier            1840-1870 MHz


     Wireless   communications   infrastructure   is  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:

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



                                       2
<PAGE>

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

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

d.   Applications  such as video demand higher  bandwidth to support higher data
     rates.

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

     The Company  expects 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 2003.

     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
they 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. The Company currently
has strong agent  representation  in Asia and plans to develop a broader network
of agents in the coming year, as well as building its direct sales and marketing
capabilities.

     The wireless  telecommunications 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. The Company's UltraTech 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 only two or three players.  With the explosion
in the growth of  wireless  technologies  in the past five years,  however,  the
smaller  companies  that supplied  amplifiers to niche markets grew very quickly
into large companies with very large overheads to sustain.

     While the high growth rates these companies have enjoyed over the past five
years have  allowed  them to flourish  financially,  they have also made it more
difficult  for them to deal with the rapid  pace of  change in the  second  tier
amplifier market.  Management  believes these changes in the marketplace  create
additional  opportunities  for the  Company  to  provide  quality  products  for
specialty applications.



                                       3
<PAGE>

     The  large,  conventional  amplifier  suppliers  will  continue  to deliver
approximately 80% of the market,  but a great opportunity exists for smaller and
better-focused  amplifier  businesses to supply the  non-captive  or specialized
markets that it is expected will prevail for many years to come.

UniLinx(TM) Wireless Data Communications Platform

     Based  on  its  knowledge  of  intersection  controllers  acquired  through
development of its Sonem business,  specifically the specialized  computers that
control  the  traffic   signal   lights,   the  Company   developed  a  wireless
communications  device  which  it  markets  under  the  name  UniLinx(TM).   The
UniLinx(TM) platform is a robust,  highly adaptable product that can be extended
into many  applications  with minimal  re-design.  UniLinx(TM)  enables wireless
connectivity between remote "smart" devices and the networks that facilitate the
transmission  of the data they provide.  The mode of data delivery is the public
wireless  network routed through the Internet,  using common  Internet  Protocol
(IP)  standards.  As each  UniLinx(TM)  device  is linked  to the  Internet,  it
essentially becomes a gateway or portal to the Internet.

     UniLinx(TM) uses the Cellular Digital Packet Data ("CDPD")  infrastructure.
CDPD is a "data only"  network  that works within the current  cellular  service
spectrum of selected wireless service providers. In essence,  information (data)
sent over the CDPD network is broken into small sections (or packets) and routed
through the  available,  unused  portion of an existing  cellular  voice network
using technology similar to the sending of e-mail between computers.

     The Company's  first  UniLinx(TM)  application  was a UniLinx(TM)  Wireless
Intersection  Communications  Card  ("UniLinx(TM)  WICC")  aimed at the  traffic
control market.  The first sale of product to this market was to the Los Angeles
Department of Transportation.  The UniLinx(TM)  WICC-based system allows traffic
engineers  to send  and  receive  information  to and from  remote  intersection
controllers   without  the  expense,   delay  and  disruption   associated  with
constructing  a hard-wired  connection.  Traffic  control  applications  are not
limited to signal light controllers.  Other traffic-related applications include
ramp meters, traffic counters,  roadside advisories,  variable message signs and
parking ticket dispensers.

     Due to the  unusually  slow sales cycle in this public sector  market,  the
Company has begun exploring more  commercially  promising  markets,  such as POS
(point  of  sale),   specifically  parking  lot  ticket  vending  machines,  and
industrial/SCADA  (Supervisory  Control  And  Data  Acquisition)  and  telemetry
markets.


                         PRODUCT RESEARCH & DEVELOPMENT

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

     The Company's  UniLinx(TM)-related  research and  development  projects are
focused on  re-configuring  UniLinx(TM) to address a number of  non-intersection
remote instrument wireless data applications. Decisions to



                                       4
<PAGE>

move forward and commercially develop new UniLinx(TM) applications will be based
on the  available  market  size  of any  potential  application,  as well as the
Company's ability to attract a strong marketing partner for each application.

     The  Company  spent $ 880,818 on  research  and  development  in 2000 and $
502,643 in 1999.

                                SALES & MARKETING

     The Company plans to build strategic alliances and partnerships to create a
network of  distributors  and  original  equipment  manufacturers  to extend the
Company's position in the wireless communications market.

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

     The  Company  intends to expand  its  marketing  efforts  to include  North
America and Europe.  Initial  sales have already been made in North  America and
appearances  will be made at  industry  trade  shows in order to get the Company
name and brand in front of the wireless network infrastructure market.

     An experienced vice-president of Marketing has been hired for the UltraTech
products,  joining the  vice-president  of Sales, and marketing  activities have
begun.  Short term  marketing  efforts will focus on two areas to expand  sales:
direct sales and channel  development.  Direct sales  activities will target the
large "tier one"  suppliers of base  transceiver  station (BTS)  equipment.  The
Company's  positioning  will be built  around its  ability  to quickly  turn out
specialty product to high standards,  with the several thousand  installed units
in  Korea  providing   needed   credibility  for  technical  and   manufacturing
capabilities,

     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 the Company's marketing strategy for the
UltraTech 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 currently being worked with.

     The Company markets its UniLinx(TM) traffic  applications through strategic
alliances  with  two  of  North  America's  largest   manufacturers  of  traffic
controllers,  Safetran  Traffic  Systems  Corporation  ("Safetran")  of Colorado
Springs,  Colorado  and Peek  Traffic  Systems  Inc.  ("Peek")  of  Tallahassee,
Florida. Under its marketing agreement with Safetran, Safetran has the exclusive
North  American  rights  to  distribute  UniLinx(TM)  for use in Model  170-type
traffic  controllers.  Safetran  is a  leading  manufacturer  of Model  170-type
traffic  controllers.  Under its distribution  agreement with Peek, Peek has the
exclusive North American rights to distribute  UniLinx(TM) for NEMA-type traffic
controllers.  Peek is a leading  manufacturer of NEMA-type traffic  controllers.
Copies of the  agreements  with  Safetran and Peek were filed with the Company's
Form  10-SB,  as amended,  filed  December  14,  1999,  as Exhibits  6.2 and 6.3
respectively.



                                       5
<PAGE>

     The  Company  provides  the  necessary   training  and  market  support  to
facilitate  sales,  while its partners  handle the selling and service duties in
the  traffic-related  markets.  The Company plans to continue to build strategic
alliances  and  partnerships  to create a network of  distributors  and original
equipment manufacturers to extend the Company's position in other markets.

     An  Industrial  Sales  Manager has been hired to develop  UniLinx sales and
channel partners in the industrial, SCADA and telemetry markets. Target segments
include  pipelines,  water supply systems,  wastewater  collection and treatment
systems, and general industrial controls.

     The Company's marketing partnership with AT&T Wireless Systems is beginning
to bear fruit in the form of leads for wireless  connectivity  throughout  North
America.  Under this program,  the Company participates in regional and national
trade shows with AT&T,  targeting  all users of the CDPD carrier  services  that
AT&T deploys, and UniLinx uses as its communications infrastructure.

     Positioning   of   UniLinx   for  the   industrial   markets  -   including
transportation - is built around its "ruggedness" and suitability for industrial
applications,  as well as the  unique  capabilities  built in to suit the market
(specifically,  on-board battery backup, built-in I/O capabilities,  support for
common industrial protocols, and a higher level of security and reliability than
competing wireless products can offer).

     Some of these capabilities make the UniLinx a candidate for some POS (point
of sale)  applications,  particularly  remote  devices  such as  parking  ticket
dispensers and other types of kiosks which must process credit cards,  and those
markets are also being actively investigated.


                            MANUFACTURING & SUPPLIERS

     The Company subcontracts its digital 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 and painting is also subcontracted.  Alternate contract  manufacturers
are available, should any of its existing contract manufacturers cease providing
services to the Company.  RF circuitry is assembled and tested  in-house,  as is
all final assembly, integration, configuration, tuning and final testing.

     The  principal  raw  materials  used  in the  production  of the  Company's
products are mostly standard electronic,  plastic and hardware  components.  The
Company  has,  from time to time,  experienced  difficulties  in  obtaining  raw
materials and reduces supply risk by using alternate suppliers.


                                   COMPETITION

     Two sizes and types of players characterize the RF amplifier business:  (1)
large-scale  manufacturers  with anywhere from  $100,000,000  to $500,000,000 in
annual sales,  specializing in large volume  production runs and mainstream type
products; and (2) smaller companies with anywhere from $1,000,000 to $30,000,000
in annual sales, specializing in custom order markets. The large and dominant RF
amplifier companies are Powerwave



                                       6
<PAGE>

Technologies Inc.  ("Powerwave"),  Spectrian Inc.  ("Spectrian"),  and Microwave
Power Devices Inc. ("MPD"). MPD was recently purchased by Ericsson. The dominant
smaller  companies are Amplidyne  Inc.  ("Amplidyne"),  Stealth  Microwave  Inc.
("Stealth") and AML Communications ("AML").

     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. More
than  50% of  Powerwave's  $500,000,000  +  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.

     MPD,  located in  Hauppauge,  New York,  designs,  manufactures,  and sells
linear  power  amplifiers,  and related  subsystems  to the  worldwide  wireless
telecommunications market. These single and multi channel amplifiers,  which are
an essential  component  in wireless  base  stations,  increase the power of the
radio frequency and microwave signals with low distortion. In addition, MDP also
designs  amplifiers  for  the  satellite   communications   market  and  medical
applications.  As Powerwave is linked to Nortel Networks, it is assumed that MPD
will likely be the prime supplier of amplifiers to Ericsson's network products.

     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 are trying to penetrate the PCS
bands with newer technology.

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

     Presently,  management believes that there are no direct competitors to the
Company's CDPD-based UniLinx products for traffic control.  Indirect competitors
fall in three main  categories:  (i) Other  wireless  solutions,  (ii)  Wireline
solutions provided by the telephone companies, which are the most common form of
intersection   communication,   and  (iii)  Wireline  solutions  provided  by  a
municipality.



                                       7
<PAGE>

                             INTELLECTUAL PROPERTY

Copyrights

     The Company  has a copyright  in Canada on its  wireless  protocol  and has
registered it with the Canadian Intellectual Property Office.

Trade Marks

     The Company  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. The Company has 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 its Sonem division, the Company
does not intend to formally  register this trade mark. The Company is also using
the unregistered trade marks "Unity Wireless(TM)" and "UniLinx(TM)". The Company
intends  to  register  these  marks in the U.S.,  Canada  and,  possibly,  other
countries.

     The  Company's  Sonem  business  was sold on October  6,  2000,  to Traffic
Systems LLC ("Traffic Systems"),  an Arizona limited liability corporation owned
37% by UW Systems and 63% by one of the Sonem  contractors  of UW  Systems.  The
sale took place  pursuant  to an Asset  Purchase  Agreement  (the " Sonem  Asset
Purchase Agreement"). The US and Canadian siren detector patents and trade marks
related to the Sonem  business of the  Company,  except for the trade mark Sonic
Solution(R),  were licensed on an exclusive  basis to Traffic  Systems under the
Sonem Asset Purchase  Agreement.  All rights to the trade mark Sonic Solution(R)
were sold to Traffic Systems under the Sonem Asset Purchase Agreement.

Patents

     The Company  does not have any patents  with  respect to its  Ultratech  or
UniLinx(TM)  technologies.  The Company has an immaterial  residual  interest in
several patents associated with the Sonem technology, substantially all of which
it has agreed to transfer to Traffic Systems under the Term Sheet.


                           SERVICE & PRODUCT WARRANTY

     The  Company  offered a standard  warranty on its Sonem  products  covering
parts and labor for a fixed period, either 1 year, 2 years or 5 years, depending
on the product and application. The Company's warranty obligations for its Sonem
products  were  assumed  by  Traffic  Systems  under  the Sonem  Asset  Purchase
Agreement. The Company offers a standard warranty of one year on parts and labor
from date of shipment on its UniLinx(TM) products and 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.

     The Company will repair units under warranty at its 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.

     The Company's 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



                                       8
<PAGE>

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 the Company's  ability to limit its liability or exclude  certain
types of damages.


                              GOVERNMENT REGULATION

Ultratech Amplifiers

     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.  The Company does not test
its amplifier products for compliance at the component level.

UniLinx(TM)

     The Company may be required to obtain regulatory  approvals in the U.S. and
other  countries  before  the sale or  shipment  of  products.  In some of these
jurisdictions,  such  requirements  may be more  stringent than in the U.S. Many
developing  nations are just beginning to establish  safety,  environmental  and
other regulatory requirements, which may vary greatly from U.S. requirements.

     In  general,   regulatory   certifications  of  interest  fall  into  three
categories: Safety, Usability and Spectrum Control.

     Safety regulation standards include U/L (Underwriter  Laboratories) and CSA
(Canadian  Standards  Association) in North America,  and CE (European  standard
specification)  in  Europe.  These sets of  regulations  specify  strict  safety
requirements  for  products.  The Company's  UniLinx(TM)  products are currently
designed to U/L and CSA specifications.

     Useability  regulations  include,  in North  America,  both NEMA  (National
Electrical  Manufacturers  Association)  and  CalTrans  regulations.  NEMA  is a
functional  specification,  including operating environment  (temperature range,
humidity,  shock  and  vibration,  etc.) for  equipment  in  NEMA-style  traffic
controller  markets;  CalTrans  is a hardware  compatibility  specification  for
equipment  operating  in  CalTrans-style  traffic  controller  cabinets.   Other
useability  requirements  may  need  to be met in  jurisdictions  outside  North
America. The Company has tested its products to, and met, both NEMA and CalTrans
equipment specifications.

     Spectrum  control is  regulated  by the Federal  Communications  Commission
(FCC) in the U.S. and by the Department of Communications (DOC) in Canada. These
agencies  allocate and  regulate  the use of  bandwidth  in the  electromagnetic
spectrum,  covering  all  wireless  communications  equipment,  as  well  as any
electrical or electronic equipment,  which may radiate  electromagnetic  energy,
which could interfere with other equipment.  Other spectrum control requirements
may need to be met in jurisdictions  outside the U.S. and Canada.  Manufacturers
are responsible for ensuring their products comply with these regulations.

     UniLinx(TM)  has been  tested and shown to meet or exceed FCC  requirements
under Part 15, as a Class A "Industrial Equipment" device.



                                       9
<PAGE>

                             MANAGEMENT & EMPLOYEES

     The Company's  senior  management team has proven  experience in exploiting
technologies in emerging markets and the Company's  technical team is proficient
in wireless  technologies.  Employees and  management  have a commitment to help
create and, in turn,  share in the success  potential of the Company.  Currently
each holds stock and/or options with future vesting dates to encourage continued
commitment and focus for several years. As of March 15, 2001, the Company had 25
full-time employees and 5 contract or part-time employees. The employees are not
represented by a collective  bargaining  agreement and the Company considers its
relationship with its employees to be good.


                               RECENT DEVELOPMENTS

Sale of Sonem Business

     The Company was founded to  commercialize  a new  acoustic  technology  for
providing  traffic  signal  preemption  for fire engines,  ambulances and police
vehicles.  Based on its  knowledge  of  intersection  controllers  gained in the
traffic signal preemption business,  specifically the specialized computers that
control the signal lights,  the Company developed its "UniLinx(TM)"  technology.
With further  development  of the  UniLinx(TM)  technology,  management  came to
believe that the Company's Sonem business should be de-emphasized in favour of a
focus on UniLinx(TM) and other wireless technologies.

     In keeping with this change in focus, the Company's Sonem business was sold
on  October 6,  2000,  to Traffic  Systems  LLC,  an Arizona  limited  liability
corporation  owned 37% by UW Systems and 63% by one of the Sonem  contractors of
UW Systems.  The sale took place pursuant to the Sonem Asset Purchase  Agreement
among UW Systems,  Traffic  Systems and others,  incorporated  by  reference  to
Exhibit  2.1 of the  Company's  report on Form 8-K filed with the SEC on October
23,  2000.  Under  the Sonem  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 is  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 Sonem 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.  The Company
believes that the costs of such  obligations  in the future may be  substantial,
and has preliminarily  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 the Company's
residual  interest  in the Sonem  patents.  The Term  Sheet is  incorporated  by
reference to Exhibit 2.1 of the Company's  report on Form 8-K filed with the SEC
on February 16, 2001.



                                       10
<PAGE>

     The foregoing is only a summary of the terms of the Sonem transactions, and
by its nature does not contain all of the terms thereof.  Investors are directed
to the complete  Sonem Asset  Purchase  Agreement  and the complete  Term Sheet,
which are exhibits to this Form 10-KSB.

Acquisition of Ultratech

     Also as part of its strategy to focus on wireless technologies, the Company
acquired Ultratech Linear Solutions, Inc., of Burnaby, British Columbia, Canada,
in a share purchase  transaction that 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, the Company paid to the shareholders of Ultratech  Cdn.$72,000
($48,000)  on account of  shareholder  loans and  issued  700,000  shares of the
common stock of the Company.  The Company had loaned Cdn.$300,000  ($200,000) to
Ultratech before closing.

     The foregoing is a summary only of the terms of the Ultratech  acquisition,
and by its nature does not contain all the terms thereof. Investors are directed
to the  complete  Share  Purchase  Agreement,  which is an  exhibit to this Form
10-KSB.

Disposition of Integration Services Business

     To complement internally developed Sonem technology, the Company had formed
wholly-owned  Unity  Wireless  Integration  Corporation  (and its  wholly  owned
subsidiary  Unity  Wireless  Integration  (S) Pte  Ltd.)  to  pursue  alliances,
licensing  agreements  and  marketing   partnerships  in  the  ITS  (intelligent
transportation  systems) and communications markets. In order to better focus on
its new high power linear amplifier business, the Company 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 the Company,
on  December  30,  2000.  The sale  took  place  pursuant  to an Asset  Purchase
Agreement (the "Integration Asset Purchase Agreement") among UW Integration, the
Company and Lyma and dated December 30, 2000, which is incorporated by reference
to Exhibit 2.1 of the Company's report on Form 8-K filed with the SEC on January
16, 2001.

     The  foregoing  is  only a  summary  of  the  terms  of the UW  Integration
transaction,  and by its  nature  does not  contain  all of the  terms  thereof.
Investors are directed to the complete  Integration  Asset  Purchase  Agreement,
which is an exhibit to this Form 10-KSB.

Change of Auditor

     As of  January  1,  2001,  the  Company  engaged  KPMG  LLP to serve as its
independent  auditor.  The Company had  previously  used the services of Ernst &
Young LLP.  The Company  filed a Form 8-K with respect to its change in auditors
on January 24, 2001.


Item 2. Description Of Property

     The Company  currently  leases 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



                                       11
<PAGE>

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 per square foot per annum;

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

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

     For its head office,  the Company  shares space with a compatible  business
located at 10900 NE 4th Street, Suite 2300, Bellevue, WA.

     The Company does not  currently  maintain any  investments  in real estate,
real estate mortgages or persons  primarily  engaged in real estate  activities,
nor does it expect to do so in the foreseeable future.


Item 3. Legal Proceedings

     The  Company,   along  with  Sonic  Systems   Corporation  and  M&M  Realty
Incorporated, has been sued in the Supreme Court of British Columbia, Canada, by
Integrated Global Financial  Corporation ("IGF"). The action is dated January 5,
2001.  The  Plaintiff  alleges it has options to purchase  500,000  shares at an
alleged exercise price of $1.00 per share, plus unspecified damages. The Company
disputes the allegations and is 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 the Company's view that the claim has little,  if any, merit and does
not expect the proceeding to have any material adverse effect on the Company.


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

     There were no matters  submitted to a vote of security  holders  during the
quarter ended December 31, 2000 and the quarter ended March 31, 2001.


                                     PART II

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

     The Company's common stock is traded on the  over-the-counter  or "Bulletin
Board" market under the symbol "UTYW."  Between  February 6, 1999 and August 17,
2000, the common stock traded under the symbol "ZSON." Before  February 6, 1999,
the common stock traded under the symbol  "MMIM." The  following  comprises  the
high and low bid prices  for the  Company's  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:



                                       12
<PAGE>

<TABLE>
Period                                                    High                                   Low
                                                          Bid                                    Bid
------                                                   ------                                -------
<S>                                                     <C>             `                     <C>
January 1 - March 31 1999..............                  3.3125                                0.0000
April 1-June 30 1999...................                  3.0000                                0.8750
July 1 - September 30 1999.............                  1.0625                                0.4375
October 1 - December 31 1999...........                  1.1875                                0.3750
January 1 - February 9 2000............                   1.27                                  0.89
February 10 - April 27 2000*...........      6.25 (No Bid/Ask - High Trade)        0.9000 (No Bid/Ask - Low Trade)
April 28 - June 30 2000................                   4.50                                 1.0625
July 1 - September 30 2000                                1.90                                  1.16
October 1 - December 31 2000                              1.53                                  0.37
</TABLE>

Source: Nasdaq Trading & Marketing Services
---------------------
*    The common  shares of the  Company  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.

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

     As of  February 9, 2001 there were  approximately  175 holders of record of
the Company's  common stock.  The Company has never  declared a cash dividend on
its common stock.

                     RECENT SALES OF UNREGISTERED SECURITIES

     On approximately December 4, 1998, the Company completed a private offering
to accredited  investors  under Rule 504. The Company  issued  7,500,000  common
shares in consideration of gross proceeds of $975,000. No underwriting discounts
were given or commissions paid.

     On December 11, 1998, in connection with the acquisition of UW Systems, the
Company  issued a total of 11,089,368  common shares to the  shareholders  of UW
Systems, who were non-U.S.  persons, residing outside of the U.S., or accredited
investors,  pursuant to Rule 903 of  Regulation S and Rule 506 of  Regulation D.
The  acquisition  transaction  occurred  outside of the U.S.  The  consideration
received  by  the  Company  was  all of  the  issued  stock  of UW  Systems.  No
underwriting discounts were given or commissions paid.

     In May/June  1999,  the Company  issued 6,500 shares to a non-U.S.  person,
residing  outside of the U.S.,  in payment of $13,000  owing by Unity Systems to
the person. No underwriting discounts were given or commissions paid.

     In the period July to October 1999, the Company completed an offering under
Regulation S, as contemplated by the acquisition  agreement with UW Systems. The
sale was to a non-U.S. person, residing outside



                                       13
<PAGE>

of the U.S.,  and took place  outside of the U.S.  The  Company  issued  500,000
shares in  consideration  of gross  proceeds of  $1,500,000.  The  Company  paid
$150,000 in commission.

     In November 1999, the Company completed a private offering under Regulation
S to a non-U.S.  person, residing outside of the U.S. The Company issued 350,000
common shares in  consideration  of gross proceeds of $175,000.  No underwriting
discounts were given or commissions paid.

     In December 1999, the Company completed a private offering under Regulation
S to a non-U.S.  person, residing outside of the U.S. The Company issued 142,857
common shares in  consideration  of gross proceeds of $100,000.  No underwriting
discounts were given or commissions paid.

     In  April  2000 the  Company  issued  common  shares  to non U.S.  persons,
residing  outside  of the U.S.,  in  partial  settlement  of debts owed by Unity
Systems to such persons.  The Company issued 65,000 shares in consideration  for
$117,968  of  debt  forgiveness.   No  underwriting   discounts  were  given  or
commissions paid.

     In April 2000 the Company  completed an equity financing  through a private
offering under  Regulation D and Regulation S of the Securities Act. The Company
accepted  subscriptions  for  3,850,000  units  resulting  in gross  proceeds of
$5,775,000.   Each  unit  consisted  of  one  share  of  common  stock  and  one
non-transferable,  callable  warrant to purchase one share of common stock at an
exercise  price of $3.25.  The warrant is  exercisable  for up to 18 months from
closing, unless earlier called by the Company. The Company may call the warrants
for  exercise  at any time after the  average of the  bid-ask  prices or closing
prices,  as applicable,  for the Company's  common stock has equaled or exceeded
$5.00 for at least ten  consecutive  trading days. If determined by the Board of
Directors  of the  Company  that  it  would  be in  the  best  interests  of the
shareholders  of the Company,  and if any  underwriter  or  underwriters  of the
Company's  securities  determine,  in their discretion,  that it would be in the
best interests of the Company, the Company has agreed it will use its reasonable
efforts  to  cause  the  shares  comprising  the  units  to  be  included  in  a
registration   statement  under  the  Securities  Act,  at  such  time  as  such
registration  is  reasonably  practicable  for the  Company to  accomplish.  The
Company  also  agreed  it will  use  its  reasonable  efforts  to  maintain  the
effectiveness of any such registration statement for at least one year after the
Closing of this offering. This registration statement is being filed pursuant to
that  agreement.  The Company  issued  285,000  shares as commissions or fees to
qualified persons.

     On August 15, 2000,  the Company  issued  15,000  shares of common stock to
Doug Stewart in return for consulting services valued at approximately  $22,500.
The  exemption  from  registration  relied  upon was  Regulation  S;  the  share
recipient  was a non-U.S.  person,  residing  outside of the U.S.

     On August 15, 2000,  the Company  issued  18,000  shares of common stock to
Hugh Notman in return for consulting  services valued at approximately  $26,900.
The  exemption  from  registration  relied  upon was  Regulation  S;  the  share
recipient was a non-U.S.  person,  residing  outside of the U.S.

     On November 16, 2000,  the Company issued 700,000 shares of common stock in
exchange  for all the issued and  outstanding  securities  of  Ultratech  Linear
Solutions  Inc.  ("Ultratech"),  as described in the  Ultratech  Share  Purchase
Agreement.  Pursuant to the  Ultratech  Share  Purchase  Agreement,  the Company
purchased  the  business of  Ultratech as a going  concern.  The purchase  price
comprised  $48,000 on account of shareholder  loans and 700,000 shares of common
stock of the Company. The Company had previously loaned Ultratech $200,000.  The
persons receiving shares of the Company in the transaction were as follows: John
Roberston, Mirza Kassam,



                                       14
<PAGE>

Chris Neumann, Robert Fetherstonhaugh and Stirling Mercantile  Corporation.  The
exemption from  registration  relied upon was Regulation S; the share recipients
were all non-U.S. persons, residing outside of the U.S.

     On December 4, 2000,  the Company  issued  25,000 shares of common stock to
3OE Enterprises Inc. ("3OE") in return for consulting  services rendered by 3OE,
as provided under the Consulting Agreement (the "Consulting  Agreement") between
the Company and 3OE dated August 1, 2000. The  consulting  services did not have
an agreed  value;  the shares were to be issued to 3OE upon the  achieving of an
agreed milestone.  The exemption from registration relied upon was Regulation S;
the share recipient was a non-U.S. person, residing outside of the U.S., and the
consulting services were performed outside the U.S.

     On December 15, 2000,  the Company issued 171,428 shares of common stock to
Mark Godsy in return for  employment  services  rendered  by Mr.  Godsy as Chief
Executive Officer and valued at $72,000.  The exemption from registration relied
upon was  Regulation  S; the share  recipient  was a non-U.S.  person,  residing
outside of the U.S., and the services were performed outside the U.S.

     On December 15, 2000,  the Company  issued 25,000 shares of common stock to
Jong Kil Kim in return for consulting services rendered by Mr. Kim and valued at
$10,500. The exemption from registration relied upon was Regulation S; the share
recipient was a non-U.S.  person, residing outside of the U.S., and the services
were performed outside the U.S.

     In  addition  to  the  3,850,000  warrants  issued  under  the  April  2000
financing,  the Company issued 500,000 warrants at an exercise price of $2.06 to
Mueller & Company, Inc. and Ideas Inc. in July, 2000, which vest until July 2002
and expire in July 2003. The Company also issued 100,000 warrants at an exercise
price of $2.06 to Crescent  Communications  Inc. which vest until April 2001 and
expire in April 2005.


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

     The following  discussion of the Company's  financial condition and results
of operations  should be read in conjunction  with the financial  statements and
notes appearing elsewhere in this Form 10-KSB.

     The Company is 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  its  RF
communications  products,  the Company 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
the Company's strategic  repositioning  toward RF wireless products during 2000,
the Company sold its Sonem business on October 6, 2000 (see Recent Developments,
Sale of Sonem Business).  Accordingly,  revenue from acoustic  products ended in
the third quarter of 2000.

     Also in late 1999,  the Company  increased its  marketing  efforts in Asia,
resulting  in a contract  in the first  quarter of 2000 with the  Transportation
Management Systems division of Orbital Sciences  ("Orbital").  Under the Orbital
contract,  UW Integration,  through its wholly owned  subsidiary,  UW Singapore,
provided systems integration support,  warranty and maintenance services for the
Automatic  Vehicle  Management  System  ("AVMS") to be  delivered by Orbital and
Sanyo Trading Company to Singapore Bus Services Ltd. Revenue from this contract



                                       15
<PAGE>

started in the quarter  ended June 30, 2000,  and  continued for the rest of the
year. As the Company  continued to refocus upon RF communication  products,  the
Orbital  contract was assigned to Lyma Sales & Management  Corp. on December 30,
2000 (see recent  Developments,  Disposition of Integration  Services Business),
and therefore the Company has no further interest in any revenue  resulting from
the contract.

     In 1999 and 2000,  the  Company  designed a  specialized  RF  communication
product with the trade mark "UniLinx",  which it introduced  commercially in the
first half 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.

     On November 16, 2000 the Company  acquired  Ultratech Linear Solutions Inc.
("Ultratech"), a designer, developer and manufacturer of linear power amplifiers
for the wireless  network  infrastructure  industry.  The revenues from sales of
Ultratech  amplifiers from the company's inception on April 22, 1999 to December
31, 2000 were  approximately  $3,200,000.  The Company 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 Company revenues in 2001 and beyond.

     The Company has incurred  net losses  since it became  active in July 1995.
Losses  resulted from low initial sales of the  Company's  Sonem traffic  signal
preemption system,  combined with startup manufacturing activity and engineering
and research  and  development  costs  relating to product  improvement  and new
technologies.  In 1998 and early 1999, the Company  prepared for growth that was
anticipated   from  increased   Sonem  sales  volume  through  newly   developed
distribution  channels.  During this period expenses increased due to additional
management and marketing  expenses,  and costs  associated  with the setup of an
office in Seattle.  In the first quarter of 1999 the Company also took advantage
of volume pricing to build inventory in anticipation of these increased sales.

     In the first and second  quarters of 1999,  the Company did not achieve its
desired  sales  volumes.  In response,  the Company  deferred  manufacturing  of
additional Sonem product,  reduced expenses through elimination of telemarketing
activities  and  restructuring  of senior  management  positions,  and moved the
Seattle office to more economical space. In the second half of 1999, the Company
focused  engineering  and  development   activities  on  wireless  communication
products for traffic  control,  in response to  indications  of strong demand in
that segment of the  transportation  industry.  Additional  marketing costs were
incurred as the Company prepared for market introduction of its UniLinx product,
and  traveled to  Singapore to undertake  negotiations  in  preparation  for the
Orbital agreement.

     Losses  continued into 2000 as the Company's  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  the  Company  became a
reporting  issuer,  requiring  additional  expenditures  on legal and accounting
services.  Also,  up to the time of the sale of the Sonem  product,  the Company
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.

     With the completion of the Ultratech  purchase,  the  discontinuance of the
contract  services  (Singapore)  business  segment,  and the  ending  of  active
participation  in  the  Sonem  product,   the  Company  restructured  its  staff
complement  to  adjust  for  the  needs  of  higher  manufacturing  volumes  and
development  activities for its RF power  amplifier  products.  The Company also
reviewed other costs and eliminated expenditures not directly required to



                                       16
<PAGE>

implement its RF wireless focus. Given the effectiveness of Ultratech's existing
distribution  channels and the potential for  increased  amplifier  sales as the
Company  introduces  these  products in U.S.,  European,  and  additional  Asian
markets,  management  believes that losses from  operations will diminish and be
eliminated as the Company advances its business plan into 2000 and beyond.


Results of Operations

(All amounts are in US dollars unless otherwise stated)

Years Ended December 31, 2000 and 1999

     Net Sales in fiscal 2000  increased by 258%, or $518,845,  to $720,162 from
$201,317 in 1999.  This  increase  was due to net sales  during 2000 of $474,003
from RF amplifiers  between  November 16 and December 31, 2000, and net sales of
$125,422 from the UniLinx product in the second,  third,  and fourth quarters of
2000.  There were no sales of RF  amplifiers  nor UniLinx  product in 1999.  Net
sales of the Sonem  product up to the date of the sale of the Sonem  business on
October 6, 2000, decreased by $80,580 compared to fiscal year 1999.

     Cost of goods sold in fiscal 2000  increased  by 339%,  or  $1,372,477,  to
$1,776,883  from $404,406 in 1999. The increase was due to cost of goods sold of
$364,422  from  sales of RF  amplifiers,  $191,331  from  sales  of the  UniLinx
product,  and an increase of $816,722  from the Sonem  product up to the date of
the sale of the Sonem business on October 6, 2000. The cost of goods sold of the
Sonem  product  increased  despite the decrease in Sonem sales due to additional
payments  to  Traffic  Systems on sale of the  business,  consulting  fees,  the
writedown of the Sonem inventory by $302,549, and additional warranty expense of
$599,752  relating to the increased  warranty  accrual.  The gross margin for RF
amplifiers was positive,  which  reflected the Company's  acquisition of a going
concern  business.  The gross  margin for the UniLinx  product  was  affected by
introductory  pricing and higher initial unit  manufacturing  resulting from low
unit volumes. Stock compensation was insignificant at $354.

     Research  and  development  expenses  in fiscal 2000  increased  by 75%, or
$378,175,  to $880,818 from $502,643 in 1999. This increase was primarily due to
increased R&D activities on the UniLinx product to add connectivity features and
adapt the design for POS  applications,  compared  to initial  product  research
expenses  incurred in 1999, and  additional  development of the Sonem product to
improve  effectiveness and to reduce unit  manufacturing  cost.  $238,655 of the
increase was  attributable  to stock  compensation  expense  resulting  from the
granting of stock options.

     Sales and marketing  expenses in fiscal 2000 increased by 45%, or $203,429,
to  $659,814  from  $456,385  in 1999.  In 2000,  sales and  marketing  expenses
increased primarily due to UniLinx  activities,  which increased due to business
development  initiatives  throughout wider regions of the U.S.,  market research
into new product  applications,  and  attendance  at trade shows.  Additionally,
sales and marketing  expenses of $10,745 were  incurred in the  Ultratech  power
amplifier business between  acquisition of the business on November 16, 2000 and
the end of the fiscal year.  $88,766 of the increase was  attributable  to stock
compensation expense resulting from the granting of stock options.



                                       17
<PAGE>

     Exchange loss (gain)  increased by $293,218 to $196,825  from  ($96,393) in
1999 due to  fluctuations  in the  currency  exchange  rate between the U.S. and
Canada.  The Company's  revenues are received mostly in U.S. dollars,  while the
majority of expenses are incurred in Canadian dollars.

     General and  administrative  expenses in fiscal 2000  increased by 112%, or
$1,030,451,  to $1,952,469  from $922,018 in 1999. The increase is due primarily
to $334,902 in additional  salary and consulting  costs,  $118,096 in additional
accounting and legal  expenses due to the costs of becoming a reporting  issuer,
increases  of  $107,160  in investor  relations  expenses,  and $45,861 in staff
placement fees.  $354,426 of the increase was attributable to stock compensation
expense resulting from the granting of stock options and warrants.

     The  writedown of assets and  investment  of $581,800 in 2000,  compared to
$nil in 1999, resulted from the writeoff of the Company's  investment in Traffic
Systems of $150,000, and the writeoff of Sonem patents of $431,800.

     Interest income increased by 1330%, or $118,603, to $127,523 from $8,920 in
1999. This increase results  primarily from interest earned on the proceeds from
the April, 2000 financing. Total interest and other income in 1999 was $10,113.

     Loss from discontinued  operations in fiscal 2000 increased to $55,632,  to
$55,632 from $nil in 1999. This loss was incurred in connection with the sale of
Unity Wireless Integration.

Years Ended December 31, 1999 and 1998

     Sales in fiscal 1999  decreased  by 35%,  or  $106,451,  to  $201,317  from
$307,768 in 1998.  This  decrease  was due in part to a higher level of sales of
the Company's  Sonem traffic signal  preemption  system in the fourth quarter of
1998, caused by an increased  marketing effort in that quarter. In the third and
fourth  quarters  of  1999,  the  Company  did not  increase  marketing  effort,
primarily due to cash constraints,  resulting in lower sales performance for the
fiscal year 1999 over that of fiscal 1998.

     Cost of goods  sold in  fiscal  1999  decreased  by 23%,  or  $121,254,  to
$404,406  from  $525,660 in 1998.  During the first  quarter of 1999 the Company
increased  production in  anticipation of higher sales of its Sonem 2000 traffic
signal priority system. However, as it became evident that these sales would not
materialize at the expected  levels,  production  was severely  reduced and then
stopped altogether.  Inventory increased as the result of both the first quarter
production activity and the ordering of parts that were expected to be needed in
the second quarter.  Production  department  direct labor and overhead  expenses
were  capitalized  to finished  goods  inventory,  which led to the  decrease in
production expenses charged against income.

     Research and  development  expenses in fiscal 1999  increased  by 103%,  or
$254,451,  to $502,643 from $248,192 in 1998. In the second,  third,  and fourth
quarters of 1999 the Company  responded to a growing market interest in wireless
communication  products in the traffic  industry by accelerating  development of
its  UniLinx(TM)  traffic  controller  communication  product.  In  addition,  a
Canadian  refundable  investment  tax  credit,  which had  financed  $93,048  of
$341,240 in gross research and  development  expenditures in 1998, was no longer
refundable  to the  Company  in 1999 in view of the  Company's  change in status
following the December 11, 1998 acquisition.  Also,  Government grants decreased
by $9,663 to $34,079 in 1999,  compared to $43,742 in 1998. At the end of fiscal
1999,  $28,487 of the total of $122,501  approved in the governing  contribution
agreement was still available to be claimed.



                                       18
<PAGE>

     Marketing expenses in fiscal 1999 increased by 18%, or $69,711, to $456,385
from $386,674 in 1998.  As part of an initiative to achieve  higher sales of its
traffic signal priority product, the Company hired two additional sales managers
in October  1998 and April  1999.  In  addition,  the  Company  hired a business
development  executive  in April  of 1998 to  pursue  opportunities  for new and
existing  products in the ITS industry and in international  markets.  Marketing
and business  development  effort was curtailed in the fourth quarter of 1999 as
the Company  directed  limited cash resources toward research and development of
wireless products for the transportation  industry,  which had shown indications
of strong demand in the second half of 1999.

     General and  administrative  expenses in fiscal 1999  increased  by 10%, or
$88,411,  to $982,998  from  $894,587 in 1998.  During this period,  the Company
incurred higher accounting,  legal, contract services,  and travel costs related
primarily  to the pursuit of new  financing  and its status as a U.S.  reporting
company.

     Accounting  and  legal  costs  rose by  $136,481,  travel by  $64,761,  and
contract  services by $34,114.  Employment  expenses  decreased  by $211,896 due
primarily  to the  higher  level of  management  incentive  awards  in 1998.  In
addition,  the  Company  opened an office in  Seattle in April  1999,  which was
subsequently relocated to more economical space in August, 1999.

Liquidity and Capital Resources

     Since its inception,  the Company has been dependent on investment  capital
as its primary source of liquidity.  Sales of the Company's  current and earlier
versions of its Sonem traffic signal priority product,  and sales of its UniLinx
product, have provided insufficient cash flow to sustain operations. The Company
had an accumulated deficit at December 31, 2000 of $10,732,275.  During the year
ended  December  31,  2000 the  Company  incurred a loss of  $5,318,633  (1999 -
$2,025,101)  and used cash from  operations of $3,097,829  (1999 -  $1,760,306).
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.  The  Company'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  Company  will be
successful.  If it is not, the Company will be required to reduce  operations or
liquidate   assets.   The  Company  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 auditor's report on the December 31, 2000 consolidated  financial statements
includes an  explanatory  paragraph that states that as the Company has suffered
recurring losses from operations,  substantial doubt exists about its 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 the
Company be unable to continue as a going concern.

     The Consolidated Statements of Cash Flows shows the change in cash position
to December 31, 2000 from  December 31, 1999 for the  Company's  business  other
than  Ultratech,  and from  November 16, 2000 for the  Ultratech  business.  The
assets,  liabilities,  and goodwill  assumed with the Ultratech  acquisition  on
November



                                       19
<PAGE>

16,  2000,  and the shares  issued in  consideration  of this  acquisition,  are
therefore  excluded  from  the  Consolidated  Statements  of Cash  Flows as they
reflect events prior to this acquisition.

     During  2000,  the  Company's  cash  position  increased by  $1,969,114  to
$2,002,084  on December 31 from $32,970 on December  31, 1999.  Net cash used in
operating  activities  was  comprised of a loss from  continuing  operations  of
$5,263,001  during the year,  partially offset by non-cash  charges  including a
writedown of assets and  investment  of $581,800,  shares issued for services of
$143,140,  stock-based  compensation  of  $682,201,  and an  increase in product
warranty of $554,211.  Other non-cash working capital changes included  accounts
receivable  and  government  grant  receivable,   which  increased  by  $146,824
primarily due to letters of credit in payment of late December  Ultratech sales,
which had not cleared on December 31, 2000. The investment tax credit receivable
of $123,245 for 1998 scientific research and experimental development was repaid
in early  2000.  The  inventory  decrease of $27,224  was  primarily  due to the
writedown  of $302,549 in Sonem  inventory,  partially  offset by an increase of
$192,462 from  Ultratech  operations  between  November 16 to December 31, 2000.
Accounts  payable and accrued  liabilities  decreased  by  $109,129,  net of the
effect of the  elimination  of the  Ultratech  accounts  payable on November 16,
2000,  primarily  due to the higher  level of trade  accounts  payable  that was
carried by the Company on December  31,  1999,  prior to its major  financing in
April, 2000.

     The Company's investing  activities in 2000 amounted to $510,957,  of which
$200,941 was attributable to increased  purchases of computing  hardware for new
staff, new accounting  software and hardware,  tenant improvements and furniture
purchases  related to the  relocation of the Vancouver  office to Burnaby in the
third  quarter  of  2000,  and  new  production  equipment  from  the  Ultratech
acquisition.  Also listed under  investing  activities  is the $314,990 cash and
cash  equivalents  component of the Company's  disposition  of its investment in
Unity Wireless Integration.

     In April 2000 the Company  completed an equity financing  through a private
offering under  Regulation D and Regulation S of the Securities Act. The Company
accepted  subscriptions  for  3,850,000  units  resulting  in gross  proceeds of
$5,775,000.  The  Company  issued  285,000  shares  as  commissions  or  fees to
qualified persons. See Recent Sales of Unregistered Securities.

     Other financing activities include an increase in the bank overdraft due to
cheques  outstanding  at  December  31,  2000;  a decrease  in loans  payable by
$49,603,  net of the effect of the elimination of the Ultratech accounts payable
on November 16,  2000,  arising from the  conversion  of the ASI loan,  and from
further reductions in the Royal Bank loan, and an increase of $204,434 in a loan
receivable  due to an advance made to Cobratech  Industries  Inc.  Additionally,
$100,000 was pledged as security for the Royal Bank loan primarily to reduce the
interest rate payable.

     Other  than  operating  loan  commitments,  the  Company  has  no  material
commitments, including capital commitments, outstanding at December 31, 2000.


INFLATION

     The Company does not believe that inflation has had a significant impact on
its  consolidated  results of operations or financial  condition.  However,  the
Company has recently  experienced some  significant  price increases for certain
components that are used in the wireless industry.



                                       20
<PAGE>

Item 7.  Financial Statements

     Information  with  respect  to this  Item is set  forth in the  "Index"  to
Consolidated Financial Statements on Page F-1.

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

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

     E&Y's report on the  financial  statement  for either of the past two years
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 the Company's
recurring losses from operations  raised  substantial doubt about its 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 the board of directors
of the Company  pursuant to a consent board  resolution dated December 31, 2000.
The Company has an audit committee,  but the decision to change  accountants was
not considered by this committee.

     During  the  Company'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.

     KPMG was engaged as the new  principal  accountant  of the Company to audit
the Company's  financial  statements.  The date of  engagement  was December 31,
2000.



                                       21
<PAGE>

PART III

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

     The directors, executive officers, and significant employees of the Company
and significant employees of its subsidiary,  Unity Wireless Systems Corporation
("UW Systems"), are as follows:

<TABLE>
NAME                            POSITION
----                            --------
<S>                             <C>
Mark Godsy                      Director and Chairman of Board of Directors of the Company
                                Director and Chairman of Board of Directors of UW Systems
John Robertson                  Director, President and Chief Executive Officer of the Company
                                Director, President and Chief Executive Officer of UW Systems
Roland Sartorius                Director, Chief Financial Officer and Secretary of the Company
                                Director, Chief Financial Officer and Secretary of UW Systems
Thomas Dodd                     Director and Senior Vice President of the Company
                                Director and Senior Vice President of UW Systems
Ken Maddison                    Director of the Company
Robert Kubbernus                Director of the Company
Lewis Sabounghi                 Director of the Company
John Anderson                   Director of the Company
Norman Dowds                    Executive for Strategic Planning & Business Development

</TABLE>

     Mark Godsy-Age 46. Mr. Godsy is a Director and the Chairman of the Board of
Directors of the Company 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 Chief Executive  Officer of the
Company from  February 2000 until  November 17, 2000.  His term as a Director of
the  Company  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
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.

     John  Robertson-Age  49. Mr. Robertson is a Director of the Company and the
Chief Executive  Officer of the Company and of UW Systems.  His term as Director
of the Company 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. Mr. Robertson
was  instrumental  in Glentel's  increase in annual  revenues from $9 million to
over $40 million,  in addition to leading the  restructuring  of related company
Glenayre  Communications.  At Uniden Canada, his leadership resulted in over $32
million in annual revenues. Throughout his career, Mr. Robertson's experience in
all levels of management, operations, finance, sales and



                                       22
<PAGE>

marketing,  have been continually proven.  Recently, he founded Ultratech Linear
Solutions  in  mid-1999  achieving  over US$3  million in revenue  before  being
acquired in November 2000 by Unity Wireless.

     Roland Sartorius-Age 48. Mr. Sartorius is a Director of the Company and the
Chief Financial Officer and Secretary of the Company and of UW Systems. His term
as Director of the Company  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 significant equity
funds, exceeding Sfr 100 million, 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  50. Mr. Dodd is a Director of the Company and Senior Vice
President  of the  Company  and of UW  Systems.  His term as a  Director  of the
Company 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.

     Ken  Maddison-Age  60. Mr. Maddison is a Director of the Company.  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, recently retired after
a lengthy career as a senior  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.

     Robert  Kubbernus-Age  40. Mr. Kubbernus is a Director of the Company.  His
term runs until the next  annual  meeting  of the  shareholders  unless  earlier
terminated. Mr. Kubbernus has over 16 years of financial experience working with
high tech firms and  currently  serves as CEO and  Chairman of the Board of JAWS
Technologies  Inc.,  a Calgary,  Alberta  based  provider  of  information  risk
management   strategies  and  products.   At  JAWS  Technologies,   his  primary
responsibilities  are to oversee  the  company's  security  product  developers,
provide   executive   direction  and  develop  key  contacts   with   government
authorities,  financiers,  clients,  insurance  underwriters  and the investment
community.  From October,  1992 until  joining JAWS  Technologies  in 1997,  Mr.
Kubbernus held the position of President and Chief Executive  Officer of Bankton
Financial  Corporation,  a company which provided  business and lending advisory
services, where he led a team of corporate financial consultants who specialized
in the placement of debt instruments with institutional and private lenders. Mr.
Kubbernus serves on the boards of JAWS  Technologies,  Inc.,  Yournet,  Inc. and
eFinancial Depot.com.



                                       23
<PAGE>

     Lewis  Sabounghi-Age  53. Dr.  Sabounghi is a Director of the Company.  His
term runs until the next  annual  meeting  of the  shareholders  unless  earlier
terminated.  Dr.  Sabounghi  has over 25 years'  experience  in  transportation,
including the surface  transportation  research and  development  project of the
Transportation  Development  Center-Canadian Federal Department of Transport. He
has  developed  ITS  applications  including  "Weigh In Motion"  and  "Automatic
Vehicle  Identification."  Dr. Sabounghi has presented numerous technical papers
and consulted on ITS to  governments  worldwide.  He holds a degree in Aerospace
Engineering,  an  MBA  from  McGill  University,  and  a  Ph.D.  in  Intelligent
Transportation Systems Engineering from the University of Manitoba.

     John  Anderson-Age 36. Mr. Anderson is a Director of the Company.  His term
runs  until  the  next  annual  meeting  of  the  shareholders   unless  earlier
terminated. Mr. Anderson has over ten years' experience in financial consulting,
investor  relations,   and  real  estate  management  positions.   Recently,  he
co-founded Cobratech Industries Ltd., an Asian based incubator of North American
technologies,  as well as Cobra Capital Ltd., a Hong Kong based venture  capital
company.  Previously  Mr.  Anderson  held the  position  of Director of Investor
Relations of Bema Gold Corp. and its subsidiary, and was a Director of Hong Kong
based Meyers  Capital Inc. He has also held  positions with Manulife Real Estate
and W.H. Bosley & Co.,  managing  commercial real estate  portfolios in Seattle,
Washington as well as Vancouver and Toronto,  Canada. He is presently a Director
of Soho  Resources  Inc. and Intertech  Minerals Ltd. Mr.  Anderson holds a B.A.
from the University of Western Ontario.

     Norman  Dowds-Age  58. Mr.  Dowds is a  consultant  in charge of  strategic
planning & business development. His contract has a term of two years commencing
July 24, 2000.  Among other things,  Mr. Dowds is responsible for assisting with
establishing  the strategic  direction of the Company's  wireless  technologies,
technology transfers,  licensing and acquisition initiatives. Mr. Dowds has over
25 years experience in  telecommunications  technology research and development.
He has worked with companies such as Microtel, MPR Teltech (a division of BCTel;
now Telus Communications),  GTE's research and development unit, and Starvision.
Many talented  engineers who worked under Mr. Dowds'  direction  have gone on to
strategic leadership  positions with industry leaders like PMC Sierra,  Spectrum
Signal  Processing  and Newbridge  Networks.  While Vice  President of Networks,
Products  and Services at MPR  Teltech,  Mr. Dowds led a team of 240  engineers,
designers and technicians that designed telecommunications equipment for network
vendors such as Northern  Telecom and Newbridge  Networks and service  providers
such as Telus and GTE.  Mr.  Dowds'  team at MPR  Teltech  developed  the ATMNet
(Asynchronous  Transfer  Mode)  system.  This  system  became  one of  the  core
technologies of Newbridge Networks.  Other achievements  include the development
of DSS (Digital Services System) which enables end-to-end  management of special
service  circuits  and WAVE (Wide Area Video  Equipment),  a broadband  platform
technology for the deployment of high quality switched video services.

     Directors  of  the  Company  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 the 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 directors or executive officers of
the Company.



                                       24
<PAGE>

Section 16(a) Beneficial Ownership Reporting Compliance

     For the fiscal year ended December 31, 2000, the following persons had late
forms 3, or 4, thereby failing to report 21 transactions on a timely basis.  Mr.
Godsy  had 1  late  Form 3 and 2 late  Forms  4.  Each  of  Mr.  Robertson,  Mr.
Sartorius,  Mr. Dodd, Mr. Maddison, Mr. Kubbernus,  Dr. Sabounghi, Mr. Anderson,
Mr. Wilson, and Dr. Vojdani had 1 late Form 3 and 1 late Form 4.

     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 the Chief
Executive  Officers of the Company  during the period  February  1999 - December
2000. No officer of the Company or its subsidiaries earned greater than $100,000
in total salary and bonus during 2000, the most recently  completed  fiscal year
of the Company.

<TABLE>
Summary Compensation Table


Name and Position             Year        Salary          Restricted             Securities
-----------------             ----        ------             Stock               Underlying
                                                           Awards($)             Options(#)
                                                           ---------             ----------
                             Annual Compensation($)            Long Term  Compensation
                             ----------------------            -----------------------
<S>                          <C>           <C>            <C>                    <C>
John Robertson                  2000(1)    10,300                 0               275,000(2)
Mark Godsy                      2000(3)         0           171,428               200,000(4)
William Brogdon                 1999       38,756                 0                      0
William Brogdon                 1998       64,167            61,480(5)             200,000
-----------
</TABLE>

NOTES:

(1)  Mr. Robertson,  the current Chief Executive Officer of the Company,  served
     as Chief  Executive  Officer  during the period  November 17 - December 31,
     2000.

(2)  Mr.  Robertson  received  200,000  options  in  December  2000  as  partial
     compensation for serving as Chief Executive Officer of the Company. He also
     received 75,000 options in December 2000 as  compensation  for serving as a
     director of the Company.

(3)  Mr.  Godsy  served as Chief  Executive  Officer of the  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.



                                       25
<PAGE>

(4)  Mr. Godsy received  200,000  options in December 2000 as  compensation  for
     serving as the Chairman of the Board of the Company.

(5)  Mr. Brogdon served as Chief  Executive  Officer of UW Systems from February
     1, 1998 and the Company from December, 1998. Both appointments concluded on
     February 22, 2000.

(6)  At the end of 2000 the named executive  officers held  restricted  stock of
     the Company as follows.  The value of these  holdings is  calculated  at 50
     cents, which was the price of the Company's stock on December 31, 2000.

                       Restricted shares held    Value of restricted shares held
                       ----------------------    -------------------------------
     John Robertson            203,315                      $101,658
     Mark Godsy              2,178,261                    $1,089,131
     William Brogdon           550,000                      $275,000

As of December 31, 2000, Mark Godsy also owned 215,151 unrestricted shares for a
total of 2,393,412.


Combined Incentive and Nonqualified Stock Option Plan

     In fiscal  1998,  the  Company  adopted  the 1998  Combined  Incentive  and
Nonqualified  Stock  Option Plan (the "98 Plan"),  pursuant to which  options to
purchase up to 3,000,000  shares of common stock may be granted to employees and
consultants of the Company.  As this plan did not receive  shareholder  approval
within the 12 months  required for certain options to qualify as Incentive Stock
Options,  the  Company  adopted  the 1999 Stock  Option  Plan (the "99 Plan") in
December,  1999 pursuant to which options to purchase up to 5,000,000  shares of
common stock may be granted, and the 98 Plan was terminated. The Company amended
the 99 Plan May, in 2000 to revise the maximum  number of shares  issuable under
the plan to 20% of the number of common shares  outstanding  including shares of
common stock issuable under the plan. The 99 Plan received  shareholder approval
in July, 2000.




                                       26
<PAGE>

     As of March 15, 2001,  there were 4,533,208  options  outstanding under the
99 Plan. These options were exercisable at the following prices:

             $0.38          2,491,042
             $0.47             60,000
             $0.50             85,000
             $0.51            782,500
             $0.64             10,000
             $1.00            832,500
             $2.06            263,833
             $2.53              5,833
             $3.90              2,500
                          -----------
                            4,533,208

     Also, 562,500 of these options vest immediately, with the remainder vesting
as to one  twelfth of the award at the end of each  quarter  of  service  for 12
quarters starting from the award date. All options expire 5 years from the award
date, unless an earlier expiry applies under the terms of the 99 Plan.

     Of the total of 4,533,208  options,  1,897,333  will be vested on March 31,
2001. Also, 1,878,750 options are awarded to directors and officers as listed in
"Security  Ownership  Of Certain  Beneficial  Owners And  Management",  of which
678,750 will be vested on March 31, 2001.

     The 99 Plan provides for the granting of stock options, including Incentive
Stock  Options  ("ISO's")  within the  meaning of  Section  422 of the  Internal
Revenue Code of 1986, as amended (the "Code"),  and Non-Qualified  Stock Options
("NQSO's").

     The 99 Plan is administered by the Board.  The Board has the right to grant
awards to eligible recipients and to determine the terms and conditions of Award
Agreements  ("Agreements"),  including, but not limited to, the vesting schedule
and exercise price of such awards, and to make all other  determinations  deemed
necessary or advisable for the  administration  of the 99 Plan.  The persons who
are  eligible  to receive  awards  pursuant  to the 99 Plan are such  directors,
officers,  consultants  and other  employees of the Company as the Board selects
("Participants").

     The maximum  number of shares of the  Company's  common stock  reserved for
issuance under the 99 Plan as at March 15, 2001 is 6,435,788  shares (subject to
adjustment  as provided  therein).  Such shares may be  authorized  but unissued
common  stock or  authorized  and  issued  common  stock  held in the  Company's
treasury.  The Board has the authority to make any and all equitable  changes or
adjustments it deems necessary or appropriate in the event any dividend or other
distribution  (whether in the form of cash,  common stock,  or other  property),
recapitalization,    common   stock   split,   reverse   common   stock   split,
reorganization,  merger, consolidation,  spin-off,  combination,  repurchase, or
share exchange,  or other similar  corporate  transaction or event,  affects the
common stock such that an adjustment is appropriate in order to prevent dilution
or enlargement of the rights of Participants under the 99 Plan.



                                       27
<PAGE>

     The Board determines the expiration date of each option, provided, however,
that no ISO can be exercisable  more than 10 years after the date of grant.  The
exercisability  of options may be based on a predetermined  vesting  schedule or
may  be  subject  to  the  attainment  by  the  Company  of  performance   goals
pre-established  by the Board. The option exercise price per share is determined
by the Board, provided, however, that in the case of an ISO, the option exercise
price in no event can be less than the fair market  value of the common stock on
the date the ISO is granted.

     The  Board  may  suspend,  terminate  or  amend  the 99 Plan  at any  time,
provided,  however,  that shareholder  approval is required if and to the extent
the  Board  determines  that  such  approval  is  appropriate  for  purposes  of
satisfying  Section  422 of  the  Code  or  Rule  16b-3  promulgated  under  the
Securities Exchange Act of 1934, as amended ("Exchange Act").

     For the complete text of the 99 Plan,  see the Company's  1999 Stock Option
Plan, a copy of which has been filed as Exhibit 10.6 to this Form 10-KSB.



<TABLE>
                              OPTION GRANTS IN 2000

Option/SAR Grants Table

                                 Option/SAR Grants in Last Fiscal Year
                                           Individual Grants
                                           -----------------
(a)                         (b)                       (c)                (d)             (e)              (f)
                         Number of                % of Total
                         Securities               Options/SARs                        Market price
                         Underlying                Granted to         Exercise or      on date of
                        Options/SARs              Employees in        Base Price          grant
Name                    Granted (#)               Fiscal Year*         ($/Sh)             ($/sh)     Expiration Date
----                    -----------               ------------         ------             ------     ---------------
       CEO
<S>                       <C>                         <C>               <C>               <C>        <C>
John Robertson**          200,000                     6.1               0.38              0.38       December 31, 2005
John Robertson             75,000                     2.3               0.38              0.50       December 31, 2005
Mark Godsy***             200,000                     6.1               0.38              0.38       December 31, 2005
</TABLE>
-----------------------

*    The  denominator  (of 3,300,000)  was arrived at by  calculating  the total
     number of new options  awarded  during the year,  and adjusting this number
     downward  for those awards  during the year that were later  reduced due to
     repricing.

**   John Robertson received 200,000 options at $1.00 (one-half fully vested and
     one-half  time-based) on December 22, 2000. Mr.  Robertson  renounced these
     options in return for 200,000 options (one-half fully vested



                                       28
<PAGE>

     and  one-half  time-based)  with an  exercise  price  of $0.38  granted  on
     December 27, 2000 (first  vesting date December 31,  2000).  He received an
     additional  75,000 with an exercise  price of $0.38 options on December 31,
     2000.

***  Mark Godsy received  500,000  options at $2.06  (one-half  fully vested and
     one-half  time-based)  on  February  22,  2000.  He  also  received  50,000
     time-based  options in December 1999. Mr. Godsy renounced all these options
     in return for 200,000  time-based  options with an exercise  price of $0.38
     granted on December 27, 2000 (first vesting date December 31, 2000).



                          FISCAL YEAR-END OPTION VALUE

     The following  table presents the value of  unexercised  options held as of
December  31,  2000 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 2000. Mr. Brogdon held no options as
of December 31, 2000.


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

                                                     Number of Securities       Value of Unexercised
                                                    Underlying Unexercised       In-the-Money Options
                                                      Options at FY-End (#)         at FY-End ($)
                                                      ---------------------         -------------
                      Shares Acquired     Value
Name                    on Exercise      Realized   Exercisable/Unexercisable  Exercisable/Unexercisable
----                    -----------      --------   -------------------------  -------------------------
<S>                    <C>                <C>        <C>                       <C>
John Robertson               0              $0        114,583 / 160,417         $ 13,750 / $ 19,250

Mark Godsy                   0              $0         16,667 / 183,333         $  2,000 / $ 22,000
</TABLE>



                                       29
<PAGE>

Compensation of Directors

     The directors of the Company do not receive salaries or fees for serving as
directors of the Company,  nor do they receive any  compensation  for  attending
meetings  of the Board of  Directors  or serving on  committees  of the Board of
Directors.  The Company may,  however,  determine to compensate its directors in
the future.  Directors  are entitled to  reimbursement  of expenses  incurred in
attending  meetings.  In addition,  the directors of the Company are entitled to
participate in the Company's stock option plan. The Company has 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  the  Company  or any of its
subsidiaries  with  William  Brogdon or Mark  Godsy.  The  Company  does have an
employment  agreement with John Robertson,  dated November 16, 2000. Pursuant to
this agreement,  Mr.  Robertson is entitled to a salary of Cdn.$9,000 per month,
reviewable  annually,  with such  increases  as the Company  deems  appropriate,
employee  benefits as are ordinarily  made  available to other  employees of the
Company and the reimbursement of reasonable  job-related expenses. Mr. Roberston
is also entitled to options to purchase up to 200,000 shares of the common stock
of the Company

Repricing of Options

     On December 22, 2000 the Board of Directors approved the Stock Option Grant
Policy (see Exhibit 10.7). This policy was implemented on December 27, 2000. See
notes to the table  "Option/SAR  Grants in Last  Fiscal  Year" for the impact of
this policy on options held by John Robertson and Mark Godsy. H. William Brogdon
was not affected by this policy as he no longer holds  options in the  Company's
common stock.

Item 11. Security Ownership Of Certain Beneficial Owners And Management

     The following table sets forth certain information regarding the beneficial
ownership  of the common  shares of the Company as of March 15, 2001 by (i) each
person  who is known by the  Company  to  beneficially  own more  than 5% of the
issued and  outstanding  common shares of the Company;  (ii) the chief executive
officer of the Company and the  Company's  two former chief  executive  officers
during its last fiscal year,  individually  named in the executive  compensation
table  above;  (iii)  the  Company's  directors;  and (iv) all of the  Company's
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, 2001,  there were  25,743,153  common shares of the
Company issued and outstanding. Each common share entitles the holder thereof to
one vote in respect of any matters that may properly come before



                                       30
<PAGE>

the  shareholders  of the Company.  To the best of the knowledge of the Company,
there exist no  arrangements  that could cause a change in voting control of the
Company.


<TABLE>
TITLE OF CLASS         NAME AND ADDRESS                 RELATIONSHIP                               SHARES         PERCENT
                       OF OWNER                         TO COMPANY                              BENEFICIALLY       OWNED
                                                                                                  OWNED(1)
--------------         ----------------                 ------------                               ------         -------
<S>                   <C>                               <C>                                     <C>               <C>
Common Stock........   Mark Godsy                       Director, 5% Shareholder and Past CEO    2,323,745         9.01
                       7575 Carvarvon Street            (February 22, 2000 - November 17,
                       Vancouver, B.C. V6N 1K6          2000)
Common Stock........   John Roberston                   Director and Current CEO (November         340,815         1.32
                       #203-728 Farrow Street           17, 2000 - present)
                       Coquitlam, B.C. V3J 3S6
Common Stock........   Roland Sartorius                 Director and Executive Officer             139,167         0.54
                       #203 - 7155 Granville Street
                       Vancouver, B.C. V6P 4X6
Common Stock........   Thomas Dodd                      Director and Executive Officer             137,500         0.53
                       808 Seymour Blvd..
                       North Vancouver, B.C.
                       V7J 2J6
Common Stock........   Ken Maddison                     Director                                    18,750         0.07
                       2591 Lund Avenue
                       Coquitlam, B.C.
                       V3K 6J8
Common Stock........   Robert Kubbernus                 Director                                    14,583         0.06
                       400, 630 - 8th Ave.
                       Calgary, Alberta
                       T2P 1G6
Common Stock........   Lewis Sabounghi                  Director                                   193,750         0.75
                       1608 Proulx Drive
                       Orleans, Ontario
                       K4A 1T5
Common Stock........   John Anderson                    Director                                    58,500         0.23
                       3106 West 5th Ave.
                       Vancouver, B.C.
                       V6K 1L1
Common Stock........   H. William Brogdon               Past CEO (February, 1999 to February       550,000         2.14
                       1817 Sleepy Hollow Lane          22, 2000)
                       Petaluma, CA 94954
Common Stock........   All directors and executive                                               3,958,477         14.98
                       officers as a group
                       (10 individuals)(2)
-----------
</TABLE>



                                       31
<PAGE>

(1)  Includes the following numbers of shares of common stock (total of 728,750)
     that may be acquired by the exercise of stock  options or warrants that are
     now exercisable or will become exercisable within the next 60 days:

     o    Mark Godsy - 33,333 shares;

     o    John Robertson - 137,500 shares;

     o    Roland Sartorius - 139,167 shares;

     o    Thomas Dodd - 137,500 shares;

     o    Ken Maddison - 18,750 shares;

     o    Robert Kubbernus - 14,583 shares;

     o    Lewis Sabounghi - 68,750 shares;

     o    John Anderson - 12,500 shares;

     o    Norm Dowds - 116,667 shares;

(2)  Includes Norm Dowds


Item 12. Certain Relationships And Related Transactions

     During 1999, the Company borrowed approximately  $1,350,000 from Integrated
Global Financial  Corporation  (IGF).  IGF is affiliated with Integrated  Equity
Management (IEM). IEM has a contract for services with Apel Financial, a company
owned by Norm Elliot, a director of the Company.  The loan from IGF was on terms
favorable to the Company and has been repaid in full.  See Liquidity and Capital
Resources.

     The  Corporation  has a loan  receivable  from  Cobratech  Industries  Inc.
("Cobratech"),  a company with two common directors,  in the principal amount of
$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 $100,000 on January 10,
2001, and has agreed to repay the balance in 2001.

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



                                       32
<PAGE>

Item 13. Exhibits and Reports on Form 8-K

(a)  Index of documents filed as part of this report:


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           Form  of  warrant   agreement  re:  private  offering   investors
               (incorporated  by reference to Exhibit 4.1 to the Company's  Form
               SB-2 filed on October 4, 2000)

 4.2           Consulting agreement among Mueller & Company,  Inc., Ideas, Inc.,
               Mark Mueller,  Aaron Fertig and Unity Wireless  Corporation dated
               January 1, 2001

 4.3           Warrant   from   Unity    Wireless    Corporation   to   Crescent
               Communications   Inc.  dated  June  26,  2000   (incorporated  by
               reference  to  Exhibit  4.3 to the  Company's  Form SB-2 filed on
               October 4, 2000)

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           Term Sheet dated January 31, 2001 between Unity Wireless  Systems
               Corporation,  a British Columbia,  Canada corporation and Traffic
               Systems,   L.L.C.,   an   Arizona   limited   liability   company
               (incorporated  by reference to Exhibit 2.1 to the Company's  Form
               8-K filed on February 16, 2001).

10.6           1999 Stock Option Plan, as amended

10.7           Recommended Stock Option Grant Policy for the Company

21.1           Subsidiaries of the Company.



                                       33
<PAGE>

(b)  Reports on Form 8-K

     The  Company  filed a Current  report on Form 8-K,  on  October  23,  2000,
announcing  the Asset  Purchase  Agreement,  dated as of October 7, 2000,  among
Unity Wireless Systems Corporation, Traffic Systems LLC, and others.

     The  Company  filed a Current  report on Form 8-K,  on  December  4,  2000,
announcing the Share Purchase  Agreement,  dated as of November 16, 2000,  among
John  Robertson,  Mirza  Kassam,  Chris  Neumann and Robert  Fetherstonhaugh  as
vendors  and  the  Company  as   purchaser.   Ultratech,   Stirling   Mercantile
Corporation, Peter A. Scott Consulting Ltd. and W. Hugh Notman were also parties
to the Share Purchase Agreement.



                                       34
<PAGE>



                                SIGNATURES

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

                                 UNITY WIRELESS CORPORATION
                                 ------------------------
                                 (Registrant)


Date  March 30, 2001             By  /s/ Roland C. Sartorius
                                     -------------------------------------------
                                     Roland C. Sartorius, Chief Financial
                                     Officer, Secretary and Director


                                     /s/ John Robertson
                                     -------------------------------------------
                                     John Robertson, President, Chief Executive
                                      Officer and Director


                                     /s/ Mark Godsy
                                     -------------------------------------------
                                     Mark Godsy, Chairman

                                     /s/ Ken Maddison
                                     -------------------------------------------
                                     Ken Maddison, Director

                                     /s/ Tom Dodd
                                     -------------------------------------------
                                     Tom Dodd, Senior V.P and Director






                                       35
<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                           UNITY WIRELESS CORPORATION

<TABLE>

                                                                                              Page
<S>                                                                                           <C>
Report of Independent Auditors.............................................................   F-2

Report of Independent Auditors.............................................................   F-3

Consolidated Balance Sheets as of December 31, 2000 and 1999...............................   F-4

Consolidated  Statements of Operations and Comprehensive Loss for the Years
     Ended December 31, 2000 and 1999 .....................................................   F-5

Consolidated  Statement of Stockholders' Equity............................................   F-6

Consolidated  Statements  of Cash Flow for the Years Ended
     December  31,  2000 and 1999..........................................................   F-7

Notes to Consolidated Financial Statements.................................................   F-8

</TABLE>









                                      F-1
<PAGE>


INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
Unity Wireless Corporation


We have audited the  accompanying  consolidated  balance sheet of Unity Wireless
Corporation (formerly Sonic Systems Corporation) as of December 31, 2000 and the
related   consolidated   statements  of  operations  and   comprehensive   loss,
stockholders'  equity and cash flows for the year 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 audit.

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

In our  opinion,  these  consolidated  financial  statements  referred  to above
present  fairly,  in all  material  respects,  the  financial  position of Unity
Wireless Corporation and subsidiaries as of December 31, 2000 and the results of
its  operations  and its cash flows for the year then ended in  conformity  with
accounting principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  on a  going  concern.  As  discussed  in  note 2 to the
financial statements,  the Company has suffered recurring losses from operations
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.

The financial  statements  for the year ended  December 31, 1999 were audited by
other auditors who expressed an opinion without  reservation on those statements
in their report dated March 3, 2000.



/s/ KPMG

Chartered Accountants
Vancouver, Canada
March 2, 2001




                                      F-2
<PAGE>


INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
Sonic Systems Corporation


We have audited the  accompanying  consolidated  balance  sheet of Sonic Systems
Corporation   and   subsidiaries  as  of  December  31,  1999  and  the  related
consolidated  statements of operations  and  comprehensive  loss,  stockholders'
equity and cash flows for the year then ended.  These  financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the United States.  Those standards require that we plan and perform an audit
to obtain  reasonable  assurance  whether the financial  statements  are free of
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 audit provides a reasonable  basis
for our opinion.

In our opinion,  these financial statements referred to above present fairly, in
all material  respects,  the  consolidated  financial  position of Sonic Systems
Corporation  as of December 31, 1999,  and the results of its operations and its
cash  flows for the year then ended in  conformity  with  accounting  principles
generally accepted in the United States of America.



/s/ Ernst & Young


Chartered Accountants
Vancouver, Canada
March 3, 2000




                                      F-3
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Consolidated Balance Sheets
(Expressed in U.S. dollars)

December 31, 2000 and 1999
================================================================================



<TABLE>
                                                                                     2000                 1999
-------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>                    <C>
Assets

Current assets:
     Cash and cash equivalents                                             $    2,002,084         $     32,970
     Restricted cash (note 13(b))                                                 100,000                    -
     Accounts receivable (less allowance for doubtful accounts of
       $4,245 in 2000 and nil in 1999)                                            232,591               26,191
     Loan receivable (note 7)                                                     204,434                    -
     Government grant receivable                                                   13,905               25,794
     Investment tax credit receivable                                                   -              123,245
     Inventory (note 8)                                                           463,412              529,528
     Prepaid expenses                                                              14,309               11,003
     Related party advances (note 10)                                                   -               10,024
     Other receivable (note 5)                                                     61,500                    -
-------------------------------------------------------------------------------------------------------------------
                                                                                3,092,235              758,755

Equipment, net (note 9)                                                           221,651               49,664
Goodwill (note 6)                                                                 926,995                    -
Patents, net (notes 4 and 11)                                                           -              493,407
-------------------------------------------------------------------------------------------------------------------
                                                                           $    4,240,881         $  1,301,826
-------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity

Current liabilities:
     Bank indebtedness                                                     $      276,811         $     18,220
     Accounts payable and accrued liabilities (note 12)                           728,807              455,677
     Loans payable (note 13)                                                       42,312              277,664
     Product warranty (note 3(n))                                                 623,497               19,670
-------------------------------------------------------------------------------------------------------------------
                                                                                1,671,427              771,231

Loans payable (note 13)                                                           115,781                    -
Product warranty (note 3(n))                                                            -               49,616
-------------------------------------------------------------------------------------------------------------------
                                                                                1,787,208              820,847
Stockholders' equity:
     Common stock, $0.001 par value 100,000,000 authorized, 25,743,153
       (1999 - 20,588,725) issued and outstanding                                  25,743               20,589
     Additional paid-in capital                                                13,251,498            5,909,624
     Deferred stock compensation                                                  (89,719)                   -
     Accumulated deficit                                                      (10,732,275)          (5,413,642)
     Other accumulated comprehensive loss                                          (1,574)             (35,592)
-------------------------------------------------------------------------------------------------------------------
                                                                                2,453,673              480,979
-------------------------------------------------------------------------------------------------------------------
                                                                           $    4,240,881         $  1,301,826
-------------------------------------------------------------------------------------------------------------------
</TABLE>


Commitments (note 15)
Subsequent events (note 19)
Contingent liabilities (note 20)


See accompanying notes to consolidated financial statements.



                                      F-4
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Consolidated Statements of Operations and Comprehensive Loss
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================



<TABLE>
                                                                                     2000                 1999
-------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                  <C>
Net sales                                                                    $    720,162         $    201,317
Cost of goods sold (includes stock-based compensation
   $354 in 2000 and nil in 1999)                                                1,776,883              404,406
-------------------------------------------------------------------------------------------------------------------
                                                                               (1,056,721)            (203,089)
Expenses:
     Research and development (includes stock-based
       compensation $238,655 in 2000 and nil in 1999)                             880,818              502,643
     Government grant (note 16)                                                         -              (34,079)
     Sales and marketing (includes stock-based compensation
       $88,766 in 2000 and nil in 1999)                                           659,814              456,385
     Depreciation and amortization                                                 79,235               60,980
     Exchange loss (gain)                                                         196,825              (96,393)
     Interest expense                                                              14,832               20,571
     General and administrative (includes stock-based
       compensation $354,426 in 2000 and nil in 1999)                           1,952,469              922,018
     Write-down of assets and investment (notes 4 and 11)                         581,800                    -
-------------------------------------------------------------------------------------------------------------------
                                                                                4,365,793            1,832,125
-------------------------------------------------------------------------------------------------------------------
Operating loss for the year                                                     5,422,514            2,035,214

Interest income                                                                   127,523                    -

Other income                                                                       31,990               10,113
-------------------------------------------------------------------------------------------------------------------
Loss from continuing operations                                                 5,263,001            2,025,101

Discontinued operations:
     Loss from discontinued operations (note 5)                                    55,632                    -
-------------------------------------------------------------------------------------------------------------------
Loss for the year                                                            $  5,318,633         $  2,025,101
-------------------------------------------------------------------------------------------------------------------
Comprehensive loss:
     Loss for the year                                                       $  5,318,633         $  2,025,101
     Currency translation adjustment                                              (34,018)              43,890
-------------------------------------------------------------------------------------------------------------------
Comprehensive loss                                                           $  5,284,615         $  2,068,991
-------------------------------------------------------------------------------------------------------------------
Basic and diluted loss per common share (note 14(c)):
     Continuing operations                                                   $      0.222         $      0.141
     Discontinued operations                                                        0.002                    -
-------------------------------------------------------------------------------------------------------------------
                                                                             $      0.224         $      0.141
-------------------------------------------------------------------------------------------------------------------
</TABLE>


See accompanying notes to consolidated financial statements.



                                      F-5
<PAGE>




UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Consolidated Statements of Stockholders' Equity
(Expressed in U.S. dollars)
================================================================================


<TABLE>
                                                   Common                                                     Other
                                                    stock    Additional       Deferred                   accumulated          Total
                                     Common    issued and       paid-in          stock   Accumulated   comprehensive  stockholders'
                                      stock   outstanding       capital   compensation       deficit   (loss) income         equity
-----------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>           <C>          <C>             <C>         <C>               <C>            <C>
Balance December 31, 1998        19,589,368    $  19,589    $ 4,274,104     $       -   $ (3,388,541)     $    8,298     $  913,450

Issued for services rendered          6,500            7         12,993             -              -               -         13,000
Issued for cash pursuant to
 private placement, net of
 share issue costs of $151,480      992,857          993      1,622,527             -              -               -      1,623,520

Loss for the year                         -            -              -             -     (2,025,101)              -     (2,025,101)
Currency translation adjustment           -            -              -             -              -         (43,890)       (43,890)
-----------------------------------------------------------------------------------------------------------------------------------

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 14(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 14(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
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


See accompanying notes to consolidated financial statements.



                                      F-6
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


<TABLE>
                                                                                     2000                 1999
-------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                  <C>
Operating activities:

     Loss from continuing operations                                         $ (5,263,001)        $ (2,025,101)
     Adjustments to reconcile net loss to net cash used in
       operating activities:
         Amortization of patents                                                   66,657               56,693
         Depreciation of equipment                                                 12,578               13,428
         Write down of assets and investment                                      581,800                    -
         Shares issued for services rendered (note 14(a))                         143,140               13,000
         Asset disposed for services                                                    -                3,319
         Stock based compensation                                                 682,201                2,000
     Changes in non-cash working capital relating to operations:
         Accounts receivable and government grant receivables                    (146,824)             199,569
         Investment tax credit receivable                                         123,245               86,727
         Inventory                                                                 27,224             (328,677)
         Prepaid expenses                                                         (13,283)               3,382
         Accounts payable and accrued liabilities                                 109,129              178,678
         Product warranty                                                         554,211               36,676
-------------------------------------------------------------------------------------------------------------------
     Net cash used in continuing operations                                    (3,122,923)          (1,760,306)
     Loss from discontinued operations                                            (55,632)                   -
     Loss on sale of business (note 5)                                             80,726                    -
-------------------------------------------------------------------------------------------------------------------
     Net cash used in operating activities                                     (3,097,829)          (1,760,306)

Investing activities:
     Acquisition of equipment                                                    (200,941)             (11,079)
     Increase in patents                                                           (5,050)             (50,020)
     Related party advances                                                        10,024              (10,024)
     Sale of business, net cash and cash equivalents disposed of (note 5)        (314,990)                   -
-------------------------------------------------------------------------------------------------------------------
     Net cash used in investing activities                                       (510,957)             (71,123)
Financing activities:
     Advance of loan                                                             (204,434)                   -
     Bank overdraft                                                               115,001               18,220
     Restricted cash (note 13(b))                                                (100,000)                   -
     Repayment of loan payable                                                    (49,603)          (1,371,159)
     Proceeds from loan payable                                                         -            1,381,184
     Cash proceeds on issuance of common shares                                 5,775,000            1,775,000
     Share issue costs                                                                  -             (151,480)
-------------------------------------------------------------------------------------------------------------------
     Net cash provided by financing activities                                  5,535,964            1,651,765

Effect of foreign exchange rate changes on cash and cash equivalents               41,936              (43,890)
-------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash                                                     1,969,114             (223,554)

Cash, beginning of year                                                            32,970              256,524
-------------------------------------------------------------------------------------------------------------------
Cash, end of year                                                            $  2,002,084         $     32,970
-------------------------------------------------------------------------------------------------------------------
Supplementary information:
     Cash paid for:
         Interest                                                            $     26,749         $     14,332
         Income taxes                                                                   -                    -
     Non-cash financing and investing activities:
         Shares issued in acquisition of business (note 6)                        539,000                    -
         Shares issued for services rendered                                      143,140               13,000
         Shares issued on settlement of debt                                      117,968                    -
         Share issue cost (note 14(a))                                            427,500                    -
         Sale of assets for 37% interest in Traffic Systems (note 4)              150,000                    -
         Receivable on sale of business (note 5)                                   61,500                    -

-------------------------------------------------------------------------------------------------------------------
</TABLE>


See accompanying notes to consolidated financial statements.


                                      F-7
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


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 products for a broad range of industrial and
     commercial applications. The Corporation's business has two primary product
     focuses:  its Ultratech high power linear radio  frequency (RF)  amplifiers
     and its  UniLinx(TM)  wireless  communications  modem card.  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.  The UniLinx(TM) wireless communications card is a
     multi-purpose wireless data communications card that allows the sending and
     receiving of data to and from remote locations,  offering secure end-to-end
     wireless  communication  between  a host  application  and  various  remote
     devices.


2.   Future operations:

     The  Corporation  is  continuing  to  develop  its  products  and  markets,
     accordingly  during the year ended  December 31, 2000 it incurred a loss of
     $5,318,633  (1999 - $2,025,101) and used cash from operations of $3,097,829
     (1999 -  $1,760,306).  Operations to date have been  primarily  financed by
     equity.

     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-8
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


3.   Significant accounting policies:

     (a)  Principles of consolidation:

          The  consolidated  financial  statements  include the  accounts of the
          Corporation and its wholly-owned subsidiaries,  Unity Wireless Systems
          Corp. ("Unity Systems"}, 321373 B.C. Ltd. (British Columbia,  Canada),
          and Unity  Wireless  Integration  Inc.  (Washington  State,  USA). The
          Statement  of  Operations  and  Comprehensive  Loss also  includes the
          accounts  of  Unity   Wireless   Singapore   from  April  1  (date  of
          incorporation),  to December 30, 2000.  All  significant  intercompany
          accounts and transactions have been eliminated.

          The  Corporation  accounts for its investment in companies in which it
          has  significant  influence by the equity  method.  The  Corporation's
          proportionate share of income (loss) as reported,  net of amortization
          of the excess purchase price over the net assets acquired, is included
          in income and is added (deducted from) the cost of the investment.

          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 property and equipment,
          goodwill patents 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, 2000,  the  Corporation  has the  following  financial
          instruments:  cash and cash equivalents,  accounts  receivable,  other
          receivables,  accounts  payable  and  accrued  liabilities,  and loans
          payable (1999 - cash and cash equivalents, accounts receivables, other
          receivables,  investment tax credit  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.

     (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.



                                      F-9
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


3.   Significant accounting policies (continued):

     (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)  Patents:

          Legal  costs  incurred  for the  registration  of  patents  have  been
          capitalized. Patent costs are being amortized on a straight-line basis
          over  their  legal  life  of  10  years.  If  it  is  determined  that
          undiscounted future cash flows do not exceed the carrying value of the
          patents,  an  impairment  charge is  recorded  to the extent  that the
          carrying value exceeds the asset's fair value.

     (h)  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-10
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


3.   Significant accounting policies (continued):

     (i)  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.

     (j)  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 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
          enactment date. To the extent that it is not more likely than not that
          a deferred  tax asset  will be  realized,  a  valuation  allowance  is
          provided.

     (k)  Advertising costs:

          Advertising costs are expensed as incurred.  The Corporation  incurred
          advertising expenses of $19,022 in 2000 and $16,940 in 1999.

     (l)  Foreign currency translation:

          The functional currency of the Corporation and its subsidiaries is the
          Canadian  dollar,  while the  reporting  currency in the  consolidated
          financial  statements is the United States dollar. Asset and liability
          accounts are  translated  into United  States  dollars at the exchange
          rate in effect at the balance sheet date.  Revenue and expense amounts
          are  translated at the average  exchange  rate for the year.  Gains or
          losses  resulting  from this  process are  recorded  in  stockholders'
          equity as an adjustment to other accumulated comprehensive loss.



                                      F-11
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


3.   Significant accounting policies (continued):

     (m)  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 later of shipment or when title
          passes  to the  customer  depending  on  the  contractual  terms.  The
          Corporation  records deferred revenue when cash is received in advance
          of the revenue recognition criteria being met.

     (n)  Product warranty:

          A liability for estimated  warranty expense is established by a charge
          against  cost of  goods  sold  at the  time  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.

     (o)  Investment tax credits:

          Investment tax credits are recorded  using the cost  reduction  method
          whereby the credits are deducted  from the cost of the related  assets
          or expenditures.

          The Corporation earns investment tax credits for qualifying scientific
          research and  development  expenditures  which are available in future
          years to reduce income taxes  payable.  The investment tax credits are
          recorded  when there is a reasonable  assurance  that the  Corporation
          will have taxable income in the near future.

     (p)  Research and development:

          Research and development costs are expensed as incurred.

     (q)  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 compensation is earned.



                                      F-12
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


3.   Significant accounting policies (continued):

     (r)  Net 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  non-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.

     (s)  Comprehensive (loss) income:

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

     (t)  Recent pronouncements:

          Statement  of  Financial  Accounting  Standards  No.  133 ("FAS  133")
          "Accounting   Derivative   Instruments  and  Hedging  Activities"  and
          Statement  of  Financial   Accounting  Standards  No.  138  (FAS  138)
          "Accounting  for Certain  Derivative  Instruments  and Certain Hedging
          Activities,"   an  amendment  of  FAS  133,  are   effective  for  the
          Corporation's  fiscal year ending  December 31, 2001.  These standards
          require that an entity  recognize all  derivatives as either assets or
          liabilities  in the statement of financial  position and measure these
          instruments at fair value. The Corporation did not hold any derivative
          instruments and was not involved in any hedging activities at December
          31, 2000.

     (u)  Comparative figures:

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


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
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


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 off are 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  is not
     considered to be a discontinued operation.

     The  Corporation has also written off its investment of $150,000 in Traffic
     Systems as of  December  31,  2000  because of  uncertainty  with regard to
     future operations, profitability and cash flows of Traffic Systems.

     Also under the Asset Purchase Agreement, Traffic Systems is responsible for
     warranty  work on Unity  Systems'  acoustic  emergency  traffic  preemption
     products already installed,  except Unity Systems has 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.  Following the  transaction,  the Corporation
     determined that  additional  installed  products  required  replacement.  A
     warranty  accrual of $599,752  has been set up to reflect  the  estimate of
     these costs.



                                      F-14
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


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  installments 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.  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 are 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.

     Net sales and income from discontinued  operation for the disposal of Unity
     Wireless Integration is as follows ($000):

                                                         2000           1999
     ------------------------------------------------------------------------
     Net sales                                      $     383       $      -
     Loss from discontinued operations                     56              -
     Loss on disposal of business segment                   -              -
     ------------------------------------------------------------------------



                                      F-15
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


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:

<TABLE>
     -------------------------------------------------------------------------------------
     <S>                                                                     <C>
     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                                                           (48,000)
         Goodwill                                                                926,995
     -------------------------------------------------------------------------------------
                                                                             $   539,000
     -------------------------------------------------------------------------------------
     Consideration:
         Issuances of shares (700,000 common shares at $0.77 per share)      $   539,000
     -------------------------------------------------------------------------------------
</TABLE>


     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.

     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)).

     The following table reflects, on an unaudited pro forma basis, the combined
     results of the  Corporation as if the above  acquisition had taken place at
     the beginning of the respective  year  presented.  Appropriate  adjustments
     have been made to reflect the  depreciation of the accounting bases used in
     recording these  acquisitions.  This pro forma information does not purport
     to be indicative of the results of operations  that would have resulted had
     the acquisitions been in effect for the entire years presented,  and is not
     intended to be a projection of future results or trends.



                                      F-16
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


6.   Business acquisition (continued):

                                                        2000            1999
     ---------------------------------------------------------------------------
     Revenues                                     $ 1,982,512     $  1,582,273
     Loss for the year                              5,703,972        2,340,813
     Loss per share                                     0.241            0.163
     ---------------------------------------------------------------------------

7.   Loan receivable:

     The  Corporation  has a loan  receivable  from  Cobratech  Industries  Inc.
     ("Cobratech"), a company with two common directors, in the principal amount
     of  $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  $100,000  on  January  10,  2001,  and has agreed to repay the
     balance in 2001.

8.   Inventory:

                                                     2000                 1999
     ---------------------------------------------------------------------------
     Raw materials                            $   248,863           $  195,364
     Work in progress                             195,504                    -
     Finished goods                                19,045              334,164
     ---------------------------------------------------------------------------
                                              $   463,412           $  529,528
     ---------------------------------------------------------------------------

9.   Equipment:

     Equipment consists of the following:

<TABLE>
                                                                   2000                          1999
     -------------------------------------------------------------------------------------------------
                                                            Accumulated                   Accumulated
                                                 Cost      depreciation         Cost     depreciation
     -------------------------------------------------------------------------------------------------
    <S>                                  <C>               <C>            <C>             <C>
     Computer equipment                   $   150,475       $    38,331    $  52,165       $   28,931
     Computer software                         27,073                 -            -                -
     Furniture and fixtures                    33,784             6,825       10,869            5,388
     Leasehold improvements                    12,172                 -            -                -
     Production and R&D equipment              56,783            13,480       30,108            9,159
     -------------------------------------------------------------------------------------------------
                                          $   280,287       $    58,636    $  93,142       $   43,478
     -------------------------------------------------------------------------------------------------
     Net book value                       $   221,651                      $  49,664
     -------------------------------------------------------------------------------------------------
</TABLE>



                                      F-17
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


10.  Related party advances:

     Advances of nil (1999 - $10,024)  are due from an  employee  and a previous
     employee who is now a distributor of the Corporation.


11.  Patents:

<TABLE>
                                                              2000                          1999
     --------------------------------------------------------------------------------------------
                                                       Accumulated                   Accumulated
                                            Cost      amortization         Cost     amortization
     --------------------------------------------------------------------------------------------
     <S>                              <C>               <C>             <C>           <C>
     Patents                          $        -        $       -       $ 570,280     $   76,873
     --------------------------------------------------------------------------------------------
     Net book value                   $        -                        $ 493,407
     --------------------------------------------------------------------------------------------
</TABLE>

     The Corporation has written down the patents to nil as of December 31, 2000
     since there are no future  cash flows  expected  to be  generated  from the
     patents.


12.  Accounts payable and accrued liabilities:

                                                     2000                 1999
     --------------------------------------------------------------------------
     Trade accounts payable                   $   468,866          $   349,179
     Employee compensation payable                      -               57,287
     Accrued liabilities                          259,941               49,211
     --------------------------------------------------------------------------
                                              $   728,807          $   455,677
     --------------------------------------------------------------------------


13.  Loans payable:

<TABLE>
     ----------------------------------------------------------------------------------------------
                                                                         2000                 1999
     ----------------------------------------------------------------------------------------------
    <S>                                                          <C>                  <C>
     British Columbia Advanced Systems Institute                  $         -          $    77,115
     Royal Bank of Canada                                              83,642              130,365
     Government of Canada - Ministry of Western Economic
       Diversification                                                 74,451               70,184
     ----------------------------------------------------------------------------------------------
                                                                      158,093              277,664
     Current portion                                                   42,312              277,664
     ----------------------------------------------------------------------------------------------
                                                                  $   115,781          $         -
     ----------------------------------------------------------------------------------------------
</TABLE>



                                      F-18
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


13.  Loans payable (continued):

     (a)  Government of British Columbia:

          British Columbia Advanced Systems Institute ("ASI"):

               The Corporation  agreed to perform certain specified research and
               development  work and 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:

          The Corporation has a $83,642 ($Cdn. 125,288) loan with the Royal Bank
          of Canada with an interest rate of Canadian  prime plus 1%.  Scheduled
          principal  repayments are $3,526 ($Cdn.  5,239) per month over 5 years
          from the initial drawdown date of January 23, 1998.

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

          Canadian bank prime rate at December 31, 2000 was 6.0 % (1999 - 6.5%).

     (c)  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%.



                                      F-19
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


13.  Loans payable (continued):

     (c)  Government of Canada (continued):

          Ministry of Western Economic Diversification (continued):

               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.


14.  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 2000, the  Corporation  issued 254,428 (1999 - 6,500) common shares
          for services  rendered at $143,140  (1999 - $13,000).  The shares were
          issued and 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.

          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 value of the
          shares issued in the private  placement.  The value  assigned has been
          recorded  by a charge  against  the  proceeds  pursuant to the private
          placement.

     (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 and  thereafter
               an  additional  70,000  Indemnity  Shares were  released from the
               terms of this Escrow  Agreement on and after each of the 11th day
               of September,  2000, and December,  2000. 70,000 Indemnity Shares
               may be released on each of the 11th day of March,  2001 and June,
               2001;



                                      F-20
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


14.  Common stock (continued):

     (b)  Escrowed shares (continued):

          (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 and thereafter an additional  180,000  escrowed
               shares were released  from the terms of this Escrow  Agreement on
               and  after  each of the  11th day of  March,  2000,  June,  2000,
               September, 2000, and December, 2000, 180,000 Indemnity Shares may
               be  released  on each of the 11th day of  March,  2001 and  June,
               2001.

     (c)  Loss per share:

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

<TABLE>
          --------------------------------------------------------------------------------
                                                                2000                 1999
          --------------------------------------------------------------------------------
         <S>                                           <C>                   <C>
          Numerator:
              Loss from continuing operations          $   5,263,001         $  2,025,101
              Loss from discontinued operations               55,632                    -

          Denominator:
              Weighted average number of:
                  Common shares outstanding               23,680,518           19,795,202
                  Adjusted                                         -           14,398,734
          --------------------------------------------------------------------------------
          Basic and diluted loss per common share:
              Continuing operations                   $        0.222         $      0.141
              Discontinued operations                          0.002                    -
          --------------------------------------------------------------------------------
</TABLE>

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

     (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, 2000 this maximum number was 6,435,788.



                                      F-21
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


14.  Common stock (continued):

     (d)  Stock option plan (continued):

          During the year,  certain  options  granted  were  cancelled  and were
          replaced with new options at a lower exercise price. Since the options
          were granted  within six months of the  cancellation,  the new options
          are considered  for  accounting  purposes to be variable in nature and
          compensation  expense will be recorded  equal to changes in the market
          value of the underlying  common shares.  The variable plan  accounting
          has been applied  prospectively for market value changes subsequent to
          the  date of the  repricing.  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, 1998                             388,000          2,387,000           $   1.00
         Options granted                                       (150,000)           150,000               1.10
         Options expired                                        152,500           (152,500)             (1.00)
         Increase in reserved for issuance                    2,000,000                  -                  -
        -------------------------------------------------------------------------------------------------------------------
         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           $   0.77
        -------------------------------------------------------------------------------------------------------------------
</TABLE>



                                      F-22
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


14.  Common stock (continued):

     (d)  Stock option plan (continued):

          The following table summarizes  information  about stock options under
          the plan outstanding at December 31, 2000:

<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                   2000     life (yrs)             price             2000        price
        -------------------------------------------------------------------------------------------------------------------
         <S>                    <C>                 <C>              <C>            <C>            <C>
         $0.38                        2,406,458           5.00             $0.38          605,208        $0.38
         $0.50                           85,000           4.99             $0.50                -        $0.50
         $1.00                        1,505,416           1.03             $1.00        1,428,208        $1.00
         $2.06                          445,292           2.43             $2.06          254,875        $2.06
         $2.53                           10,000           3.32             $2.53            5,833        $2.53
         $3.90                            2,500           0.29             $3.90            2,500        $3.90
        -------------------------------------------------------------------------------------------------------------------
                                      4,454,666           3.39             $0.77        2,296,624        $0.96
        -------------------------------------------------------------------------------------------------------------------
</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>
        -------------------------------------------------------------------------------------------------------------------
                                                                                     2000                 1999
        -------------------------------------------------------------------------------------------------------------------
        <S>                                                                <C>                  <C>
         Loss for the year, as reported                                    $    5,318,633       $    2,025,101
         Add SFAS 123 expense                                                   1,740,746               64,589
        -------------------------------------------------------------------------------------------------------------------
         Pro forma                                                         $    7,059,379       $    2,089,690
        -------------------------------------------------------------------------------------------------------------------
         Basic and diluted loss per common share, net as reported          $        0.224       $        0.141
         Pro forma                                                                  0.298                0.145
        -------------------------------------------------------------------------------------------------------------------
</TABLE>



                                      F-23
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


14.  Common stock (continued):

     (d)  Stock option plan (continued):

          The fair value of each option  granted in 2000 and 1999 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 was based on weekly stock price; risk-free interest rate of
          5% (1999 - 5%) and an expected life of four and one-half years.

          The  weighted-average  fair value of options  granted  during 2000 and
          1999 was $0.95 and $0.58 respectively.

     (e)  Warrants:

          The Corporation has warrants  outstanding to purchase 4,450,000 common
          shares at $2.06 to $3.25 per share. 3,850,000 warrants may be callable
          for exercise by the  Corporation  at any time after the average of the
          bid-ask price, or closing price, as applicable,  for the Corporation's
          common stock is equal to or exceeds $5.00 for at least ten consecutive
          trading days.  These warrants expire in October 2001. Of the remaining
          600,000 warrants, 100,000 warrants vest after April 2001 and expire in
          April 2005,  and 500,000  warrants  vest until July 2002 and expire in
          July 2003.


15.  Commitments:

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

     ---------------------------------------------------------------------------
     2001                                                          $    84,918
     2002                                                               83,029
     2003                                                               81,413
     2004                                                               78,239
     2005                                                               52,159
     Thereafter                                                              -
     ---------------------------------------------------------------------------
                                                                  $    379,758
     ---------------------------------------------------------------------------

     In 2000, rent expense was $43,526 (1999 - $58,136).


16.  Government grant:

     (a)  During the year ended December 31, 1997, the Corporation  entered into
          a contribution agreement with the Federal  Transportation  Development
          Centre,  whereby the Corporation is entitled to receive  approximately
          $122,501 ($Cdn. $182,000) or 50% of eligible expenditures,  as defined
          in the  agreement.  As at  December  31,  2000,  the  Corporation  had
          received $94,014 ($Cdn. $137,922) (1999 - $94,014 - $Cdn. $137,922).



                                      F-24
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


16.  Government grant (continued):

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

17.  Income taxes:

     At December 31, 2000,  the  Corporation  has U.S. tax net operating  losses
     approximating  $1,796,000,   which  will  begin  to  expire  in  2018.  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
     $7,688,000 which expire as follows:

     -----------------------------------------------------------------------
     2001                                                    $      105,000
     2002                                                           522,000
     2003                                                           636,000
     2004                                                         1,516,000
     2005                                                         1,282,000
     2006                                                         3,627,000
     -----------------------------------------------------------------------

     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  and
     liabilities as of December 31 are as follows:

                                                       2000              1999
     ---------------------------------------------------------------------------
     Deferred tax assets:
         Net operating loss carry forwards     $  4,150,672      $  1,814,000
         Depreciation/amortization                  121,713            (1,000)
         Other                                       40,129           387,000
     ---------------------------------------------------------------------------
     Total deferred tax assets                    4,312,514         2,200,000
     Valuation allowance                         (4,312,514)       (2,200,000)
     ---------------------------------------------------------------------------
     Net deferred taxes                        $          -     $           -
     ---------------------------------------------------------------------------



                                      F-25
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


18.  Segmented information:

     (a)  Segment information ($000):

          During the year, the Corporation sold its contract  services  business
          (note 5). As at December 31, 2000, the Corporation is operating in the
          wireless  product  and  acoustic  product  segments.  The  Corporation
          reports  revenues and gross profit to its chief  executive  officer as
          follows:

          Industry   information   related  to  the   Corporation's   continuing
          operations is as follows:

<TABLE>
          -----------------------------------------------------------------------------
                                                           Sonem
                                              Wireless   Acoustic
                                              Products   Products    Other      Total
          -----------------------------------------------------------------------------
          <S>                                 <C>        <C>         <C>      <C>
          Sales to external customers              599        121        -        720
          Gross profit (loss)                       44     (1,101)       -     (1,057)
          Segment assets                         1,879         95    2,267      4,241
          -----------------------------------------------------------------------------
</TABLE>

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

     (b)  Geographic information ($000):

          Substantially  all assets and operations  are in Canada.  A summary of
          sales by region is as follows:

          ---------------------------------------------------------------------
                                                    2000                 1999
          ---------------------------------------------------------------------
          Korea                                $      474           $        -
          Canada                                       34                   79
          United States                               212                  122
          ---------------------------------------------------------------------
          Total sales                          $      720           $      201
          ---------------------------------------------------------------------



                                      F-26
<PAGE>

UNITY WIRELESS CORPORATION
(Formerly Sonic Systems Corporation)

Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)

Years ended December 31, 2000 and 1999
================================================================================


18.  Segmented information (continued):

     (c)  Major customers ($000):

          The approximate sales to major customers is as follows:

          ----------------------------------------------------------------------
                                                     2000                 1999
          ----------------------------------------------------------------------
          Customer A                           $       409           $        -
          Customer B                                    65                    -
          ----------------------------------------------------------------------


19.  Subsequent events:

     (a)  Mueller and Ideas warrants:

          Under the consulting  agreement  between the Corporation and Mueller &
          Company, Inc. and Ideas Inc. ("Mueller and Ideas") dated as of July 1,
          2000,  500,000  shares of common  stock were  issuable  to Mueller and
          Ideas upon  exercise  of  warrants  at $2.06 per share.  On January 1,
          2001,  the  Corporation  and Mueller  and Ideas  agreed to modify this
          agreement  such that the number of warrants was reduced to 200,000 and
          the exercise price was reduced to $0.38.

     (b)  Stock option grant:

          On  February  6, 2001,  the  Corporation  granted  782,500  options to
          employees and contractors.


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 certain 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 on advice of 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-27
<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           Form  of  warrant   agreement  re:  private  offering   investors
               (incorporated  by reference to Exhibit 4.1 to the Company's  Form
               SB-2 filed on October 4, 2000)

 4.2           Consulting agreement among Mueller & Company,  Inc., Ideas, Inc.,
               Mark Mueller,  Aaron Fertig and Unity Wireless  Corporation dated
               January 1, 2001

 4.3           Warrant   from   Unity    Wireless    Corporation   to   Crescent
               Communications   Inc.  dated  June  26,  2000   (incorporated  by
               reference  to  Exhibit  4.3 to the  Company's  Form SB-2 filed on
               October 4, 2000)

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           Term Sheet dated January 31, 2001 between Unity Wireless  Systems
               Corporation,  a British Columbia,  Canada corporation and Traffic
               Systems,   L.L.C.,   an   Arizona   limited   liability   company
               (incorporated  by reference to Exhibit 2.1 to the Company's  Form
               8-K filed on February 16, 2001).

10.6           1999 Stock Option Plan, as amended

10.7           Recommended Stock Option Grant Policy for the Company

21.1           Subsidiaries of the Company.