UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
                                   -----------

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

                 For the quarterly period ended: AUGUST 31, 2005

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

            For the transition period from __________ to ___________

                        Commission file number: 000-32475

                           ASTRATA GROUP INCORPORATED
                           --------------------------
                 (Name of small business issuer in its charter)

                NEVADA                                 84-1408762
   -------------------------------        ------------------------------------
   (State or other jurisdiction of        (I.R.S. Employer Identification No.)
    incorporation or organization)

1801 CENTURY PARK EAST, SUITE 1830, LOS ANGELES, CALIFORNIA           90067-2320
-----------------------------------------------------------           ----------
        (Address of principal executive offices)                      (Zip Code)

Issuer's telephone number:  (310) 282-8646
                            --------------

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

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

                         Common Stock, par value $0.0001
                         -------------------------------
                                (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.
Yes [X] No [ ]

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

       State the number of shares outstanding of each of the issuer's classes of
common equity, as of October 11, 2005: 12,518,394
____________________________________________________

Transitional Small Business Disclosure Format (Check One):  Yes:   ; No: X
                                                                ---     ---

<PAGE>

                                 [ASTRATA LOGO]

                                TABLE OF CONTENTS

                                                                            Page

Part I - Financial Information

     Item 1   Financial Statements                                           F-1

              Condensed Consolidated Balance Sheet as of August 31, 2005     F-1

              Condensed Consolidated Statements of Operations and
              Comprehensive Loss for the three and six months ended
              August 31, 2005 and 2004                                       F-2

              Condensed Consolidated Statements of Cash Flows for the

              six months ended August 31, 2005 and 2004                      F-3

              Notes to Condensed Consolidated Financial Statements           F-5

     Item 2   Management's Discussion and Analysis or Plan of Operation        1

     Item 3   Controls and Procedures                                         11

Part II - Other Information

     Item 1   Legal Proceedings                                               11

     Item 2   Unregistered Sales of Equity Securities and Use of Proceeds     11

     Item 3   Defaults upon Senior Securities                                 11

     Item 4   Submission of Matters to a Vote of Security Holders             11

     Item 5   Other Information                                               11

     Item 6   Exhibits                                                        12

                                       1

<PAGE>

Part I - Financial Information

Item 1   Financial Statements

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)
                                 August 31, 2005

                                     ASSETS
Current assets:
     Cash and cash equivalents                                     $    494,485
     Trade and other receivables, net                                 4,166,893
     Inventories                                                      3,392,705
     Other assets                                                       101,032
                                                                   ------------
Total current assets                                                  8,155,115

Property and equipment, net                                           1,439,510
Intangible assets, net                                                1,613,100
Goodwill                                                              2,481,280
Investment in and advances to affiliate                                 288,438
                                                                   ------------
Total assets                                                       $ 13,977,443
                                                                   ============
                      LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
     Accounts payable                                              $  7,883,887
     Lines of credit                                                  2,324,750
     Income taxes payable                                               206,484
     Notes payable to stockholders                                    2,234,518
     Advances from stockholders                                         366,378
     Current portion of redeemable preferred stock of subsidiary        416,181
     Current portion of other long-term liabilities                      58,253
                                                                   ------------
Total current liabilities                                            13,490,451

Redeemable preferred stock of subsidiary                                716,990
Long-term liabilities                                                    78,604
Deferred tax liability                                                  513,967
                                                                   ------------
Total liabilities                                                    14,800,012
                                                                   ------------
Minority interest                                                       213,186

Commitments and contingencies

Stockholders' deficit:
     Preferred stock, $0.0001 par value, 10,000,000 shares
       authorized, none issued or outstanding                                --
     Common stock, $0.0001 par value, 40,000,000 shares
       authorized, 12,284,492 issued and outstanding                      1,228
     Additional paid-in capital, net                                 11,974,706
     Deferred compensation cost                                        (500,000)
     Accumulated deficit                                            (12,666,951)
     Accumulated other comprehensive income                             155,262
                                                                   ------------
Total stockholders' deficit                                          (1,035,755)
                                                                   ------------
Total liabilities and stockholders' deficit                        $ 13,977,443
                                                                   ============

  See accompanying notes to these condensed consolidated financial statements.

                                      F-1

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                               Three Months Ended August 31,   Six Months Ended August 31,
                                                   2005            2004            2005            2004
                                               ------------    ------------    ------------    ------------
                                                               (AS RESTATED)                   (AS RESTATED)
<S>                                            <C>             <C>             <C>             <C>
Net sales                                      $  4,791,340    $  3,671,642    $  8,286,698    $  6,937,321
Cost of goods sold                                3,071,846       2,254,120       5,208,176       4,174,141
                                               ------------    ------------    ------------    ------------
Gross profit                                      1,719,494       1,417,522       3,078,522       2,763,180

Selling, general and administrative expenses      3,397,383       2,027,883       6,651,908       4,328,113
Research and development                            685,190         374,217       1,017,290         521,247
                                               ------------    ------------    ------------    ------------
Operating loss                                   (2,363,079)       (984,578)     (4,590,676)     (2,086,180)
                                               ------------    ------------    ------------    ------------
Other income (expense):
     Interest expense                              (237,191)         (7,954)       (802,806)        (14,010)
     Equity in net earnings of affiliate             13,634              --           3,669              --
     Other income                                   (19,778)        141,298          (4,305)        185,541
                                               ------------    ------------    ------------    ------------
Total other (expense) income                       (243,335)        133,344        (803,442)        171,531
                                               ------------    ------------    ------------    ------------
Loss before minority interest and
     provision for income taxes                  (2,606,414)       (851,234)     (5,394,118)     (1,914,649)
Income tax provision                                (63,881)         93,185         (48,214)         50,844
                                               ------------    ------------    ------------    ------------
Loss before minority interest                    (2,542,533)       (944,419)     (5,345,904)     (1,965,493)
Minority interest                                   (12,863)         34,224           6,774          27,283
                                               ------------    ------------    ------------    ------------
Net loss                                       $ (2,555,396)   $   (910,195)   $ (5,339,130)   $ (1,938,210)
                                               ============    ============    ============    ============

Comprehensive loss and its components
consist of the following:
     Net loss                                  $ (2,555,396)   $   (910,195)   $ (5,339,130)   $ (1,938,210)
     Foreign currency translation
     adjustment, net of tax                         (62,448)        (52,500)       (227,504)        (63,194)
                                               ------------    ------------    ------------    ------------
Comprehensive loss                             $ (2,617,844)   $   (962,695)   $ (5,566,634)   $ (2,001,404)
                                               ============    ============    ============    ============

Loss per common share*
     Basic                                     $      (0.21)   $      (0.12)   $      (0.44)   $      (0.28)
     Diluted                                          (0.21)          (0.12)          (0.44)          (0.28)

Weighted average common shares outstanding*
     Basic                                       11,999,048       7,650,000      11,999,048       6,962,500
                                               ============    ============    ============    ============
     Diluted                                     11,999,048       7,650,000      11,999,048       6,962,500
                                               ============    ============    ============    ============

* As restated for the three and six-month periods ended August 31, 2004

</TABLE>

  See accompanying notes to these condensed consolidated financial statements.

                                      F-2

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

                                                         2005           2004
                                                     -----------    -----------
                                                                   (AS RESTATED)
CASH FLOW FROM OPERATING ACTIVITIES:
     Net loss                                        $(5,339,130)   $(1,938,210)
     Adjustments to reconcile net loss to net
     cash (used in) operating activities:
         Gain on sale of property and equipment           (4,814)
         Depreciation and amortization                   459,999        261,518
         Amortization of deferred compensation cost      187,500             --
         Deferred finance costs and debt discount        416,025             --
         Issuance of stock for services                   74,375        519,737
         Issuance of stock for reorganization                 --        954,294
         Equity in net (earnings) of affiliate            (3,669)            --
         Minority interest                                (6,774)       114,159
         Deferred income taxes                           (39,706)            --
         Unrealized foreign currency exchange gain       (69,690)            --
     Changes in operating assets and liabilities:
         Accounts receivable                          (1,822,417)       490,509
         Inventories                                     174,690     (1,237,052)
         Other assets                                    129,753        (31,624)
         Accounts payable and accrued liabilities      2,032,438        674,755
         Deferred tax liability                               --        (40,000)
                                                     -----------    -----------
Net cash used in operating activities                 (3,811,420)      (231,914)
                                                     -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property and equipment                 (394,114)      (255,105)
     Proceeds from sale of assets                         14,899             --
     Investment in affiliates                             47,419             --
     Cash of acquired company                                 --        678,608
                                                     -----------    -----------
Net cash (used in) provided by investing activities     (331,796)       423,503
                                                     -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Repayment of bridge loan                         (1,500,000)            --
     Repayment of long term liabilities                  (35,013)       (10,602)
     Proceeds from long term liabilities                  54,012
     Proceeds from lines of credit, net                1,305,774             --
     Proceeds from note payables from stockholders       200,000             --
     Proceeds from advances from stockholders            333,655             --
     Proceeds from issuance of common stock            3,073,234             --
                                                     -----------    -----------
Net cash provided by (used in) financing activities    3,431,662        (10,602)
                                                     -----------    -----------
Effect of foreign currency exchange rate changes
     on cash and cash equivalents                        (75,025)       (45,558)

Net (decrease) increase in cash and cash equivalents    (786,579)       135,429

Cash and cash equivalents at beginning of period       1,281,064        264,067
                                                     -----------    -----------
Cash and cash equivalents at end of period           $   494,485    $   399,496
                                                     ===========    ===========

  See accompanying notes to these condensed consolidated financial statements.

                                      F-3

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>
(Continued)                                                       2005          2004
                                                              -----------   -----------
<S>                                                           <C>           <C>
Cash paid during the period for:
     Interest                                                 $   140,194   $    14,010
                                                              ===========   ===========
     Income taxes                                             $        --   $    75,849
                                                              ===========   ===========

Supplemental disclosure of non-cash investing and financing activities:

Pre-August 2, 2004 condensed assets, liabilities
and equity of Astrata Technologies not included
above are as follows:
     Purchase price in common stock                                         $ 1,048,844
     Assets excluding cash                                                     (739,132)
     Liabilities                                                                193,802
     Minority interest                                                          175,094
                                                                            -----------
         Cash of acquired company                                           $   678,608
                                                                            ===========

   See the accompanying notes for information on other non-cash investing and
                             financing activities.

</TABLE>

  See accompanying notes to these condensed consolidated financial statements.

                                      F-4

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

1. ORGANIZATION AND BASIS OF PRESENTATION

Organization

         As   previously   disclosed,   under   the   terms  of  the   confirmed
reorganization plan of Cetalon Corporation (the predecessor entity,  hereinafter
referred to as "Cetalon"),  effective  August 2, 2004 Cetalon  combined with (i)
Cadogan  Investments  Limited  ("Cadogan"),  a  London-based  entity  that owned
Astrata South Africa (Pty) Limited,  a South African company ("Astrata SA"), and
(ii) Optron  Technologies,  Inc. ("Optron  Technologies"),  a Nevada corporation
(collectively,   the  "Merger   Transaction").   The   subsidiaries   of  Optron
Technologies  are located in Singapore,  Malaysia,  Brunei,  and England.  As of
August 2, 2004, Optron Technologies was merged into Cetalon and the subsidiaries
of Optron Technologies became subsidiaries of Cetalon.

         Because  of  the  structure  of  the  Merger   Transaction,   Cetalon's
acquisition of Cadogan  (including its subsidiary) and Optron  Technologies  was
accounted  for as a "reverse  merger"  because the  stockholders  of Cadogan and
Optron  Technologies,  as the legal  acquirees,  obtained  more than 50%  voting
control  of  Cetalon,  the legal  acquiror.  Since the  stockholders  of Cadogan
obtained majority voting control of Cetalon, for accounting purposes Cadogan has
been treated as the continuing  reporting entity and the accounting  acquiror in
the Merger Transaction.  As a result, the accompanying August 31, 2004 condensed
consolidated  financial  statements are those of Cadogan and its  majority-owned
subsidiaries.

         The accounting  treatment  described above resulted in Cetalon adopting
the  February  28/29  fiscal  year-end  of Cadogan.  On August 3, 2004,  Cetalon
changed its name to Astrata Group Incorporated  ("Astrata  Group").  The Astrata
Group and its majority-owned subsidiaries are sometimes hereinafter collectively
referred to as the "Company," "we," "us," and "our."

         Subsequent   to  closing  the  Merger   Transaction,   the   historical
consolidated  statements  of  operations  are those of the Astrata Group and its
majority-owned  subsidiaries.  The  consolidated  balance sheet reflects the net
assets of the aforementioned  entities  (including  majority-owned  subsidiaries
since their  acquisition  dates) reported at historical  cost. All capital stock
shares  and  amounts  and per share  data have been  retroactively  restated  to
reflect the exchange ratio in the Merger Transaction.

Nature of Operations

         The Company,  which is in the telematics and Global  Positioning System
("GPS") industry, is focused on advanced location-based IT products and services
that combine positioning, wireless communications, and information technologies.
GPS positioning is based on a technique that precisely  measures  distances from
four or more satellites.  The satellites  continuously  transmit precisely timed
radio signals using extremely  accurate atomic clocks.  A GPS receiver  measures
distances from the satellites in view by determining the travel time of a signal
from the  satellite  to the  receiver,  and uses those  distances to compute its
position.  The positional  data acquired from the GPS satellites are transmitted
in real time using data links over  cellular  telephone  networks,  or satellite
communication when a cellular network is not available.

         The  Company  provides  advanced  positioning   products,  as  well  as
monitoring  and  airtime  services  to  industrial,   commercial,   governmental
entities, academic/research institutions, and professional customers in a number
of  markets  including  surveying,  utility,  construction,  homeland  security,
military,   intelligence,   mining,  agriculture,  marine,  public  safety,  and
transportation.  The Company leases  facilities which  accommodate the assembly,
testing,  and  research  and  development   personnel  with  thirteen  years  of
experience in position and wireless communication technology of fleet management
products to customers. GSM (Global System for Mobile  Telecommunications) is the
dominant cellular telephone standard currently developed throughout the world.

         A major portion of the  Company's  business is the  application  of GPS
positioning  technology  to  terrestrial  applications.   GPS  is  a  system  of
twenty-four orbiting satellites and associated ground control that is funded and
maintained  by  the  United  States  Government;  this  system  has  been  fully
operational since March 1995. A significant reduction in the number of operating
satellites would impair the current ability of the GPS system, and the growth of
existing and  potential  market  opportunities.  In addition,  the United States
Government may not remain  committed to the operation and maintenance of the GPS
satellites  over  an  extended  period,  and the  policy  of the  United  States
Government for the world wide use of GPS without charge may change.

                                      F-5

<PAGE>
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

         Since  some of the  Company's  sales  and  purchases  transactions  are
denominated in foreign  currencies,  the Company is exposed to foreign  currency
risk.  Astrata SA purchases forward foreign exchange  contracts to cover certain
product - purchase  transactions  denominated  in U.S.  dollars.  During the six
months ended August 31, 2005,  the South African Rand weakened  against the U.S.
dollar,  and the Company reported an unrealized gain on forward foreign exchange
contracts of approximately $118,000.

Basis of Presentation

         Management of the Company has prepared, without audit, the accompanying
condensed  consolidated  financial statements for the three and six months ended
August  31,  2005 and 2004.  The  information  furnished  has been  prepared  in
accordance with accounting principles generally accepted in the United States of
America  ("GAAP")  for  interim  financial   reporting.   Accordingly,   certain
disclosures normally included in a complete set of financial statements prepared
in  accordance  with GAAP have been  condensed  or  omitted.  In the  opinion of
management,  all adjustments  considered  necessary for the fair presentation of
the Company's financial position, results of operations and cash flows have been
included and are only of a normal  recurring  nature.  The results of operations
for the six months ended August 31, 2005 are not  necessarily  indicative of the
results of operations for the year ending February 28, 2006.

Liquidity and Going Concern Considerations

         The accompanying  condensed consolidated financial statements have been
prepared  assuming the Company  will  continue as a going  concern.  For the six
months ended August 31, 2005, the Company had a net loss of  approximately  $5.3
million;  negative cash flow from  operating  activities of  approximately  $3.8
million;  and  negative  equity of $1 million.  In  addition,  the Company had a
working capital deficit of approximately $5.3 million as of August 31, 2005.

         The Company's  independent  public accountants have indicated that they
will be adding a going concern  paragraph to their re-issued audit report on our
February 28, 2005 consolidated financial statements that will be included in the
second  amendment  of the  Company's  registration  statement on Form SB-2 to be
filed  with the SEC.  The going  concern  paragraph  will  state  that  there is
substantial  doubt about the Company's  ability to continue as a going  concern.
Such financial  statements were prepared assuming that the Company will continue
as a going concern (based upon management's  plans discussed in this Note) which
contemplates,  among other things, the realization of assets and satisfaction of
liabilities in the ordinary course of business.  Accordingly, the aforementioned
financial statements and the accompanying August 31, 2005 condensed consolidated
financial   statements   do  not   include  any   adjustments   related  to  the
recoverability  and  classification  of asset carrying amounts or the amount and
classification of liabilities that might result, should the Company be unable to
continue as a going concern.

         Management  of  the  Company  is  projecting   significant   growth  in
telematics  sales during fiscal 2006. It is anticipated that this growth will be
driven by the Astrata Geo-Location  Platform ("GLP") product that was introduced
in November 2004, linked with international sales and a marketing infrastructure
that was  established  in fiscal 2005.  However,  there can be no assurance that
such sales  growth will  generate  margins  that  provide an adequate  return on
assets,  if at all,  or that we will have  sufficient  resources  to produce the
products and provide the services required to support any such growth.

         The  Company has  various  debt  facilities  which it is  currently  in
negotiations for extension of the due dates (see Note 4).

         In order for the  Company  to fund its  operations  and  continue  this
growth  plan,  substantial  additional  funding will be required  from  external
sources.  Management  currently intends to fund operations through a combination
of equity,  lines of credit, and collateralized  debt facilities.  Management is
currently in  negotiations  with  strategic  and financial  investors,  who have
expressed an interest in making  investments in the Company.  These  discussions
are ongoing,  and some of the potential investors are currently conducting their
due diligence procedures.  However,  there can be no assurance of the outcome of
these  negotiations.  In the  event  that  the  Company  is not  able to  secure
financing on acceptable  terms beyond the $3.2 million of net proceeds  received
in April and May 2005 (see Note 6) and the  $1,750,000  related  to the  October
2005 debt financing  described in Note 12,  management  believes that it has the
ability to access debt  markets  using sale and  leaseback  arrangements  and/or
collateralized  debt  facilities.  In  addition,   management  has  revised  the
Company's  business  plan and  thereby  reduced its cash  requirements  by using
alternate  channels  to  access  telematics   markets  in  selected   geographic
locations.  While such revisions may yield immediate  improvements in short-term
profitability and cash flow, this will be achieved at the cost of a reduction in
the Company's future growth rate and profitability, if any.

                                      F-6

<PAGE>
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

2.  CERTAIN SIGNIFICANT ACCOUNTING POLICIES

         The  significant  accounting  policies  presented below are designed to
assist in understanding the Company's  consolidated  financial statements.  Such
consolidated  financial statements and accompanying notes are the representation
of the  Company's  management,  who are  responsible  for  their  integrity  and
objectivity. These accounting policies conform to GAAP in all material respects,
and have been  consistently  applied in  preparing  the  accompanying  condensed
consolidated financial statements.  The selected significant accounting policies
described  below should be read in conjunction  with the Company's  February 28,
2005 annual report on Form 10-KSB  (filed with the SEC on June 14, 2005),  which
includes all of the Company's significant accounting policies.

Principles of Consolidation

         The  consolidated  financial  statements  include  the  accounts of the
Astrata Group and its majority-owned  subsidiaries in which it has a controlling
financial interest. All significant inter-company transactions and balances have
been eliminated in consolidation.

         Equity investments in which the Company owns at least 20% of the voting
interest, or otherwise exercises significant influence over the investee, but in
which the Company does not have a controlling  financial  interest are accounted
for using the equity method.

Concentrations

         The  financial  instrument  that  potentially  exposes the Company to a
concentration of credit risk principally  consists of cash. The Company deposits
its cash with high credit financial institutions, principally in the Republic of
South Africa. This country does not have any institutional  depository insurance
comparable to the United States, which insures bank balances up to $100,000.  At
August 31, 2005, the Company's foreign bank balances approximated  $715,000. The
Company had  approximately  $10,000 in U.S. bank accounts,  which are insured by
the Federal Deposit Insurance Corporation to $100,000.

         The  Company  does  not  require  collateral  from its  customers,  but
performs  ongoing  credit  evaluations of its  customers'  financial  condition.
Credit risk with respect to the accounts  receivable  is limited  because of the
large  number of  customers  included  in the  Company's  customer  base and the
geographic  dispersion of those  customers.  The Company also performs  periodic
reviews of  collectibility  and  provides an  allowance  for  doubtful  accounts
receivable.  Management considers the allowance for doubtful accounts receivable
at August 31, 2005 of approximately $78,000 to be adequate.

Inventories

         Inventories  are stated at the lower of cost  (first-in,  first-out) or
estimated  market,  and consist of raw  materials,  work in process and finished
goods.  Market is determined  by  comparison  with recent sales or estimated net
realizable  value. Net realizable  value is based on management's  forecasts for
sales of the  Company's  products  and  services  in the  ensuing  years  and/or
consideration  and analysis of any change in the customer base,  product mix, or
other  factors that may impact the estimated net  realizable  value.  Should the
demand for the Company's products and/or services prove to be significantly less
than  anticipated,  the ultimate  realizable value of the Company's  inventories
could  be  substantially  less  than  reflected  in the  accompanying  condensed
consolidated balance sheet.

Property and Equipment

         Property and  equipment are stated at cost,  and are being  depreciated
using the  straight-line  method over the estimated  useful lives of the assets,
which generally range between three and seven years.  Leasehold improvements are
amortized  on a  straight-line  basis over the shorter of the  estimated  useful
lives of the assets or the remaining  lease terms.  Maintenance  and repairs are
charged  to  expense as  incurred.  Significant  renewals  and  betterments  are
capitalized.  At the time of  retirement,  other  disposition  of  property  and
equipment or termination of a lease,  the cost and  accumulated  depreciation or
amortization  are removed from the accounts  and any  resulting  gain or loss is
reflected in results of operations.

Goodwill and Other Intangible Assets

         Statement of Financial  Accounting Standard ("SFAS") No. 142, "Goodwill
and Other Intangible Assets",  addresses how intangible assets that are acquired
individually  or with a group of other assets should be accounted for upon their
acquisition  and after  they have been  initially  recognized  in the  financial
statements.  SFAS No. 142 requires  that  goodwill and  identifiable  intangible

                                      F-7

<PAGE>
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

assets that have indefinite lives not be amortized but rather be tested at least
annually for impairment,  and intangible assets that have finite useful lives be
amortized  over their  estimated  useful lives.  SFAS No. 142 provides  specific
guidance for testing  goodwill and intangible  assets that will not be amortized
for impairment,  and expands the disclosure requirements about intangible assets
in the years subsequent to their acquisition.

         The  principal  effect of SFAS No.  142 on the  Company's  accompanying
financial statements is that goodwill is not required to be amortized.

         For additional  information,  see the discussion in "Long-Lived Assets"
immediately below.

Long-Lived Assets

         SFAS No. 144,  "Accounting for the Impairment of Long-Lived  Assets and
for  Long-Lived  Assets to be Disposed of" addresses  financial  accounting  and
reporting for the impairment or disposal of long-lived assets. SFAS 144 requires
that long-lived assets be reviewed for impairment  whenever events or changes in
circumstances indicate that their carrying amount may not be recoverable. If the
cost  basis  of  a  long-lived  asset  is  greater  than  the  projected  future
undiscounted  net cash flows from such asset,  an impairment loss is recognized.
Impairment losses are calculated as the difference  between the cost basis of an
asset and its estimated fair value.

         As  of  August  31,  2005,  management  has  determined  that  no  such
impairment indicators exist and therefore,  no adjustments have been made to the
carrying values of long-lived assets. There can be no assurance,  however,  that
market  conditions  will not change or demand  for the  Company's  services  and
products will continue which could result in impairment of long-lived  assets in
the future.

Revenue Recognition

         The Company's  revenues are recorded in  accordance  with the SEC Staff
Accounting  Bulletin  No. 104,  "Revenue  Recognition."  The Company  recognizes
revenue  when  persuasive  evidence  of  an  arrangement  exists,  delivery  has
occurred,  the fee is fixed or determinable,  and  collectibility  is reasonably
assured.  In instances where final acceptance of the product is specified by the
customer or is uncertain, revenue is deferred until all acceptance criteria have
been met.  Activation  fees are  deferred  and  recognized  over the life of the
contractual customer relationship.

         When the ultimate  outcome of a transaction  is  uncertain,  revenue is
recognized only to the extent that costs are recoverable from our customer. When
the outcome of a qualifying  transaction  involving the sale of products  and/or
the rendering of services can be estimated reliably, revenue associated with the
transaction  is  recognized  by  reference  to the  stage of  completion  of the
transaction.  The stage of completion is estimated by whichever of the following
methods is  considered  most  indicative  of the physical  completion  under the
circumstances  of the  specific  transaction:  a survey  of the work  performed,
services  completed as a percentage of total services required by the agreement,
or costs  incurred to date as a percentage of the most recent  estimate of total
costs to be incurred  under the related  contract  or other  agreement.  Amounts
which are  billable  under  the terms of the  contract  may not  reflect  earned
revenue under this accounting policy.  Thus, amounts invoiced that have not been
earned are reported as a liability in the Company's consolidated balance sheet.

         Contracts and customer  purchase orders are generally used to determine
the existence of an  arrangement.  Shipping  documents (and customer  acceptance
criteria,  when  applicable) are used to verify  delivery.  The Company assesses
whether the fee is fixed or determinable  based on the payment terms  associated
with the  transaction  and  whether  the  sales  price is  subject  to refund or
adjustment.  The Company assesses  collectibility  based primarily on the credit
worthiness of the customer as determined by credit checks and analysis,  as well
as the customer's payment history.

         The Company's orders are generally shipped  free-on-board  destination,
which means that such orders are not  recognized as revenue until the product is
delivered and title has transferred to the buyer. Free-on-board destination also
means that the Company  bears all costs and risks of loss or damage to the goods
prior to their delivery.

         Revenue from  distributors  and resellers is recognized  upon delivery,
assuming  that all  other  criteria  for  revenue  recognition  have  been  met.
Distributors and resellers do not have the right of return.

         Customer  incentive  bonuses  and  other   consideration   received  or
receivable  directly  from a vendor for which the Company acts as a reseller are
accounted for as a reduction in the price of the vendor's  products or services.
Where such incentive is pursuant to a binding  arrangement,  the amount received
or receivable  is deferred and amortized on a systematic  basis over the life of
the arrangement.

                                      F-8

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

         The Company is accounting for the government contract described in Note
9 under AICPA  Statement of Position  81-1,  using the  percentage-of-completion
method.  The Company generally  measures progress toward completion based on the
cost incurred to date as a percentage of  management's  most recent  estimate of
total contract cost. Product delivery and installation are separate deliverables
under the terms of the contract, and the related revenue is not recognized until
the necessary activities have been completed.

Services Revenue

         In our Geomatics segment,  we provide technical support and training on
using the equipment sold as well as remedial service on the hardware through our
factory trained electronic  workshop.  Ongoing technical support of our products
is essential in  maintaining  our customer  base and is considered a competitive
advantage,  but does not provide a revenue stream for the Company.  We do charge
customers  for specific  training  and  servicing of  equipment;  however,  this
revenue is not material.

         Our Telematics  segment has a technical team  responsible for effecting
installations and upgrades,  and training clients on installation and supporting
them  on  an  ongoing   basis.   We  do  not  earn   revenue  for   training  or
software/firmware  upgrades,  but we do  charge  for  non-warranty  repairs  and
installation; however, this revenue is not material.

Research and Development Costs

         Research and development costs relating to GPS positioning hardware and
software  systems  including  the GLP to be sold or otherwise  marketed that are
incurred before  technological  feasibility of the product has been  established
and after general  release of the product to customers are expensed as incurred.
The Company  incurred  approximately $1 million and $0.5 million of research and
development  expenses  during the six  months  ended  August 31,  2005 and 2004,
respectively.

         Management  believes that technological  feasibility is not established
until  a beta  version  of the  software  product  exists.  Historically,  costs
incurred  during the period from when a beta version is available  until general
release to the public have not been material.  Accordingly,  the Company has not
capitalized any computer software development costs.

Stock-Based Compensation

         The Company accounts for stock-based  compensation  issued to employees
using the intrinsic value based method prescribed by Accounting Principles Board
("APB") Opinion No. 25,  "Accounting for Stock issued to Employees," and related
interpretations. Under the intrinsic value based method, compensation expense is
the excess,  if any, of the estimated fair value of the underlying  stock on the
grant date or other  measurement  date over the amount an  employee  must pay to
acquire  the  stock.  Compensation  expense,  if any,  is  recognized  over  the
applicable service period, which is usually the vesting period.

         SFAS No.  123,  "Accounting  for  Stock-Based  Compensation,"  if fully
adopted,  changes the method of accounting for employee stock-based compensation
to the fair value based method.  For stock  options and warrants,  fair value is
estimated  using an option pricing model that takes into account the stock price
at the grant  date,  the  exercise  price,  the  expected  life of the option or
warrant,  estimated stock volatility and the annual rate of quarterly dividends.
Compensation  expense, if any, is recognized over the applicable service period,
which is usually the vesting period.

         Adoption of the accounting methodology of SFAS No. 123 is optional, and
the Company has elected to account for stock-based  employee  compensation using
APB No. 25;  however,  pro forma  disclosures  as if the Company had adopted the
cost recognition  requirement of SFAS No. 123 are required to be presented.  For
stock-based  compensation  issued to  non-employees,  the Company  uses the fair
value method of accounting under the provisions of SFAS No. 123.

         Financial  Accounting  Standards Board ("FASB")  Interpretation  No. 44
("FIN 44"),  "Accounting for Certain Transactions  Involving Stock Compensation,
an  Interpretation  of APB 25," clarifies the  application of APB No. 25 for (a)
the definition of employee for purposes of applying APB No. 25, (b) the criteria
for  determining  whether a stock option plan  qualifies  as a  non-compensatory
plan, (c) the accounting  consequence of various modifications to the terms of a
previously  fixed stock option or award,  and (d) the accounting for an exchange
of stock compensation awards in a business combination. Management believes that
the Company accounts for transactions involving stock compensation in accordance
with FIN 44.

         SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure,  an  amendment  of SFAS No. 123,"  provides  alternative  methods of
transition  for a voluntary  change to the fair value based method of accounting
for  stock-based  employee  compensation.

                                      F-9

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

In addition,  SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to
require  prominent  disclosure in both annual and interim  financial  statements
about the method of accounting for  stock-based  employee  compensation  and the
effect of the method  used on reported  results.  At August 31, 2005 the Company
had one stock-based  employee  compensation  plan, which is described in Note 6.
The following table illustrates the effect on net loss and loss per common share
for the three months and six months ended August 31, 2005, as if the Company had
applied  the  fair  value  recognition  provisions  of  SFAS  No.  123  for  its
stock-based employee compensation plan.

<TABLE>
<CAPTION>
                                          Three Months Ended  Three Months Ended  Six Months Ended    Six Months Ended
                                            August 31, 2005     August 31, 2004    August 31, 2005     August 31, 2004
                                            --------------------------------------------------------------------------
<S>                                          <C>                 <C>                 <C>               <C>
Net (loss) as reported                       $  (2,555,396)      $    (910,195)      $(5,339,130)      $  (1,938,210)

Stock based compensation, net of tax                    --                  --           (59,767)                 --
                                             -------------       -------------       -----------       -------------
Pro forma net (loss)                         $  (2,555,396)      $    (910,195)      $(5,398,897)      $  (1,938,210)
                                             -------------       -------------       -----------       -------------

Basic and diluted (loss) per common share:

As reported*                                  $      (0.21)      $      (0.12)      $     (0.44)      $       (0.28)
                                             =============       =============       ===========       =============
Pro forma                                    $       (0.21)      $      (0.12)      $     (0.45)      $       (0.28)
                                             =============       =============       ===========       =============
* Restated for the August 2004 periods

</TABLE>

The  assumptions  used in the Black Scholes  option  pricing model for the above
table were as follows:

            Risk-free interest rate                        3%
            Estimated volatility                         140%
            Expected life (years)                           3
            Expected dividend yield                        --

         The above pro forma  effect  of  applying  SFAS 123 is not  necessarily
representative of the impact on the results of operations for future years.

Recently Issued Accounting Pronouncements

         In  the  opinion  of   management,   there  were  not  any   accounting
pronouncements  issued by the FASB (including its Emerging Issues Task Force, or
"EITF"),  the SEC or the American  Institute of Certified Public  Accountants or
"AICPA" since the June 14, 2005 filing of the Company's February 28, 2005 annual
report  on Form  10-KSB  that are  expected  to have a  material  effect  on the
Company's future consolidated financial statements.

3. INVENTORY

         Inventories consisted of the following as of August 31, 2005:

                     U.S.     South Africa    Europe        Asia         Total
                  ----------   ----------   ----------   ----------   ----------
Raw materials     $       --   $  535,039   $       --   $       --   $  535,039
Work in progress          --      522,100           --           --      522,100
Finished goods        18,775    1,958,635       53,116      305,040    2,335,566
                  ----------   ----------   ----------   ----------   ----------
       Totals     $   18,775   $3,015,774   $   53,116   $  305,040   $3,392,705
                  ==========   ==========   ==========   ==========   ==========

                                      F-10

<PAGE>
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

4.  NOTES PAYABLE TO AND ADVANCES FROM STOCKHOLDERS

         In September  2004,  Astrata Group entered into a series of agreements,
pursuant to which a stockholder (who then beneficially owned  approximately 5.5%
of the Company's  outstanding  common stock) lent $1.5 million to Astrata Group,
as an unsecured note payable.  Under the amended loan agreement described in the
following paragraph, the principal is due upon fifteen days' written demand, but
no later  than  June  30,  2005.  Interest  at a fixed  rate of 15%,  compounded
annually,  is due and payable  concurrently with the principal.  The outstanding
balance of this demand note was $1,500,000 as of August 31, 2005 and is included
in notes payable to  stockholders  in the  accompanying  condensed  consolidated
balance sheet.  The transaction  described above  constituted an exempt offering
under Rule 506 of Regulation D to a single accredited investor. The note was not
paid on the due date, nor has demand for payment been made by the holder. We are
currently negotiating new terms with the holder.

         In November 2004, with  retroactive  effect to the date of the original
borrowing, Astrata Group and the holder amended the promissory note described in
the  preceding  paragraph.  Subject to an  earlier  demand  for  repayment,  the
creditor  was  granted  the option to convert  any or all of the  principal  and
interest  into shares of the  Company's  common  stock at an initial  conversion
price of $5.00, subject to certain adjustments and anti-dilution provisions. The
holder's conversion  privilege expires when the Company has privately issued its
common stock for an aggregate of at least $10 million.  In connection  with such
amendment,  the Company also  granted  warrants  (which  vested and become fully
exercisable  on the grant date) to the holder to purchase up to 32,000 shares of
the Company's common stock with an exercise price of $5.00 per share.

         In October 2004,  Astrata  Group entered into an agreement  pursuant to
which a stockholder  agreed to lend $600,000 to Astrata  Group,  as an unsecured
credit facility. The note accrues interest at 3% above the U.S. prime rate (6.5%
at August 31, 2005).  Principal and accrued  interest were due by June 30, 2005.
The outstanding  balance is approximately  $351,000 as of August 31, 2005 and is
included  in  notes  payable  to  stockholders  in  the  accompanying  condensed
consolidated  balance sheet.  The original note of $151,000 was not paid on June
30, 2005; and along with  additional  funds of $200,000 was negotiated to become
due and  payable  on  September  30,  2005.  We have not  paid  the  notes as of
September 30, 2005. We are currently negotiating new terms with the holder.

         In November 2004,  Astrata Group received an unsecured  advance from an
officer/stockholder  in the amount of $42,781.  This advance accrues interest at
the London  Inter-bank  Offered Rate ("LIBOR") (3.7% at August 31, 2005) plus 3%
and  had an  original  maturity  date  of  March  1,  2005  with  no  prepayment
restrictions.  The maturity  date was extended to June 30, 2005 and has recently
become a demand note. The outstanding balance of this demand note was $42,781 as
of  August  31,  2005 and is  included  in  advances  from  stockholders  in the
accompanying condensed consolidated balance sheet.

         In December 2004, Astrata Group sold a $384,000 convertible demand note
to one of its stockholders,  who then beneficially owned approximately 6% of the
Company's  outstanding  common stock and had previously  lent Astrata Group $1.5
million  on an  unsecured  basis (see the first  paragraph  of this  Note).  The
holder's  conversion  privilege  expires when Astrata Group has privately issued
its common stock for an aggregate of at least $10 million.  The principal is due
upon fifteen days' written demand, but no later than June 30, 2005.  Interest at
a fixed rate of 15%, compounded  annually,  is due and payable concurrently with
the principal.  The  outstanding  balance of this note was $384,000 as of August
31, 2005 and is included in notes payable to  stockholders  in the  accompanying
condensed consolidated balance sheet The transaction described in this paragraph
constituted  an exempt  offering under Rule 506 of Regulation D to an accredited
investor. The note was not paid on the due date, nor was demand for payment made
by the holder. We are currently negotiating new terms with the holder.

         During the quarter  ended May 31, 2005, a director of the Company,  two
of its executive  officers,  and a director of two wholly-owned  subsidiaries of
the Company  provided  unsecured  short-term  loans to four  subsidiaries of the
Company totaling $323,597.  Of this amount, loans of approximately  $157,308 and
$50,000  were due on  August  31,  2005 and June  30,  2005,  respectively;  the
remaining loans do not have a scheduled due date at this time. The $157,308 loan
bears  interest at LIBOR plus 3%. The total  borrowings  also  include a loan of
$116,289,  which  bears  interest at 11% per annum.  The other  $50,000 of loans
described in the first sentence of this paragraph accrues interest at LIBOR plus
3%. The total  outstanding  balance of the notes was  $323,597  as of August 31,
2005 and is included in advances from stockholders in the accompanying condensed
consolidated  balance sheet. The $157,308 and $50,000 advances due on August 31,
2005 and June 30, 2005, respectively, have not been paid and have been converted
to demand notes with all of the other terms remaining the same.

                                      F-11

<PAGE>
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

5. OTHER DEBT TRANSACTIONS

Lines of Credit

         Astrata  SA has  secured a line of credit  for use in its South  Africa
operations.  The line of credit is secured by certain trade accounts  receivable
and allows for funding up to 70% of the outstanding accounts receivable accepted
by the  lender  with a maximum of  R10,000,000  (approximately  $1.5  million at
August 31, 2005).  Interest on the outstanding balance is charged at the current
prime  rate in South  Africa  (10.5% as of August  31,  2005).  The  outstanding
balance is approximately  $1.4 million as of August 31, 2005, and is included in
lines of credit in the accompanying condensed consolidated balance sheet.

         In  June  2005,  Astrata  SA  obtained  a  R7,000,000  line  of  credit
(approximately  $1 million as of August 31, 2005) with a South  African  finance
company.  This revolving facility is repayable within sixty days of funding with
interest at 2% above the South African prime rate plus a 3% fee on each advance,
and is secured by subordination of certain  intercompany  liabilities of Astrata
SA and its subsidiary,  and a bond secured by certain assets (up to R12,000,000)
of  the  Company's  South  African  subsidiaries.  The  outstanding  balance  is
approximately  $0.9 million as of August 31,  2005,  and is included in lines of
credit in the accompanying condensed consolidated balance sheet.

Bridge Loan

         On February 15, 2005,  the Company  secured a bridge loan of $1,500,000
for use in its world wide operations.  The principal balance,  together with all
accrued  interest at the rate of nine percent per annum,  was due on the earlier
of (i) June 15, 2005,  (ii) the date on which the Company had  privately  issued
shares of common stock for an aggregate of not less than five million dollars in
a single  offering  or a series of  offerings,  or (iii) the  occurrence  of any
default event. The Company repaid this obligation in full on April 26, 2005.

         In connection with the bridge loan, the Company issued 15,000 shares of
its common stock for financing charges. Such shares were valued at approximately
$96,000  (estimated  to be the  fair  value  based on the  trading  price on the
issuance date).  Accordingly,  the Company recorded deferred  financing costs of
approximately  $96,000 and common stock and additional paid-in capital of $2 and
$95,623,  respectively.  The deferred financing cost was amortized over the life
of the note  (considering  that it had an early  maturity  of  April  26,  2005)
resulting  in expense of  approximately  $64,000 for the  quarter  ended May 31,
2005,  which is  included  in  interest  expense in the  accompanying  condensed
consolidated statements of operations.

         In February 2005, the Company issued 150,000 five-year  warrants,  each
to purchase  one share of its common  stock to the  bridge-loan  creditors at an
exercise  price of $5.00.  The warrants  vested and became fully  exercisable on
their  issuance   dates.   The  Company  also  provided   certain   "piggy-back"
registration rights for the 15,000 shares (see the preceding  paragraph) and the
shares underlying the warrants for a period not to exceed five years, and agreed
to  file  a  registration  statement  with  the  SEC  covering  the  registrable
securities  on or  before  April  2005.  The  Company  is  not  subject  to  any
contractual  penalties if such registration  statement is not declared effective
by the SEC by any specific  date.  The  transaction  described in this paragraph
constituted  an exempt  offering  under Rule 506 of  Regulation D to  accredited
investors.

         In  accordance  with EITF Issue No.  88-9 and APB  Opinion  No. 14, the
Company  allocated a portion of the  $1,500,000  loan  proceeds to the  warrants
issued.  The amount allocated was approximately  $196,000,  which was originally
recorded as additional paid-in capital and a debt issue discount. The debt issue
discount was  amortized on a  straight-line  basis to interest  expense over the
life of the loan (considering its early maturity of April 26, 2005).  During the
quarter ended May 31, 2005,  amortization  of the remaining  debt issue discount
resulted  in expense of  approximately  $131,000,  which is included in interest
expense in the accompanying condensed consolidated statement of operations.

         On June 27, 2005, the Company filed the registration statement required
by the bridge loan  transaction  and by certain  other  transactions,  including
those  described in the "Issuance of Common Stock and Other Equity  Instruments"
section of Note 6. As of October 11, 2005, such  registration  statement had not
been declared effective by the SEC.

6. EQUITY TRANSACTIONS

Issuance of Common Stock and Other Equity Instruments

         In March 2005,  the Company issued 12,500 shares of its common stock in
exchange  for  services  provided  by a  consultant.  Such shares were valued at
$74,375  (estimated  to be the  fair  value  based on the  trading  price on the
issuance  date).  The  transaction  described in this  paragraph  constituted an
exempt offering under Section 4(2) of the Securities Act of 1933, as amended.

                                      F-12

<PAGE>
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

         In  April  2005,  the  Company  entered  into a series  of  agreements,
pursuant to which it sold 950,142 units of its  securities at $3.50 per unit, or
an aggregate of $2,893,497 in net proceeds.  Each unit consisted of one share of
common stock and one five-year  warrant to purchase one share of common stock at
an exercise price of $3.50. The warrants vested and became fully  exercisable on
their  issuance   dates.   The  Company  also  provided   certain   "piggy-back"
registration  rights for the shares and the shares underlying the warrants for a
period  not to  exceed  five  years and  agreed  to file a re-sale  registration
statement  with the SEC covering the  registrable  securities  on or before June
2005. The Company is subject to certain contractual  penalties in the event that
such  registration  statement is not  declared  effective by the SEC by the date
specified in the related agreement. The transactions described in this paragraph
constituted  exempt  offerings  under  Rule 506 of  Regulation  D to  accredited
investors.

         In May 2005, the Company entered into a series of agreements,  pursuant
to which it sold  92,964  units of its  securities  at  $3.50  per  unit,  or an
aggregate  of  $283,374 in net  proceeds.  Each unit  consisted  of one share of
common stock and one five-year  warrant to purchase one share of common stock at
an exercise price of $3.50. The warrants vested and became fully  exercisable on
their  issuance   dates.   The  Company  also  provided   certain   "piggy-back"
registration  rights for the shares and the shares underlying the warrants for a
period  not to  exceed  five  years and  agreed  to file a re-sale  registration
statement  with the SEC covering the  registrable  securities  on or before June
2005. The Company is subject to certain contractual  penalties in the event that
such  registration  statement is not  declared  effective by the SEC by the date
specified in the related agreement. The transactions described in this paragraph
constituted  exempt  offerings  under  Rule 506 of  Regulation  D to  accredited
investors.

Stock Option Plan

         In December  2004,  the Board of Directors of the Company  approved the
2004  Equity  Incentive  Plan (the "2004  Plan").  The 2004 Plan is  intended to
provide a means by which selected employees, directors of and consultants to the
Company,  or its  affiliates,  could receive options to purchase common stock of
the Company,  and other equity  interests in the Company as more fully described
in the 2004 Plan.  The plan was  amended  on April 27,  2005,  providing  for an
aggregate of 2,400,000 shares of common stock to be issued as stock awards under
the 2004 Plan.

         On July 1, 2005, the Company filed a Registration Statement on Form S-8
to register the 2.4 million  shares  underlying the stock options that have been
or may be  granted  under the 2004  Plan.  Such  registration  statement  became
effective upon filing with the SEC.

7.  OTHER RELATED PARTY TRANSACTIONS

         The Company  currently leases facilities from an entity controlled by a
director  and  a  former  director  of a  Company  subsidiary  under  cancelable
operating  leases  expiring in 2007.  The annual  rent is subject to  adjustment
based on the terms of the  leases.  The  condensed  consolidated  statements  of
operations  include  expenses  from  these  operating  leases  of  approximately
$126,000  and  $69,000  for the six  months  ended  August  31,  2005 and  2004,
respectively.

8.  INVESTMENT IN AFFILIATE

         In October 2003,  Astrata SA entered into an agreement with  Barloworld
Equipment   (Pty)  Limited   ("Barloworld"),   the  exclusive   distributor  for
Caterpillar  Corporation in South Africa. Such agreement established a corporate
entity,  Barloworld Optron  Technologies (Pty) Limited ("BOT"),  of which 50% is
owned by each of Barloworld  and Astrata SA.  Barloworld's  core business is the
sale,  rental,  service and maintenance of new and used  Caterpillar  commercial
equipment and related parts in South Africa and certain other African countries.
The  principal  business  of BOT is the supply of products  and  services to the
mining industry in southern Africa.

         Since  Astrata SA does not own a majority  voting  interest  in BOT and
does not otherwise have a controlling  financial  interest therein,  the Company
accounts for its  investment in BOT using the equity method of  accounting.  BOT
has a September 30 fiscal year end.

                                      F-13

<PAGE>
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

         Condensed  unaudited  historical  financial  information  of  BOT as of
August  31,  2005 and for the three and six  months  ended  August  31,  2005 as
presented below:

                                  As of
                              August 31, 2005
                              ---------------
       Current assets            $745,175
       Other assets               113,423
       Payable to stockholders    459,799
       Other liabilties           299,240
       Equity                      99,560

                              Six Months Ended   Three Months Ended
                               August 31, 2005     August 31, 2005
                               ---------------   -----------------
       Sales                     $637,215           $449,764
       Cost of good sold          338,819            241,513
                                 --------           --------
       Gross margin               298,396            208,251
       Operating expenses         261,823            179,390
                                 --------           --------
       Operating income          $ 36,573           $ 28,861
                                 ========           ========
       Net earnings              $  7,338           $ 27,268
                                 ========           ========
       Equity distributions      $     --           $     --
                                 ========           ========

On August 15, 2005, the joint venture  partners  mutually agreed to dissolve BOT
for a value to be determined in the near future.

9. OTHER COMMITMENTS AND CONTINGENCIES

Legal Matters

         From time to time,  the  Company  may be  involved  in various  claims,
lawsuits,   disputes  with  third  parties,  actions  involving  allegations  of
discrimination or breach of contract actions incidental to the normal operations
of the business.  The Company is not currently  involved in any litigation which
management  believes  could  have a  material  adverse  effect on the  Company's
financial position or results of operations.

Operating Leases

         The  Company  occupies  facilities  under  operating  lease  agreements
expiring on various dates through  August 2014.  Certain  leases  include future
rental escalations and renewal options.  As of August 31, 2005, minimum payments
under operating  leases  approximated  the following for the fiscal years ending
February 28 listed below:

                              2007   $  375,000
                              2008      250,000
                              2009       89,000
                              2010       89,000
                              2011       89,000
                        Thereafter      304,000
                                     ----------
                                     $1,196,000
                                     ==========

Rent expense approximated  $409,000 and $187,000 for the six months ended August
31, 2005 and 2004, respectively.

                                      F-14

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

Government Contract

         In December 2004, a subsidiary of the Company was awarded a fixed-price
contract to provide the Singapore  government's Civil Defence Force (the "SCDF")
with software and hardware in an integrated  control system  designed to provide
real-time  tracking (the  "System") of vehicles that are authorized to transport
hazardous  materials  within the country.  The contract amount  approximates 2.0
million  Singapore  dollars,  or about $1.2  million as of August 31,  2005 (the
"Contract").  During the quarter ended August 31, 2005,  the Company  recognized
revenue on the Contract of  approximately  $0.3 million,  and for the six months
ended August 31, 2005 we recognized approximately $0.5 million.

         In the opinion of  management,  the Contract was completed on or before
September 30, 2005 (the required contractual completion date) in accordance with
its terms.  Thus, it is not presently expected that the Company will be assessed
any liquidated damages (which are limited to 10% of the Contract price) for late
completion.  SCDF has the right to withhold the final 10% of the Contract  price
until approximately  sixteen months after the System has successfully  completed
certain acceptance tests specified in the Contract.  The Company is obligated to
warrant the System for a one-year period beginning  approximately fourteen weeks
after the System has passed all of the aforementioned acceptance tests. The time
frames  described in the preceding two  sentences  assume that the  "performance
guarantee  period"  (as  defined)  is not  extended  beyond  the  original  time
specified in the Contract.

         If any breach of the Contract is not cured within thirty  calendar days
or such other period as may be approved by SCDF,  the Contract can be terminated
at any time prior to the defined acceptance date. Under these circumstances, the
Company would be required to refund all payments  received that do not relate to
items  which have been  delivered  to and  accepted  by SCDF.  Any or all of the
Contract may also be terminated at will by SCDF, in which case the Company would
be entitled to submit a claim for compensation  (including approved direct costs
relating to the settlement of any agreements with Company vendors which provided
goods or services  relating to the Contract) for work completed prior to receipt
of the termination notice.

         SCDF  also has the  right to audit  all of the  Company's  subsidiaries
which provide goods or services under the Contract in order to ensure that there
is appropriate internal control and compliance with the terms of the Contract.

Employment Agreements

         With the  approval  of the Board of  Directors,  on October 7, 2005 the
Company  entered into employment  agreements with its Executive  Chairman of the
Board  ("Harrison"),  Chief Executive  Officer  ("Venter"),  and Chief Financial
Officer  ("Euler").  Under the terms of such  agreements,  these  employees  are
entitled to annual  salaries as follows:  Harrison:  (British  pounds)  140,000;
Venter: (British pounds) 110,000; and Euler: $215,000.  These agreements provide
for an annual  performance  bonus of up to 100% of the  employee's  base salary,
subject to approval by the Compensation Committee of the Board of Directors. The
Compensation  Committee was  established by the Board of Directors on October 7,
2005.

         The above employment agreements may be terminated by the Company at any
time without  cause.  Under such  circumstances,  each employee is entitled to a
severance payment equal to twenty four months of his salary. Harrison and Venter
may  terminate  their  employment  agreement at any time upon 180 days'  written
notice.  Additionally,  under the terms of the employment  agreements  described
above,  each employee is entitled to certain  benefits  (including paid vacation
and health care), and is eligible to receive incentive equity grants approved by
the  Compensation  Committee.  In  the  event  the  employment  relationship  is
terminated within six months of a change-of-control  transaction,  each employee
will be entitled to a payment equal to two years' salary.


10.  SEGMENT REPORTING AND GEOGRAPHIC INFORMATION

         The Company is operating in the following two reportable segments:

         Geomatics:  Products,  accessories and services related to the business
of measurement and setting out (i.e. Survey,  Mapping and Geographic Information
Systems)  and precise  position  monitoring  (such as scanning  excavations  and
industrial  plants).  Also included within this segment are the machine guidance
products,   accessories  and  services  related  to  the  business  of  guiding,
controlling  and  monitoring  machinery,  including  mobile  machinery  such  as
graders,  dump  trucks and drills as well as  agricultural  products  which have
tractor and crop-spraying guidance in them.


                                      F-15

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

         Telematics:  Products, accessories and services related to the business
of remote  monitoring of assets  (including  track-and-trace)  whereby position,
attributes, status and communication are involved.

         Total  assets,  revenues  and gross  profit  for each of the  Company's
reportable  segments in addition to a reconciliation  of the gross profit of the
two  segments  to  the  Company's  consolidated  statements  of  operations  are
presented below:

For the three months ended August 31, 2005:

                                 Geomatics      Telematics     Consolidated
                               ------------    ------------    ------------
Total assets                   $  9,525,938    $  4,451,505    $ 13,977,443
                               ============    ============    ============
Revenue:
   Outsiders                   $  3,265,404    $  1,525,935    $  4,791,339
   Company subsidiaries              67,307         767,539         834,846
                               ------------    ------------    ------------
Total segment revenues         $  3,332,711    $  2,293,474    $  5,626,185
   Intercompany eliminations        (67,307)       (767,539)       (834,846)
                               ------------    ------------    ------------
Consolidated revenues          $  3,265,404    $  1,525,935    $  4,791,339
                               ============    ============    ============
Gross profit                      1,027,641         691,853       1,719,494
Operating expenses                                               (4,082,573)
                                                               ------------
Operating loss                                                 $ (2,363,079)
                                                               ============

For the three months ended August 31, 2004:

                                 Geomatics      Telematics     Consolidated
                                -----------    -----------     -----------
Total assets                    $ 6,972,377    $ 1,661,062     $ 8,633,439
                                ===========    ===========     ===========
Revenue:
   Outsiders                    $ 2,965,223    $   706,419     $ 3,671,642
   Company subsidiaries              53,498         14,879          68,377
                                -----------    -----------     -----------
Total segment revenues          $ 3,018,721    $   721,298     $ 3,740,019
   Intercompany eliminations        (53,498)       (14,879)        (68,377)
                                -----------    -----------     -----------
Consolidated revenues           $ 2,965,223    $   706,419     $ 3,671,642
                                ===========    ===========     ===========
Gross profit                      1,036,048        381,474       1,417,522
Operating expenses                                              (2,402,100)
                                                               -----------
Operating loss                                                 $  (984,578)
                                                               ===========

                                      F-16

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

For the six months ended August 31, 2005:

                                 Geomatics       Telematics     Consolidated
                                ------------    ------------    ------------
Total assets                    $  9,763,605    $  4,213,838    $ 13,977,443
                                ============    ============    ============
Revenue:
   Outsiders                    $  5,788,472    $  2,498,225    $  8,286,697
   Company subsidiaries              192,778       1,000,398       1,193,176
                                ------------    ------------    ------------
Total segment revenues          $  5,981,250    $  3,498,623    $  9,479,873
   Intercompany eliminiations       (192,778)     (1,000,398)     (1,193,176)
                                ------------    ------------    ------------
Consolidated revenues           $  5,788,472    $  2,498,225    $  8,286,697
                                ============    ============    ============
Gross profit                       2,084,898         993,624       3,078,522
Operating expenses                                                (7,669,198)
                                                                ------------
Operating loss                                                  $ (4,590,676)
                                                                ============

For the six months ended August 31, 2004:

                                 Geomatics      Telematics      Consolidated
                                -----------     -----------     -----------
Total assets                    $ 5,352,732     $ 3,280,707     $ 8,633,439
                                ===========     ===========     ===========
Revenue:
   Outsiders                    $ 5,278,034     $ 1,659,287     $ 6,937,321
   Company subsidiaries              53,498          14,879          68,377
                                -----------     -----------     -----------
Total segment revenues          $ 5,331,532     $ 1,674,166     $ 7,005,698
   Intercompany eliminiations       (53,498)        (14,879)        (68,377)
                                -----------     -----------     -----------
Consolidated revenues           $ 5,278,034     $ 1,659,287     $ 6,937,321
                                ===========     ===========     ===========
Gross profit                      1,892,144         871,036       2,763,180
Operating expenses                                               (4,849,360)
                                                                -----------
Operating loss                                                  $(2,086,180)
                                                                ===========

                                      F-17

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

Geographic Information

         Certain condensed  geographic  information is presented below including
property and equipment, revenues, gross profit and operating loss:

For the three months ended August 31, 2005:

<TABLE>
<CAPTION>
                 Property and                   Gross       Operating     Operating
                Equipment, net   Revenue        Profit      Expenses        Loss
                 -----------   -----------   -----------   -----------   -----------
<S>              <C>           <C>           <C>           <C>           <C>
Asia             $   416,439   $   758,616   $   158,467   $   395,911   $  (237,444)
Africa               677,764     3,836,708     1,556,214     2,015,537      (459,323)
United States          4,106            --            --       738,265      (738,265)
Western Europe       341,201       196,016         4,813       932,860      (928,047)
                 -----------   -----------   -----------   -----------   -----------
Total            $ 1,439,510   $ 4,791,340   $ 1,719,494   $ 4,082,573   $(2,363,079)
                 ===========   ===========   ===========   ===========   ===========
</TABLE>

For the three months ended August 31, 2004:

<TABLE>
<CAPTION>
                Property and                   Gross        Operating     Operating
               Equipment, net    Revenue       Profit        Expenses       Loss
                 ----------    ----------    ----------     ----------   ----------
<S>              <C>           <C>           <C>            <C>          <C>
Asia             $  108,764    $      658    $      259     $  299,866   $ (299,607)
Africa              426,387     3,670,984     1,417,263      1,669,180     (251,917)
United States         6,452            --            --        172,001     (172,001)
Western Europe       85,793            --            --        261,053     (261,053)
                 ----------    ----------    ----------     ----------   ----------
Total            $  627,396    $3,671,642    $1,417,522     $2,402,100   $ (984,578)
                 ==========    ==========    ==========     ==========   ==========
</TABLE>

For the six months ended August 31, 2005:

<TABLE>
<CAPTION>
                Property and                   Gross        Operating     Operating
               Equipment, net    Revenue       Profit        Expenses       Loss
                 -----------   -----------   -----------   -----------   -----------
<S>              <C>           <C>           <C>            <C>          <C>
Asia             $   416,439   $ 1,208,722   $   359,311   $   970,720   $  (611,409)
Africa               677,764     6,876,828     2,716,531     3,617,365      (900,834)
United States          4,106            --            --     1,214,614    (1,214,614)
Western Europe       341,201       201,148         2,680     1,866,499    (1,863,819)
                 -----------   -----------   -----------   -----------   -----------
Total            $ 1,439,510   $ 8,286,698   $ 3,078,522   $ 7,669,198   $(4,590,676)
                 ===========   ===========   ===========   ===========   ===========
</TABLE>

For the six months ended August 31, 2004:

<TABLE>
<CAPTION>
                Property and                   Gross        Operating     Operating
               Equipment, net    Revenue       Profit        Expenses       Loss
                 -----------   -----------   -----------   -----------   -----------
<S>              <C>           <C>           <C>            <C>          <C>
Asia             $   108,764   $    11,868   $    11,479   $   484,517   $  (473,038)
Africa               426,387     6,925,453     2,751,701     3,023,507      (271,806)
United States          6,452            --            --       950,149      (950,149)
Western Europe        85,793            --            --       391,187      (391,187)
                 -----------   -----------   -----------   -----------   -----------
Total            $   627,396   $ 6,937,321   $ 2,763,180   $ 4,849,360   $(2,086,180)
                 ===========   ===========   ===========   ===========   ===========
</TABLE>

See Note 3 for geographic information on inventory.

                                      F-18

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

11.  INCOME/LOSS PER COMMON SHARE

         The following is a reconciliation of the numerators and denominators of
the basic and diluted  loss per common share  computations  for the three months
and six months ended August 31, 2005 and 2004:

<TABLE>
<CAPTION>
                               Three Months Ended      Three Months Ended      Six Months Ended       Six Months Ended
                                August 31, 2005         August 31, 2004         August 31, 2005        August 31, 2004
                               ---------------------------------------------------------------------------------------
<S>                              <C>                    <C>                     <C>                      <C>
Numerator for basic and
diluted loss
per common share:

    Net loss attributed
    to common stockholders       $ (2,555,396)           $   (910,195)           $ (5,339,130)           $ (1,938,210)

Denominator for basic and
diluted loss per common share:

    Weighted average number of
    common shares outstanding*     11,999,048               7,650,000              11,999,048               6,962,500


Basic and diluted loss           ------------            ------------            ------------            ------------
per common share*                $      (0.21)           $      (0.12)           $      (0.44)           $      (0.28)
                                 ============            ============            ============            ============

* As restated for the three and six-month periods ended August 31, 2004.

</TABLE>

12.  SUBSEQUENT EVENTS

Issuance of Common Stock

         In September 2005, the Company issued 93,178 shares of its common stock
in exchange for  services  provided by  consultants.  Such shares were valued at
$128,453  (estimated  to be the fair  value  based on the  trading  price on the
issuance  date with a 15%  discount  from the  market  price).  The  transaction
described in this paragraph constituted an exempt offering under Section 4(2) of
the Securities Act of 1933, as amended.

         In October 2005,  the Company  issued 90,724 shares of its common stock
in exchange for  services  provided by  consultants.  Such shares were valued at
$198,750  (estimated  to be the fair  value  based on the  trading  price on the
issuance  date with a 15%  discount  from the  market  price).  The  transaction
described in this paragraph constituted an exempt offering under Section 4(2) of
the Securities Act of 1933, as amended.

         In October  2005,  the Company also issued  50,000 shares of its common
stock to a newly appointed,  non-management  director in consideration  for such
director's services. Such shares are valued at $51,000 (estimated to be the fair
value based on the trading  price on the issuance  date with a 15% discount from
the market  price).  These  shares  will be earned  over a  two-year  period and
recorded as compensation  expense during such period. The transaction  described
in this paragraph  constituted an exempt offering under Rule 506 of Regulation D
to accredited investors.


                                      F-19

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

October 2005 Debt Financing Transaction

         In October 2005, the Company  completed a private  placement  financing
transaction  by  issuing  secured  convertible  notes  payable  to  a  group  of
accredited  investors in the total amount of  $2,170,000.  The Company  received
$700,000  in cash when the  transaction  closed on  October  7,  2005,  and will
receive  the  remaining  net  proceeds  as  follows:  $500,000  when the related
registration  statement  (see below) is filed with the SEC,  and $550,000 on the
date such registration  statement is declared  effective by the SEC. These notes
payable,  which are due  September  2008,  are  convertible  into  shares of the
Company's common stock at any time at the holder's option at the lesser of $2.50
per share  (which is  subject  to  reduction  in the event of  certain  dilutive
issuances) or 60% of a defined  average  market price during the twenty  trading
days preceding any conversion notice.

         The  excess  of the  face  amount  of the  notes  payable  over the net
proceeds  principally  represents  interest at a rate of approximately  5.7% per
annum.  If such notes payable are not repaid when due, the annual  interest rate
will increases by an additional  15% per annum.  These notes payable are secured
by all of Astrata  Group's  property  and  equipment,  trade and other  accounts
receivable,  inventory,  general intangible assets (including but not limited to
all licenses, distributorship agreements, customer lists, goodwill, trade names,
patents and patent applications),  and all of Astrata Group's other intellectual
property including software code and related  documentation,  trade secrets, and
copyrights. There is no security in favor of the lenders at the level of Astrata
Group's  subsidiaries.  Such  notes  payable  are  also  collateralized  by  the
assignment of 900,000  shares of Astrata  Group's  common stock owned by certain
members of the Company's executive management team.

         In connection with the transaction  described  above,  the Company also
issued  five-year  warrants to  purchase a total of up to 280,000  shares of its
common stock at an initial exercise price of $3.00 per share; the exercise price
is  subject to  downward  adjustment.  Such  warrants  vested  and became  fully
exercisable  upon  issuance.  Concurrently  with the  Company's  receipt  of the
remaining  two  tranches of net  proceeds  under the secured  convertible  notes
payable, the Company will issue additional warrants to purchase a total of up to
an additional  420,000 shares of its common stock, for an aggregate  issuance of
warrants  to  purchase  up to 700,000  shares.  However,  the  exercise  of such
warrants  and/or the  conversion  of the related notes payable may not result in
beneficial  ownership by any creditor and its  affiliates  of more than 4.99% of
the Company's then outstanding shares of common stock.

         The  creditors/warrant  holders in the above  transaction  have certain
registration  rights for the common stock  underlying  both the warrants and the
convertible debt. The related  registration  rights agreement includes financial
penalties if the Company fails to meet the registration  statement filing and/or
effectiveness  deadline dates, which are November 21, 2005 and January 16, 2006,
respectively.

Other Matters

         Because of the October 2005 financing  transaction described above, the
exercise prices of certain warrants  outstanding at February 28, 2005 and all of
the warrants issued in April/May 2005 will be retroactively  reduced pursuant to
contractual requirements.

         Because  of the same  transaction,  the  conversion  prices of the $1.5
million  convertible note payable to a stockholder  issued in September 2004 (as
amended in November 2004) and a $384,000  convertible note payable issued to the
same  stockholder  in December 2004 will be  retroactively  reduced  pursuant to
contractual requirements.

                                      F-20

<PAGE>

                  ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2005 AND 2004
                                   (UNAUDITED)

13. RESTATEMENT OF CERTAIN UNAUDITED FINANCIAL STATEMENTS

August 31, 2004 Statement of Cash Flows

         It has come to the attention of management  that the computation of the
effect of foreign  currency  exchange rate changes on cash and cash  equivalents
for the six months ended August 31, 2004 was not in accordance with SFAS No. 95.
Accordingly, the Company's accompanying condensed consolidated statement of cash
flows  for  the  aforementioned  period  has  been  retroactively   adjusted  as
summarized below.

                                             As
                                          Prevously     Retroactive      As
                                          Reported      Adjustment     Restated
                                          ----------    -----------    --------
Net cash used in operating activities     ($214,480)     ($17,434)    ($231,914)
                                          ==========    ===========    ========

Net cash provided by financing activities  ($10,400)        ($202)     ($10,602)
                                          ==========    ===========    ========

Effect of foreign currency exchange rate
    changes on cash and cash equivalents   ($63,194)      $17,637      ($45,558)
                                          ==========    ===========    ========

         The  reclassification  adjustments  described  above do not  affect the
previously  reported  stockholder's  equity at August 31, 2004 or the results of
operations for the three or six-month periods then ended.

August 31, 2004 Statements of Operations

         Management has determined that the previously reported weighted average
common shares  outstanding for the three and six-month  periods ended August 31,
2004  were  not  correct.   As  explained  in  the  following   paragraph,   the
re-computation  of this weighted average increased the loss per common share for
the three  months  ended  August  31,  2004 from  $0.09 to $0.12 and for the six
months ended  August 31, 2004 from $0.19 to $0.28;  the  accompanying  condensed
consolidated  statements  of  operations  for those  periods have been  restated
accordingly.

         For the period  from the  beginning  of fiscal  2005 to the August 2004
merger date (see the "Organization" section of Note 1), the Company included the
legal  parent's  total common  shares  outstanding  as of the merger  date.  The
weighted  average  of  Cadogan's  outstanding  common  shares  adjusted  for the
exchange  ratio in the  transaction  and the legal  parent's total common shares
outstanding  as of the merger date have been  included  in the revised  weighted
average common shares  outstanding  during the three and six-month periods ended
August 31, 2004.

         The adjustment described in the preceding paragraph does not affect the
previously reported stockholder's equity at August 31, 2004 or the net loss for
the three or six-month periods then ended.

                                      F-21

<PAGE>


Item 2.  Management's Discussion and Analysis or Plan of Operation

Overview

         The  following  discussion  should  be read  in  conjunction  with  the
condensed unaudited  consolidated  financial statements and notes thereto of the
Company appearing elsewhere in this report. Such financial  statements have been
prepared  to reflect the  Company's  financial  position as of August 31,  2005,
together  with the  results of  operations  for the three and six  months  ended
August 31,  2005 and 2004,  and cash flows for the six months  ended  August 31,
2005 and 2004, respectively.

Forward-Looking Statements

         Historical  results  and trends  should not be taken as  indicative  of
future operations. Management's statements contained in this report that are not
historical facts are  forward-looking  statements  within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Actual results may differ
materially from those included in the  forward-looking  statements.  The Company
intends  such  forward-looking  statements  to be  covered  by  the  safe-harbor
provisions for  forward-looking  statements  contained in the Private Securities
Litigation  Reform Act of 1995,  and is including this statement for purposes of
complying with those safe-harbor provisions.  Forward-looking statements,  which
are based on certain  assumptions  and describe  future  plans,  strategies  and
expectations  of the Company,  are  generally  identifiable  by use of the words
"believe,"  "expect,"  "anticipate,"   "estimate,"  "project,"  "prospects,"  or
similar  expressions.  The  Company's  ability to predict  results or the actual
effect of future plans or  strategies  is  inherently  uncertain.  Factors which
could have a material  adverse affect on the operations and future  prospects of
the Company on a consolidated basis include,  but are not limited to: changes in
economic  conditions  generally in the countries in which the Company  operates,
legislative/regulatory  changes,  the political climate in the foreign countries
in which the Company  operates,  the  availability  of capital,  interest rates,
competition,  and U.S. generally accepted accounting principles. These risks and
uncertainties should be considered in evaluating  forward-looking statements and
undue reliance should not be placed on any such statements.  Further information
concerning the Company and its business; including additional factors that could
materially affect the Company's  financial  results,  are included herein and in
the Company's  other filings with the  Securities and Exchange  Commission  (the
"SEC").

Company Overview

         Astrata Group and its  subsidiaries are in the telematics and geomatics
sectors  of the  Global  Positioning  System  ("GPS")  industry.  The  Company's
expertise is focused on advanced  location-based  IT products and services  that
combine  positioning,  wireless  communications,  and information  technologies.
Astrata Group provides advanced positioning  products, as well as monitoring and
airtime   services   to   industrial,    commercial,    governmental   entities,
academic/research  institutions,  and  professional  customers  in a  number  of
markets including surveying, utility, construction, homeland security, military,
intelligence,  mining,  agriculture,  public safety, marine, and transportation.
Astrata Group leases  facilities which  accommodate the assembly,  testing,  and
research and  development  personnel  with  experience  in position and wireless
communication  technology GPS/GSM (Global System for Mobile  Telecommunications)
fleet management products to customers.

         Examples of our products and services include surveying instrumentation
using GPS and other augmenting technologies,  such as wireless communication and
lasers;  fleet  management  for  specialized  machines,  such  as  guidance  for
earth-moving   equipment;   positioning  and  IT  technology  for  remote  asset
management  and  telematics  products,  field  data  collection  equipment,  and
products  and airtime  communications  services  for high volume track and trace
applications.

         Positioning  technologies  employed  by Astrata  Group  include  laser,
optical and inertial  navigation systems.  Communication  techniques employed by
Astrata  Group  include  both public  networks  such as GSM cellular and private
networks  such  as  paging  or  point-to-point  private  wireless  networks  and
satellite communications.

         We believe that we add value to our  products and services  through the
development of proprietary  information  technologies,  such as applications and
software that allow the customer to make use of the positioning information in a
location of his choice.

         One of Astrata  Group's  predecessor  entities was founded in 1986 as a
reseller of Sokkia products, a Japanese  manufacturer of survey instruments.  In
1988-89,  the Company  integrated GPS products into its portfolio and became one
of the first  international  dealers of Trimble  Navigation Limited in 1989. The
Company  sells  geo-information  technology  ("Geo IT") products and services to
commercial customers in the mining, surveying, utility, government, agriculture,
oil and gas,  construction,  and  offshore  fleet  markets  often  in  demanding
environments. Astrata Group's products include proprietary products and services
as  well  as  products  from  Trimble   Navigation   Limited,   Nikon  Surveying
Instruments,  Itronix,  and Optech. In addition,  Astrata Group provides ongoing
communications  and IT services for its customers  with  comprehensive  service,
training, and technical assistance.

                                       1

<PAGE>

         As new  positioning and wireless  technologies  have been introduced in
recent years,  Astrata Group has grown by incorporating them into a product line
to meet the  expanding  market.  Astrata  Group  purchased a software  solutions
company  with   experience   in  systems   integration,   large-scale   database
applications and Internet technologies, which launched Astrata Group's web-based
communications  IT services for vehicle  tracking and monitoring and controlling
offshore and onshore fleets.

         The results have been organic growth and Astrata Group's  concentration
on two operating segments: 1) Geomatics and 2) Telematics.

Geomatics

         High  precision  surveying/positioning  instruments  are  required  for
surveying  and  construction  professionals,  the  mining  industry,  government
agencies,  utility  companies  and  municipalities.  We supply and support these
markets with current products and factory certified technicians. We offer a full
spectrum  of  after-sales  service  and  training  programs  that help build and
maintain long-term relationships with customers and suppliers.

         Astrata Group incorporates GPS positioning and critical performance and
monitoring  information  from field  equipment and personnel  into earth moving,
mining, and construction  machines to lower costs, boost productivity,  increase
profits, and improve remote site management and operational control. Products in
this  segment  automate  certain  functions  in such  machines  and apply to the
initial survey, earthmoving, and building phase of construction.

         This  segment  also  supports  our venture  with  Barloworld  Equipment
Company (Pty) Limited  ("Barloworld"),  the exclusive distributor of Caterpillar
Corporation in South Africa. In October 2003,  Astrata SA and Barloworld entered
into an agreement,  pursuant to which Barloworld Optron  Technologies  (Pty) Ltd
("BOT") was formed.  Astrata SA and Barloworld  each own 50% of BOT (see Note 8,
Investment  in  Affiliate to the  condensed  consolidated  financial  statements
included elsewhere herein).

         Astrata  Group  is the  sole  distributor  for  Trimble  Geomatics  and
Engineering equipment in Southern Africa.  Representative  products marketed and
sold by Astrata  Group and its  subsidiaries  include:  GPS Survey  Products and
related accessories;  Geographic Information System ("GIS") Mapping Products and
related accessories; Nikon Total Stations, Automatic Levels, Thedolites; Itronix
Products;  Ag Leader Products;  Chicago Steel  Accessories;  Garmin Handheld GPS
Units; and Optech..

         The Geomatics segment also includes products,  accessories and services
related to the business of measurement and setting out (i.e. Survey, Mapping and
GIS)  and  precise  position  monitoring  (such  as  scanning   excavations  and
industrial  plants).  Also included within this segment are the machine guidance
products,   accessories  and  services  related  to  the  business  of  guiding,
controlling  and  monitoring  machinery,  including  mobile  machinery  such  as
graders,  dump  trucks and drills as well as  agricultural  products  which have
tractor and crop-spraying guidance in them.

Telematics

         Telematics  products,  accessories  and  services  are  related  to the
business of remote  monitoring  of assets,  frequently  in real-time  (including
tracking and tracing) whereby position, attributes, status and communication are
involved.  Telematics  products  often focus on people and assets in hostile and
demanding  environments  such as  monitoring  hazardous  materials  for homeland
security  purposes.  This  segment  addresses  the market for fleet  management,
workforce management,  remote asset management and tracking,  meter reading, and
emergency   services  by  providing   hardware  for  GPS  information  and  data
collection,  as well as the  software  needed to  access  and  analyze  the data
through the  Internet.  Astrata Group  products  combine  positioning,  wireless
communications,   and  information   technology  and  add  measurable  value  to
location-based information.  The Company offers airtime to communicate data from
the vehicle or field location to the customer's  data center or provides  access
over the Internet to the data and  application  software.  This allows  critical
real-time  performance  and  monitoring  data to be  accessed  and  analyzed  by
supervisory,  maintenance,  or financial users and make real-time  decisions for
productivity improvement, cost reductions, safety improvement, or other critical
decisions to be fed to the field.

         In addition,  Astrata Group offers a range of rugged mobile  computing,
wireless and location-based  solutions,  which in some instances combine GPS and
GSM technologies.  The services markets for location-based  technologies include
workforce  management,  remote asset management and tracking,  meter reading and
emergency  services.  Astrata  Group offers  custom  built  solutions as well as
"off-the-shelf" products to meet the specific needs of its customers.

         The  Telematics  segment also includes our seventh  generation  GPS/GSM
transceiver (the Astrata Geo-Location  Platform, or "GLP") that enables users to
track,  monitor,  and control mobile  platforms or remote assets such as trucks,
vessels,  containers,  trailers, and other

                                       2

<PAGE>

vehicles.   The  Astrata  GLP  is  based  on  years  of  experience   designing,
manufacturing,  and supporting  seven  generations  of positioning  and wireless
communication  products for major global commercial telematics companies such as
Thales.  Management  believes that the GLP sets a new standard of capability and
functionality,  more expandability, and high reliability, while at the same time
dramatically  reducing the cost of Location Based Services  ("LBS").  Management
believes that customers can reduce costs, increase productivity, and monitor and
control virtually any equipment, vehicles, assets, or persons using state of the
art monitoring, routing, control or other real-time information systems. The GLP
platform allows Astrata Group to integrate customized applications for virtually
any requirement in markets such as container  tracking for homeland security and
employees  for  compliance  with the  Department of  Transportation  Legislation
relating to driving hours.

Technology Overview

         A major portion of our business is the  application of GPS  positioning
technology  to  terrestrial  applications.  GPS  is  a  system  of  24  orbiting
satellites  and  associated  ground control that is funded and maintained by the
U.S.  Government and is available  worldwide free of charge.  GPS positioning is
based  on a  technique  that  precisely  measures  distances  from  four or more
satellites.  The satellites  continuously transmit precisely timed radio signals
using extremely  accurate atomic clocks. A GPS receiver measures  distances from
the  satellites  in view by  determining  the travel  time of a signal  from the
satellite  to the  receiver,  and then  uses  those  distances  to  compute  its
position.  Under normal  circumstances,  a  stand-alone  GPS receiver is able to
calculate its position at any point on earth, in the earth's  atmosphere,  or in
lower earth orbit,  within  approximately  ten meters,  twenty-four hours a day.
Much better  accuracies are possible  through a technique  called  "differential
GPS". In addition, GPS provides extremely accurate time measurement.

         GPS technology is dependent upon the reception by a receiver of the GPS
signals, which requires line-of-sight  visibility between the satellites and the
receiver.  Buildings,  hills,  and dense  foliage  can block this  line-of-sight
visibility.  The receiver must have a line-of-sight  to at least four satellites
to determine  its latitude,  longitude,  altitude,  and time.  Distortion of GPS
signals  from  atmospheric   conditions,   intentional  or  inadvertent   signal
interference,  or  Selective  Availability  may also limit the  accuracy of GPS.
Selective  Availability,  which was the largest component of GPS distortion,  is
controlled by the U.S. Department of Defense and was deactivated on May 1, 2000.

         The convergence of our position, wireless, and information technologies
enables us to add significant value to location-based  information.  At the same
time,  wireless  communications  have become far less expensive in recent years.
This allows the low-cost efficient transfer of the GPS receiver's  position data
(combined with critical  performance and monitoring  information  from the field
equipment or personnel) to locations distant from the positioning receiver. This
in turn  permits  the  data  to be  accessed  by  supervisory,  maintenance,  or
financial  users and  thereby  allows  productivity  improving,  cost  reducing,
safety-related, or other critical real time data to be fed to the field.

         Laser and optical  products  sold and serviced by us measure  distances
and angles accurately using light.  Laser diodes create light beams for distance
measurement  and precision  mechanics and software  algorithms in these products
combine  to give  accurate  distance  and angle  measurements  for a variety  of
agricultural, surveying, academic research and construction applications.

         Astrata  Group  maintains   workshops   staffed  with   factory-trained
personnel to service and repair the  equipment  sold by the Company.  Also,  the
Company provides  technical support by means of dedicated  personnel via e-mail,
telephone and in-house, and offers product training.

Results of Operations for the Three Months Ended August 31, 2005 and 2004

         Net sales were  approximately  $4.8  million for the three months ended
August 31, 2005; an increase of approximately $1.1 million compared to the three
months ended August 31, 2004 of approximately $3.7 million.  This reflects a 30%
growth quarter to quarter.  Our geomatics  segment  revenue  reflects a moderate
increase of 10% quarter to quarter, primarily from our project with Brunei Shell
in Asia.  Our telematics  segment  revenue  reflects a 116% increase  quarter to
quarter, primarily from expansion into the Asia and Europe markets.

         On July 20, 2005, the Company announced that it had signed an agreement
with Danish Asset/Vehicle Management specialists,  North Securities ApS of Kaas,
Denmark.  The contract value is approximately $3.0 million at July 2005 exchange
rates. Shipments began in August 2005. Under this agreement, Astrata will be the
exclusive supplier to North Securities of new advanced  technological  solutions
for  track/trace  and vehicle  fleet  management  systems.  In  addition,  North
Securities and Astrata have agreed to combine their  respective  capabilities to
develop solutions that target opportunities across several industries, including
mail delivery, property development,  transport, electronic security, police and
the defense  sector.  The Company  expects that this  contract will increase our
future revenues.

         On July 28,  2005,  the Company  announced  that it had been  awarded a
contract by Italy's  Motivegeeks for 3,600 GLP units. The first twelve months of
the agreement are designed to generate  approximately  $1.6 million from product
sales and, in subsequent years,  produce annual recurring revenues to Astrata of
approximately  $1.5  million.  Shipments  began in August  2005.  As part of the
contract, Motivegeeks, a

                                       3
<PAGE>

specialist  security and vehicle  tracking  organization,  will  distribute  the
Astrata-GLP  for asset  tracking and fleet  management  applications  throughout
Italy,  and will also bring to this  market a new range of  services,  including
personal and medical information,  using the iButton(R) devised by Dalsemi-Maxim
(Dallas Semiconductor Corp. and Maxim Integrated Products). Such technology will
be integrated by using Astrata's optional secondary  processor unit, which has a
'Dallas  Semiconductor'  interface  (a  built-in  means of  communication).  The
Company expects that this contract will increase our future revenues.

         Gross profit increased approximately $0.3 million to approximately $1.7
million for the three months ended August 31, 2005  compared to the three months
ended August 31, 2004 of approximately $1.4 million.  As more fully explained in
the next two  paragraphs,  gross  profit  overall  as a  percentage  of  revenue
decreased from 39% to 36%.

         Our  geomatics  margins  are  subject  to  changes  in  product  mix of
geographic information systems and mapping products; optics and accessories; and
our ability to expand into other geographic markets.  Our geomatics margins have
declined from 35% to 31%. The South African region  maintained  consist  margins
quarter to quarter;  our contract  with Brunei  Shell in Asia has  significantly
lower  geomatics  margins.  This Asia  contract is the  provision  of  geomatics
equipment as well as various  other  services  which do not generate  margins as
traditional  equipment  sales  would.  With  respect to our overall  product mix
during the current  quarter,  a greater  percentage of sales have been on survey
products, however, margins have remained consistent.

         Our  telematics   location-based   service   Geo-Location  devices  are
installed  for the  tracking of  customers'  remote  assets;  these  devices use
cellular  networks for the  transmission of data from the asset to the client or
control  center.  Our telematics  margins have decreased from 54% to 45%. Due to
the  change in our  telematics  model  from  hardware  sales to a service  based
business, these margins are not directly comparable. During the current quarter,
approximately  46% of our margin  was  related  to our  expansion  into Asia and
Europe  and 54% was  related  to South  Africa.  This  reflects  the  geographic
expansion of telematics business beyond South Africa.

         Selling general and administrative  expenses for the three months ended
August 31, 2005 were  approximately  $3.4 million,  an increase of approximately
$1.4 million compared to the three months ended August 31, 2004 of approximately
$2.0 million.  In Africa,  overhead was approximately $1.5 million.  In 2005, as
part of our commitment to global expansion,  the Company entered South East Asia
(including  Singapore,  Malaysia,  Brunei and  Indonesia)  and Europe during the
latter part of fiscal  2005.  This  includes  facilities  for South East Asia in
Singapore,  Malaysia  and  Brunei  with  sales  staff  of  46  individuals;  and
facilities for Europe in London and Crawley with sales staff of 22  individuals.
The cost of  establishing  our new  operations  has been  largely  in line  with
expectations,  however the time to market and sales  penetration was slower than
planned and our revenues have been below budget. Our revenues in Europe and Asia
have not been  sufficient to cover our operating and start-up  costs and in turn
have resulted in operating losses in excess of budget.  Our management  believed
that while  these  regions  were  gaining  in  penetration  in their  respective
markets,  implementation  of reductions in the overhead cost base toward the end
of the August 31, 2005  quarter  were  necessary.  The South East Asia staff has
been reduced from 46 to 41 individuals  and the facilities for Europe in Crawley
have been closed and the staff of 22  individuals  reduced to 15. Our operations
in South East Asia and Europe for the quarter  ended  August,  31 2005  incurred
overhead expenses of approximately $0.4 million and $0.8 million,  respectively.
These expenses are primarily  related to staffing,  facilities and travel costs.
Corporate  overhead  of  approximately  $0.7  million  included  public  company
expenses  of  approximately   $0.2  million  and   administrative   expenses  of
approximately $0.5 million for the quarter ended August 31, 2005. Public company
expenses include audit expenses,  legal fees, and director fees.  Administrative
expenses primarily include marketing,  salaries, facilities and travel expenses.
For the three months ended August 31, 2004,  the $2.0 million was related to the
African  operations  covering selling,  general and  administrative  expenses of
approximately $1.3 million;  South East Asia of approximately $0.3 million;  and
Europe of approximately $0.4 million.

         Research and development  expenses were  approximately $0.7 million for
the three months ended August 31, 2005, and  approximately  $0.4 million for the
three months ended August 31,  2004.  Our research and  development  dollars are
currently  related to the  expansion of our  hardware  and software  development
staff and acceleration of the development of GLP derivatives and supplements.

         Interest  expense  for the  three  months  ended  August  31,  2005 was
approximately  $0.2 million.  The current quarter  includes the finance costs of
approximately $0.1 million directly associated with the debt financing (see Note
4 to the condensed  consolidated financial statements included elsewhere herein)
and interest expense of approximately $0.1 million.

         Our  operating  loss for the three  months  ended  August 31,  2005 was
approximately  $2.4 million,  an increase of approximately $1.4 million over the
three months ended August 31, 2004 of  approximately  $1 million.  This increase
reflects  the  operating  costs  of  businesses  in Asia  and  Europe;  business
expansion in Africa; and corporate overhead relating to public company expenses,
capital raising, and administrative expenses.

                                       4

<PAGE>

         We are reporting a net loss of approximately  $2.6 million or $0.21 per
common share for the three  months ended August 31, 2005  compared to a net loss
of  approximately  $0.9  million or $0.12 per common  share for the three months
ended August 31, 2004.

Results of Operations for the Six Months Ended August 31, 2005 and 2004

         Net sales were  approximately  $8.3  million  for the six months  ended
August 31, 2005; and increase of approximately  $1.4 million compared to the six
months ended August 31, 2004 of approximately $6.9 million.  This reflects a 19%
growth  period to period.  Our  geomatics  segment  revenue  reflects  growth of
approximately  $0.5 million for the six months ended August 31, 2005 compared to
the six months ended August 31,  2004;  this is primarily  from our project with
Brunei Shell in Asia. Our telematics segment revenue reflects significant growth
of approximately  $0.9 million for the six months ended August 31, 2005 compared
to the six months ended August 31, 2004;  primarily from expansion into the Asia
and Europe markets.

         On July 20, 2005, the Company announced that it had signed an agreement
with Danish Asset/Vehicle Management specialists,  North Securities ApS of Kaas,
Denmark.  The contract value is approximately $3.0 million at July 2005 exchange
rates. Shipments began in August 2005. Under this agreement, Astrata will be the
exclusive supplier to North Securities of new advanced  technological  solutions
for  track/trace  and vehicle  fleet  management  systems.  In  addition,  North
Securities and Astrata have agreed to combine their  respective  capabilities to
develop solutions that target opportunities across several industries, including
mail delivery, property development,  transport, electronic security, police and
the defense  sector.  The Company  expects that this  contract will increase our
future revenues.

         On July 28,  2005,  the Company  announced  that it had been  awarded a
contract by Italy's  Motivegeeks for 3,600 GLP units. The first twelve months of
the agreement are designed to generate  approximately  $1.6 million from product
sales and, in subsequent years,  produce annual recurring revenues to Astrata of
approximately  $1.5  million.  Shipments  began in August  2005.  As part of the
contract,  Motivegeeks, a specialist security and vehicle tracking organization,
will  distribute  the  Astrata-GLP  for  asset  tracking  and  fleet  management
applications throughout Italy, and will also bring to this market a new range of
services,  including  personal  and medical  information,  using the  iButton(R)
devised  by  Dalsemi-Maxim  (Dallas  Semiconductor  Corp.  and Maxim  Integrated
Products).  Such  technology  will be  integrated  by using  Astrata's  optional
secondary  processor  unit,  which has a  'Dallas  Semiconductor'  interface  (a
built-in means of  communication).  The Company  expects that this contract will
increase our future revenues.

         Gross profit increased approximately $0.3 million to approximately $3.1
million  for the six months  ended  August 31,  2005  compared to the six months
ended August 31, 2004 of approximately $2.8 million.  As more fully explained in
the next two  paragraphs,  gross  profit  overall  as a  percentage  of  revenue
decreased from 40% to 37%.

         Our  geomatics  margins  are  subject  to  changes  in  product  mix of
geographic information systems and mapping products; optics and accessories; and
our ability to expand into other geographic markets.  Our geomatics margins have
remained  consistent  for the six months ended August 31, 2005 to the six months
ended August 31, 2004 at 36%. This primarily was due to the South African region
improving  their average margins period to period while our contract with Brunei
Shell in Asia had  significantly  lower  margins in this segment  during the six
month  period.  With  respect to our  overall  product mix during the six months
ended August 31, 2005, we saw a higher  proportion of revenue generated from our
geographic  information  systems and mapping products which have higher margins,
which was partly offset by an increase in optics and accessories sales which are
at lower margin levels. The proportion of revenue from our construction  machine
control  declined,  which have lower  margins  on  average  as  compared  to the
Geomatics division as a whole.

         Our  telematics  margins  have  decreased  from 52% to 40%.  Due to the
change in our telematics  model from hardware sales to a service based business,
these  margins  are  not  directly  comparable.  This  reflects  the  geographic
expansion  of  telematics   business   beyond  South  Africa.   Our   telematics
location-based  service  Geo-Location  devices are installed for the tracking of
customers'   remote  assets;   these  devices  use  cellular  networks  for  the
transmission of data from the asset to the client or control center. By default,
our GLP uses general  packet  radio  service (or GPRS) for the  transmission  of
data;   however,  if  this  is  not  available  or  if  an  immediate  emergency
transmission  is required,  the GLP uses short message  service or SMS. The fees
charged by the cellular  providers for SMS transmission are considerably  higher
than  GPRS.  The use of SMS for data  routing  is,  however,  anticipated  to be
minimal.  During the quarter ended May 31 2005, a significant  number of our GLP
devices were incorrectly utilizing SMS transmissions when GPRS was available; we
incurred  excessive airtime costs which could not be recovered from our clients.
Once this problem was identified,  a software program adjustment was implemented
to correct the transmission selection.

                                       5

<PAGE>

         Selling  general and  administrative  expenses for the six months ended
August 31, 2005 were  approximately  $6.7 million,  an increase of approximately
$2.4 million  compared to the six months ended August 31, 2004 of  approximately
$4.3 million. In Africa, overhead was approximately $2.9 million,  approximately
$0.9  million  of which was  attributable  to the  expansion  of our  telematics
business.  In 2005, as part of our commitment to global  expansion,  the Company
entered South East Asia (including  Singapore,  Malaysia,  Brunei and Indonesia)
and Europe during the latter part of fiscal 2005.  This includes  facilities for
South  East Asia in  Singapore,  Malaysia  and  Brunei  with  sales  staff of 46
individuals; and facilities for Europe in London and Crawley with sales staff of
22 individuals.  The cost of establishing our new operations has been largely in
line with  expectations,  however the time to market and sales  penetration  was
slower than planned and our  revenues  have been below  budget.  Our revenues in
Europe and Asia have not been  sufficient  to cover our  operating  and start-up
costs and in turn have  resulted in  operating  losses in excess of budget.  Our
management  believed  that while these  regions were gaining in  penetration  in
their respective markets, implementation of reductions in the overhead cost base
toward the end of the August 31, 2005  quarter  were  necessary.  The South East
Asia staff has been reduced from 46 to 41  individuals  and the  facilities  for
Europe in Crawley  have been closed and the staff of 22  individuals  reduced to
15. Our  operations  in South  East Asia and  Europe  for the six  months  ended
August,  31 2005 incurred  overhead  expenses of approximately  $1.0 million and
$1.9 million,  respectively.  These expenses are primarily  related to staffing,
facilities and travel costs.  Corporate  overhead of approximately  $0.9 million
included   public   company   expenses  of   approximately   $0.4   million  and
administrative  expenses of approximately  $0.5 million for the six months ended
August 31, 2005. Public company expenses include audit expenses, legal fees, and
director fees.  Administrative  expenses primarily include marketing,  salaries,
facilities  and travel  expenses.  For the six months ended August 31, 2004, the
$4.3 million was related to the African operations covering selling, general and
administrative  expenses  of  approximately  $2  million;  South  East  Asia  of
approximately $0.6 million;  Europe of approximately $0.9 million; and corporate
overhead of approximately $0.8 million.

         Research and development expenses were approximately $1 million for the
six months  ended August 31, 2005,  and  approximately  $0.5 million for the six
months ended August 31, 2004, an increase of approximately $0.5 million. This is
due  to the  expansion  of our  hardware  and  software  development  staff  and
acceleration of the development of GLP derivatives and supplements.

         Interest  expense  for  the  six  months  ended  August  31,  2005  was
approximately  $0.8  million.  This  increase  includes  the  finance  costs  of
approximately  $0.4 million directly  associated with the debt financing and the
bridge  loan  (see  Notes  4  and  5 to  the  condensed  consolidated  financial
statements included elsewhere herein) and interest expense of approximately $0.4
million.

         Our  operating  loss  for the six  months  ended  August  31,  2005 was
approximately  $4.6 million,  an increase of approximately $2.5 million over the
six months ended August 31, 2004. This increase  reflects the operating costs of
businesses  in Asia and Europe;  business  expansion  in Africa;  and  corporate
overhead   relating  to  public   company   expenses,   capital   raising,   and
administrative expenses.

Certain Non-Operating Items

         See  "Foreign  Currency  Exchange  Rate Risk" below for  discussion  of
forward foreign exchange contracts.

Net Results of Operations

         We  reported  a net loss of  approximately  $5.3  million  or $0.44 per
common share for the six months ended August 31, 2005  compared to a net loss of
approximately  $1.9  million or $0.28 per common  share for the six months ended
August 31, 2004.

Liquidity and Capital Resources

         Total assets  decreased by $353,564 from $14,331,007 as of February 28,
2005 to $13,977,443 as of August 31, 2005. The decrease is due to an increase in
trade receivables, net of $1,558,114; and an increase in property and equipment,
net of  $128,138;  offset by a  reduction  in cash of  $786,579;  a decrease  in
inventory  of  $598,261;  deferred  finance  costs of  $227,150  related to debt
financing and the bridge loan; a decrease in other assets of $146,485 related to
Value Added Tax or "VAT" receivable for the European operation; the amortization
of  intangible  assets of  $204,108;  and a  decrease  in our  investment  in an
affiliate of $77,233.

         Total  liabilities  increased  by  $1,826,734  from  $12,973,278  as of
February 28, 2005 to  $14,800,012  as of August 31, 2005. The increase is due to
an increase in trade and accrued payables of $1,485,731; an increase in lines of
credit by  $1,169,701;  an increase  in long term debt of $54,012 for  operating
leases;  notes  payable  received  from  stockholders  of  $200,000  for working
capital;  advances  received from  officers and directors of $323,597;  and debt
issuance  discount  of  $130,875  related  to the  bridge  loan;  offset  by the
repayment  of  $1,500,000  bridge  loan;  a decrease  in  liability  for foreign
exchange loss of $76,641; a decrease in deferred taxes of $39,706; and repayment
on long term debt of $49,510.

                                       6
<PAGE>

         Operating  activities used  approximately  $3.8 million in cash for the
six months ended  August 31, 2005.  Our net loss of $5.3 million was the primary
component  of our  negative  operating  cash  flow.  Included  in such loss were
certain  non-cash  expenses  such as the  issuance  of  equity  instruments  for
services of approximately  $0.1 million,  $0.4 million of deferred finance costs
and debt  discount  fees  related to the $1.5  million  bridge loan (see below),
amortization of deferred compensation cost of $0.2 million, and depreciation and
amortization of approximately $0.5 million.  The effect of the non-cash expenses
described  in the  preceding  sentence  was  reduced  by an  unrealized  foreign
exchange  gain of  $0.1  million.  Negative  operating  cash  flow  was  further
increased by the increase of  approximately  $1.1 million in trade payables with
the extension of payment terms to vendors.

         Cash used in  investing  activities  during the six months ended August
31,  2005  principally  related to the  purchase of property  and  equipment  of
approximately  $0.4 million for our expansion  into Europe and  Southeast  Asia;
offset by the  reduction of  investment  in an affiliate of  approximately  $0.1
million.

         Cash flows provided by financing activities during the six months ended
August 31, 2005  consisted of  approximately  $3.1 million of proceeds  from the
issuance  of common  stock;  approximately  $1.3  million  advanced  on lines of
credit;  approximately $0.3 million of advances by certain Company stockholders;
and  approximately  $0.2 million  advanced as a note payable for working capital
from a  stockholder.  Of  this  total,  $1.5  million  was  used  to  repay  the
aforementioned bridge loan in April 2005.

         At August  31,  2005,  the  Company  had  negative  working  capital of
approximately  $5.3 million.  The primary reason for the working capital deficit
is the increase in trade accounts payable.

         It is apparent from this analysis that the Company  primarily relied on
equity capital, loan proceeds and extended payment terms with certain vendors to
fund its  operations  during the six months ended August 31, 2005.  In order for
the Company to finance  operations  and continue  its growth  plan,  substantial
additional  funding will be required from external sources.  Management plans on
funding operations through a combination of equity capital, lines of credit, and
collateralized  debt  facilities.  Management is currently in negotiations  with
certain  strategic   investors,   who  have  expressed  an  interest  in  making
investments  in the Company.  In addition,  management has revised the Company's
business  plan and thereby  reduced  its cash  requirements  by using  alternate
channels to access Telematics markets in selected  geographic  locations.  While
such revisions may yield immediate improvements in short-term  profitability and
cash flow,  this will be achieved at the cost of a  reduction  in the  Company's
future growth rate and profitability, if any.

         Astrata  SA has  obtained  a line  of  credit  for  use in its  African
operations.  This line of credit is secured by certain trade accounts receivable
and  allows for  funding up to  R10,000,000  (approximately  $1.5  million as of
August 31, 2005) based on current invoices.  Interest on the outstanding balance
is charged at the  current  prime rate in South  Africa  (10.5% as of August 31,
2005).  Astrata SA has drawn approximately $1.4 million on the line of credit as
of  August  31,  2005.  This  allows  it  an  additional   source  of  funds  of
approximately $0.1 million.

         In  June  2005,  Astrata SA  obtained  a  R7,000,000  line  of  credit
(approximately  $1,000,000 as of August 31, 2005) with a South  African  finance
company.  This revolving facility is repayable within sixty days of funding with
interest at 2% above the South African prime rate plus a 3% fee on each advance,
and is secured by subordination of certain  intercompany  liabilities of Astrata
SA and its subsidiary,  and a bond secured by certain assets (up to R12,000,000)
of our South  African  subsidiaries.  Astrata  SA has drawn  approximately  $0.9
million  on this  line of  credit  as of  August  31,  2005.  This  allows it an
additional source of funds of approximately $0.1 million.

Liquidity and Going Concern Considerations

         The accompanying  condensed consolidated financial statements have been
prepared  assuming that we will continue as a going concern.  For the six months
ended  August 31,  2005,  we had a net loss of  approximately  $5.3  million and
negative cash flow from operating  activities of approximately $3.7 million.  In
addition,  we had a working capital deficit of approximately  $5.3 million as of
August 31, 2005.

         The Company's  independent  public accountants have indicated that they
will be adding a going concern  paragraph to their re-issued audit report on our
February 28, 2005 consolidated financial statements that will be included in the
second  amendment  of the  Company's  registration  statement on Form SB-2 to be
filed  with the SEC.  The going  concern  paragraph  will  state  that  there is
substantial  doubt about the Company's  ability to continue as a going  concern.
Such financial  statements were prepared assuming that the Company will continue
as a going  concern  (based upon  management's  plans  discussed  herein)  which
contemplates,  among other things, the realization of assets and satisfaction of
liabilities in the ordinary course of business.  Accordingly, the aforementioned
financial  statements and the August 31, 2005 condensed  consolidated  financial
statements  included elsewhere herein do not include any adjustments  related to
the  recoverability  and  classification of asset carrying amounts or the amount
and  classification  of  liabilities  that might  result,  should the Company be
unable to continue as a going concern.

                                       7

<PAGE>

         Our  management is projecting  significant  growth in telematics  sales
during  fiscal 2006.  It is  anticipated  that this growth will be driven by the
Astrata  GLP  product  that was  introduced  in  November  2004 and linked  with
international  sales and a  marketing  infrastructure  that was  established  in
fiscal  2005.  However,  there can be no  assurance  that such sales growth will
generate  margins that provide an adequate return on assets,  if at all, or that
we will have  sufficient  resources  to produce  the  products  and  provide the
services required to support any such growth.

         We have various debt facilities  which we are currently in negotiations
for  extension  of the  due  dates  (see  Note 4 to the  condensed  consolidated
financial statements included elsewhere herein).

         In order for us to fund our  operations  and continue this growth plan,
substantial   additional   funding  will  be  required  from  external  sources.
Management currently intends to fund operations through a combination of equity,
lines of credit, and collateralized debt facilities.  Management is currently in
negotiations  with  strategic and  financial  investors,  who have  expressed an
interest in making  investments in the Company.  These  discussions are ongoing,
and some of the potential investors are currently conducting their due diligence
procedures.  However,  there  can  be no  assurance  of  the  outcome  of  these
negotiations.  In the  event  that  we are  not  able  to  secure  financing  on
acceptable  terms beyond the $3.2 million of net proceeds  received in April and
May 2005,  and the  $1,750,000  of net proceeds to be received  from the secured
convertible  notes  issued  in  October  2005  (see  Note  12 to  the  condensed
consolidated   financial  statements  included  elsewhere  herein),   management
believes that it has the ability to access debt markets using sale and leaseback
arrangements and/or collateralized debt facilities. In addition,  management has
revised our business  plan and thereby  reduced our cash  requirements  by using
alternate  channels  to  access  telematics   markets  in  selected   geographic
locations.  While such revisions may yield immediate  improvements in short-term
profitability and cash flow, this will be achieved at the cost of a reduction in
ours future growth rate and profitability, if any.

Off Balance Sheet Arrangements

         As of August 31, 2005,  there were no off balance  sheet  arrangements.
Please refer to the  Commitments  and  Contingencies  footnote to the  Company's
condensed consolidated financial statements included elsewhere herein.

Inflation

         We do not  believe  that  inflation  has had a  material  effect on our
business,  financial condition,  or results of operations.  If our costs were to
become  subject to  significant  inflationary  pressures,  we may not be able to
offset fully such higher costs through price increases. Our inability or failure
to do so could adversely affect our business,  financial condition,  and results
of operations.

Foreign Currency Exchange Rate Risk

         The operation of the Company's  subsidiaries in  international  markets
results in exposure to fluctuations  in foreign  currency  exchange  rates.  The
potential of volatile foreign currency  exchange rate fluctuations in the future
could have a  significant  effect on our  results  of  operations.  The  Company
purchases  forward foreign exchange  contracts to cover certain product purchase
transactions denominated in U.S. dollars.

         The principal  foreign currency involved is the South African Rand. The
Company  translates all assets and liabilities at period-end  exchange rates and
income and expense accounts at average rates during the period.  The U.S. dollar
strengthened  against  the Rand by  approximately  12% for the six months  ended
August 31, 2005; and the U.S. dollar  strengthened by  approximately  1% for the
six months ended August 31, 2004. The average U.S. dollar rate weakened  against
the Rand by  approximately  1% for the six months ended August 31, 2005 compared
to the six months  ended August 31, 2004.  This  increases  both our revenue and
costs as compared to previous  periods.  During the six months  ended August 31,
2005, the Company also had  transactions  denominated in the British Pound,  the
Singapore dollar, the Malaysian Ringgit,  the Brunei dollar, and the New Zealand
dollar.

Interest Rate Risk

         Since many of the Company's  credit  facilities  are directly  based on
various prime rates of interest, the Company is exposed to interest rate risk.

                                        8

<PAGE>

Critical Accounting Policies

         In December 2001, the SEC requested that all registrants  explain their
most "critical  accounting  policies" in the Management  Discussion and Analysis
section of their 34 Act  periodic  reports.  The SEC  indicated  that a critical
accounting  policy  is one  which  is both  important  to the  portrayal  of the
Company's  financial  condition  and  results,  and requires  management's  most
difficult,  subjective  or complex  judgments,  often as a result of the need to
make  estimates  about the effect of matters that are inherently  uncertain.  We
believe that the following accounting policies fit this definition.

Inventories

         Inventories  are stated at the lower of cost  (first-in,  first-out) or
estimated  market,  and consist of raw  materials,  work in process and finished
goods.  Market is determined  by  comparison  with recent sales or estimated net
realizable value.

         Net realizable  value is based on  management's  forecasts for sales of
the Company's  products and services in the ensuing years and/or  considerations
and analysis of changes in the customer base,  product mix, or other issues that
may  impact  the  estimated  net  realizable  value.  Should  the demand for the
Company's  products or services prove to be significantly less than anticipated,
the  ultimate   realizable   value  of  the  Company's   inventories   could  be
substantially  less than  reflected  in the  accompanying  consolidated  balance
sheet.

Long-Lived Assets

         The Financial  Accounting Standards Board (the "FASB") issued Statement
of  Financial  Accounting  Standards  ("SFAS")  No.  144,  "Accounting  for  the
Impairment of  Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of"
which  addresses  financial  accounting  and  reporting  for the  impairment  or
disposal of  long-lived  assets.  SFAS 144 requires  that  long-lived  assets be
reviewed for impairment  whenever  events or changes in  circumstances  indicate
that  their  carrying  amount  may not be  recoverable.  If the cost  basis of a
long-lived  asset is greater than the  projected  future  undiscounted  net cash
flows from such asset, an impairment loss is recognized.  Impairment  losses are
calculated  as the  difference  between  the  cost  basis  of an  asset  and its
estimated fair value.

         As  of  August  31,  2005,  management  has  determined  that  no  such
impairment  exists and therefore,  no adjustments have been made to the carrying
values of long-lived  assets.  There can be no assurance,  however,  that market
conditions  will not change or demand for the  Company's  services  and products
will  continue  which could result in  impairment  of  long-lived  assets in the
future.

Intangible Assets

         SFAS No. 142,  "Goodwill  and Other  Intangible  Assets"  addresses how
intangible assets that are acquired individually or with a group of other assets
should  be  accounted  for upon  their  acquisition  and  after  they  have been
initially  recognized in the  consolidated  financial  statements.  SFAS No. 142
requires that goodwill and identifiable  intangible  assets that have indefinite
lives not be amortized  but rather be tested at least  annually for  impairment,
and  intangible  assets that have finite  useful lives be  amortized  over their
estimated  useful  lives.  SFAS No. 142 provides  specific  guidance for testing
goodwill and  intangible  assets that will not be amortized for  impairment.  In
addition,  SFAS No. 142 expands the  disclosure  requirements  about  intangible
assets in the years subsequent to their acquisition.

         The  principal  effect of SFAS No.  142 on the  Company's  consolidated
financial statements is that goodwill is not required to be amortized.

Revenue Recognition

         The Company's  revenues are recorded in  accordance  with the SEC Staff
Accounting  Bulletin  No. 104,  "Revenue  Recognition."  The Company  recognizes
revenue  when  persuasive  evidence  of  an  arrangement  exists,  delivery  has
occurred,  the fee is fixed or determinable,  and  collectibility  is reasonably
assured.  In instances where final acceptance of the product is specified by the
customer or is uncertain, revenue is deferred until all acceptance criteria have
been met.  Activation  service fees are deferred and recognized over the life of
the contractual customer relationship.

         When the ultimate  outcome of a transaction  is  uncertain,  revenue is
recognized only to the extent that costs are recoverable from our customer. When
the outcome of a qualifying  transaction  involving the sale of products  and/or
the rendering of services can be estimated reliably, revenue associated with the
transaction  is  recognized  by  reference  to the  stage of  completion  of the
transaction.  The stage of completion is estimated by whichever of the following
methods is  considered  most  indicative  of the physical  completion  under the

                                       9

<PAGE>

circumstances  of the  specific  transaction:  a survey  of the work  performed,
services  completed as a percentage of total services required by the agreement,
or costs  incurred to date as a percentage of the most recent  estimate of total
costs to be incurred  under the related  contract  or other  agreement.  Amounts
which are  billable  under  the terms of the  contract  may not  reflect  earned
revenue under this accounting policy.  Thus, amounts invoiced that have not been
earned are reported as a liability in the Company's consolidated balance sheet.

         Contracts and customer  purchase orders are generally used to determine
the existence of an  arrangement.  Shipping  documents (and customer  acceptance
criteria,  when  applicable),  are used verify  delivery.  The Company  assesses
whether the fee is fixed or determinable  based on the payment terms  associated
with the  transaction  and  whether  the  sales  price is  subject  to refund or
adjustment.  The Company assesses  collectibility  based primarily on the credit
worthiness of the customer as determined by credit checks and analysis,  as well
as the customer's payment history.

         The  Company's  orders  are  generally  shipped  free-on-board  ("FOB")
destination,  which means that such orders are not  recognized  as revenue until
the product is delivered and title has transferred to the buyer. FOB destination
means that the Company  bears all costs and risks of loss or damage to the goods
prior to their delivery.

         Revenue from  distributors  and resellers is recognized  upon delivery,
assuming  that all  other  criteria  for  revenue  recognition  have  been  met.
Distributors and resellers do not have the right of return.

         Customer  incentive  bonuses  and  other   consideration   received  or
receivable  directly  from a vendor for which the company acts as a reseller are
accounted for as a reduction in the price of the vendor's  products or services.
Where such incentive is pursuant to a binding  arrangement,  the amount received
or receivable  is deferred and amortized on a systematic  basis over the life of
the arrangement.

         The Company  accounts for its contract  with the  Singapore  government
under AICPA  Statement  of  Position  81-1,  using the  percentage-of-completion
method.  The Company generally  measures progress toward completion based on the
cost incurred to date as a percentage of  management's  most recent  estimate of
total contract cost. Product delivery and installation are separate deliverables
under the terms of the contract, and the related revenue is not recognized until
the necessary activities have been completed.

Research and Development Costs

         Research and development  costs relating to computer  software products
to be  sold  or  otherwise  marketed  that  are  incurred  before  technological
feasibility of the product has been established and after general release of the
product to customers are expensed as incurred.

         Management  believes that technological  feasibility is not established
until a beta version of the product exists. Historically,  costs incurred during
the period from when a beta version is available  until  general  release to the
public  have not been  material.  Thus,  the  Company  has not  capitalized  any
software development costs.

Recently Issued Accounting Pronouncements

         In  the  opinion  of   management,   there  were  not  any   accounting
pronouncements  issued by the FASB  (including its Emerging  Issues Task Force),
the SEC, or the American  Institute of Certified  Public  Accountants  since the
June 14, 2005 filing of the  Company's  February 28, 2005 annual  report on Form
10-KSB  that are  expected  to have a material  effect on the  Company's  future
consolidated financial statements.

                                       10

<PAGE>

Item 3.  Controls and Procedures

         We carried out an  evaluation  of the  effectiveness  of the design and
operation of our disclosure  controls and procedures (as defined in Exchange Act
Rules  13a-15(e)  and  15d-15(e))  as of August 31, 2005.  This  evaluation  was
carried  out  under  the  supervision  and with the  participation  of our Chief
Executive Officer and Chief Financial Officer.  Based upon that evaluation,  our
Chief Executive Officer and Chief Financial Officer concluded that, as of August
31, 2005, our disclosure controls, and procedures are effective. There have been
no significant  changes in our internal controls over financial reporting during
the  quarter  ended  August  31,  2005  that  have  materially  affected  or are
reasonably likely to materially affect such controls.

         Disclosure  controls and procedures  are controls and other  procedures
that are  designed to ensure that  information  required to be  disclosed in our
reports  filed or  submitted  under the Exchange  Act are  recorded,  processed,
summarized,  and reported  within the time periods  specified in the SEC's rules
and forms.  Disclosure  controls and  procedures  include,  without  limitation,
controls  and  procedures  designed  to ensure that  information  required to be
disclosed  in our  reports  filed  under the  Exchange  Act is  accumulated  and
communicated  to  management,  including our Chief  Executive  Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Internal Controls

         Our  management  does not  expect  that  our  disclosure  controls  and
procedures or our internal  control over financial  reporting  will  necessarily
prevent all fraud and material error. An internal control system,  no matter how
well  conceived  and  operated,  can  provide  only  reasonable,  not  absolute,
assurance that the objectives of the control system are met. Further, the design
of a control  system must reflect the fact that there are resource  constraints,
and the benefits of controls must be considered relative to their costs. Because
of the inherent  limitations in all control  systems,  no evaluation of controls
can provide  absolute  assurance that all control issues and instances of fraud,
if any,  within the  Company  have been  detected.  These  inherent  limitations
include the realities that judgments in decision-making  can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally,  controls
can be circumvented by the individual acts of some persons,  by collusion of two
or more people, or by management override of the internal control. The design of
any system of controls also is based in part upon certain  assumptions about the
likelihood of future events,  and there can be no assurance that any design will
succeed in achieving  its stated goals under all  potential  future  conditions.
Over time,  control may become inadequate  because of changes in conditions,  or
the degree of compliance with the policies or procedures may deteriorate.

PART II - Other Information

Item 1.  Legal Proceedings

         From time to time,  the  Company  may be  involved  in various  claims,
lawsuits,  disputes with third  parties,  and actions  involving  allegations or
discrimination or breach of contract actions incidental to the normal operations
of the business.  The Company is not currently  involved in any litigation which
management  believes  could  have a  material  adverse  effect on its  financial
position or results of operations.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

         None

Item 3.  Defaults upon Senior Securities

         None

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

         None

Item 5.  Other Information

         None

                                       11

<PAGE>

Item 6.  Exhibits

Exhibit No.       Description
-----------       -----------

Exhibit 2.1       Cetalon  Corporation  Court  Order of May 27,  2004 and Second
                  Amended  Disclosure   Statement  and  Plan  of  Reorganization
                  incorporated  by reference to Exhibit 2.1 to Form 8-K filed on
                  August 9, 2004.

Exhibit 2.2       Articles of Merger  between  Astrata  Group  Incorporated  (as
                  merging entity) and Cetalon Corporation (as surviving entity),
                  filed  with  Secretary  of State of  Nevada  on August 3, 2004
                  incorporated  by  reference  to Exhibit  2.2 to the  Company's
                  Current Report on Form 8-K filed on August 9, 2004.

Exhibit 2.3       Certificate of Correction to the Articles of Merger filed with
                  Secretary of State of Nevada on August 4, 2004 incorporated by
                  reference to Exhibit 2.2a to the Company's  Current  Report on
                  Form 8-K filed on August 9, 2004.

Exhibit 3.1       Amended  and  Restated   Articles  of   Incorporation  of  the
                  Registrant  as filed with the  Secretary of State of Nevada on
                  July 30, 2004 incorporated by reference to Exhibit 3.1b to the
                  Company's Current Report on Form 8-K filed on August 9, 2004.

Exhibit 3.2       By-Laws of the  Registrant,  incorporated  by  reference  from
                  Exhibit 3.2 of the  Company's  Registration  Statement on Form
                  SB-2, as filed with the  Securities an Exchange  Commission on
                  October 7, 1998.

Exhibit 10.1      Share Exchange  Agreement,  dated August 2, 2004, by and among
                  the Registrant  and the entities  listed on the signature page
                  thereof  incorporated  by  reference  to  Exhibit  10.1 to the
                  Company's Annual Report on Form 8-K filed on August 9, 2004.

Exhibit 10.2      Consultant Agreement between Optron Technologies, Inc. and The
                  Watley  Group LLC,  dated  February 14, 2004  incorporated  by
                  reference to Exhibit 10.2 to the  Company's  Annual  Report on
                  Form 10-KSB filed on June 14, 2005.

Exhibit 10.3      Amended  and  Restated   Promissory   Note  of  Astrata  Group
                  Incorporated  in favor of Walter  Jared Frost dated  September
                  27, 2004  incorporated  by  reference  to Exhibit  10.3 to the
                  Company's Annual Report on Form 10-KSB filed on June 14, 2005.

Exhibit 10.4      Common  Stock  Purchase  Warrant for 48,000  shares of Astrata
                  Group Incorporated common stock in favor of Walter Jared Frost
                  dated September 27, 2004  incorporated by reference to Exhibit
                  10.4 to the  Company's  Annual  Report on Form 10-KSB filed on
                  June 14, 2005.

Exhibit 10.5      Registration    Rights   Agreement   between   Astrata   Group
                  Incorporated  and Walter Jared Frost dated  September 27, 2004
                  incorporated  by reference  to Exhibit  10.5 to the  Company's
                  Annual Report on Form 10-KSB filed on June 14, 2005.

Exhibit 10.6      Common  Stock  Purchase  Warrant for 32,000  shares of Astrata
                  Group Incorporated common stock in favor of Walter Jared Frost
                  dated November 30, 2004  incorporated  by reference to Exhibit
                  10.6 to the  Company's  Annual  Report on Form 10-KSB filed on
                  June 14, 2005.

Exhibit 10.7      Promissory  Note of  Astrata  Group  Incorporated  in favor of
                  Walter  Jared Frost dated  December 14, 2004  incorporated  by
                  reference to Exhibit 10.7 to the  Company's  Annual  Report on
                  Form 10-KSB filed on June 14, 2005.

Exhibit 10.8      Common  Stock  Purchase  Warrant for 12,000  shares of Astrata
                  Group Incorporated common stock in favor of Walter Jared Frost
                  dated December 14, 2004  incorporated  by reference to Exhibit
                  10.8 to the  Company's  Annual  Report on Form 10-KSB filed on
                  June 14, 2005.

Exhibit 10.9      Registration    Rights   Agreement   between   Astrata   Group
                  Incorporated  and Walter  Jared Frost dated  December 14, 2004
                  incorporated  by reference  to Exhibit  10.9 to the  Company's
                  Annual Report on Form 10-KSB filed on June 14, 2005.

Exhibit 10.10     Form of Astrata Group  Incorporated  Regulation S Subscription
                  Agreement  incorporated  by reference to Exhibit  10.10 to the
                  Company's Annual Report on Form 10-KSB filed on June 14, 2005.

Exhibit 10.11     Form of Astrata Group  Incorporated  Regulation S Common Stock
                  Purchase  Warrant  Agreement   incorporated  by  reference  to
                  Exhibit  10.11 to the  Company's  Annual Report on Form 10-KSB
                  filed on June 14, 2005.

Exhibit 10.12     Form of Astrata Group  Incorporated  Regulation D Subscription
                  Agreement  incorporated  by reference to Exhibit  10.12 to the
                  Company's Annual Report on Form 10-KSB filed on June 14, 2005.

                                       12

<PAGE>

Exhibit No.       Description
-----------       -----------

Exhibit 10.13     Form of Astrata Group  Incorporated  Regulation D Common Stock
                  Purchase  Warrant  Agreement   incorporated  by  reference  to
                  Exhibit  10.13 to the  Company's  Annual Report on Form 10-KSB
                  filed on June 14, 2005.

Exhibit 10.14     Engagement  Letter among Westminster  Securities  Corporation,
                  Rodman & Renshaw,  LLC, and Astrata Group Incorporated,  dated
                  March 2, 2005  incorporated  by reference to Exhibit  10.14 to
                  the  Company's  Annual Report on Form 10-KSB filed on June 14,
                  2005.

Exhibit 10.15     Co-Placement  Agents  Agreement among  Westminster  Securities
                  Corporation,   Rodman  &  Renshaw,   LLC,  and  Astrata  Group
                  Incorporated, dated March 2, 2005 incorporated by reference to
                  Exhibit  10.15 to the  Company's  Annual Report on Form 10-KSB
                  filed on June 14, 2005.

Exhibit 10.16     Medium Term Loan Facility  Agreement  between  Pointe  Capital
                  Limited  and  Astrata   Europe  Ltd,   dated  August  1,  2004
                  incorporated  by reference to Exhibit  10.16 to the  Company's
                  Annual Report on Form 10-KSB filed on June 14, 2005.

Exhibit 10.17     Registration  Rights Agreement  between Pointe Capital Limited
                  and  Astrata   Group   Incorporated,   dated   November   2004
                  incorporated  by reference to Exhibit  10.17 to the  Company's
                  Annual Report on Form 10-KSB filed on June 14, 2005.

Exhibit 10.18     Letter  of  Instruction  and  Amendment  to  Medium  Term Loan
                  Facility  between  Pointe  Capital  Limited and Astrata  Group
                  Incorporated, dated February 2, 2005 incorporated by reference
                  to Exhibit 10.18 to the Company's Annual Report on Form 10-KSB
                  filed on June 14, 2005.

Exhibit 10.19     Form of  short-term  Convertible  Promissory  Note of  Astrata
                  Group  Incorporated,  dated February 22, 2005  incorporated by
                  reference to Exhibit 10.19 to the  Company's  Annual Report on
                  Form 10-KSB filed on June 14, 2005.

Exhibit 10.20     Form of short-term  conversion  Warrant to Purchase  Shares of
                  Astrata  Group  Incorporated  common stock dated  February 22,
                  2005  incorporated  by  reference  to  Exhibit  10.20  to  the
                  Company's Annual Report on Form 10-KSB filed on June 14, 2005.

Exhibit 10.21     Warrants  for  10,000  shares of  Astrata  Group  Incorporated
                  common stock in favor of Westminster  Securities  Corporation,
                  dated February 28, 2005  incorporated  by reference to Exhibit
                  10.21 to the  Company's  Annual Report on Form 10-KSB filed on
                  June 14, 2005.

Exhibit 10.22     Form of standard  Warrant to Purchase  Shares of Astrata Group
                  Incorporated common stock, dated February 2005 incorporated by
                  reference to Exhibit 10.22 to the  Company's  Annual Report on
                  Form 10-KSB filed on June 14, 2005.

Exhibit 10.23     Acquisition Agreement between Optron (Pty) Ltd. and Nanini 209
                  CC (SureTrack),  dated June 3, 2004  incorporated by reference
                  to Exhibit 10.23 to the Company's Annual Report on Form 10-KSB
                  filed on June 14, 2005.

Exhibit 10.24     Addendum to  Acquisition  Agreement  between Optron (Pty) Ltd.
                  and  Nanini  209  CC   (SureTrack),   dated  January  5,  2005
                  incorporated  by reference to Exhibit  10.24 to the  Company's
                  Annual Report on Form 10-KSB filed on June 14, 2005.

Exhibit 10.25     Share Sale Purchase  Agreement between Astrata  (Malaysia) Sdn
                  Bhd (Co.  No.  645257-D),  Astrata  Geotrax  Sdn Bhd (Co.  No.
                  645151-M) and Geotrax  Technologies Sdn Bhd (Co. No. 519403A),
                  dated February 28, 2005  incorporated  by reference to Exhibit
                  10.25 to the  Company's  Annual Report on Form 10-KSB filed on
                  June 14, 2005.

Exhibit 10.26     Form of Private Placement  Subscription Agreement incorporated
                  by reference to Exhibit 10.26 to the  Company's  Annual Report
                  on Form 10-KSB filed on June 14, 2005.

Exhibit 10.27     Form of  Private  Placement  Warrant  to  purchase  shares  of
                  Astrata  Group  Incorporated   common  stock  incorporated  by
                  reference to Exhibit 10.27 to the  Company's  Annual Report on
                  Form 10-KSB filed on June 14, 2005.

Exhibit 10.28     Securities  Purchase  Agreement dated as of October 7, 2005 by
                  and among  Astrata  Group  Incorporated  and the investors set
                  forth on the signature pages thereto incorporated by reference
                  to Exhibit 10.1 to the  Company's  Current  Report on Form 8-K
                  filed on October 7, 2005.


                                       13

<PAGE>

Exhibit No.       Description
-----------       -----------

Exhibit 10.29     Form of Stock Purchase  Warrant  incorporated  by reference to
                  Exhibit 10.2 to the Company's Current Report on Form 8-K filed
                  on October 7, 2005.

Exhibit 10.30     Form of Callable  Secured  Convertible  Note  incorporated  by
                  reference to Exhibit 10.3 to the Company's  Current  Report on
                  Form 8-K filed on October 7, 2005.

Exhibit 10.31     Registration  Rights  Agreement dated as of October 7, 2005 by
                  and among  Astrata  Group  Incorporated  and the investors set
                  forth on the signature pages thereto incorporated by reference
                  to Exhibit 10.4 to the  Company's  Current  Report on Form 8-K
                  filed on October 7, 2005.

Exhibit 21.1      Subsidiaries  of Astrata Group  Incorporated,  incorporated by
                  reference to Exhibit 21.1 to the  Company's  Annual  Report on
                  Form 10-KSB filed on June 14, 2005.

Exhibit 31.1*     Certification  of Chief Executive  Officer pursuant to Section
                  302 of the Sarbanes-Oxley Act.

Exhibit 31.2*     Certification  of Chief Financial  Officer pursuant to Section
                  302 of the Sarbanes-Oxley Act.

Exhibit 32.1*     Certification  of Chief Executive  Officer pursuant to Section
                  906 of the Sarbanes-Oxley Act.

Exhibit 32.2*     Certification  of Chief Financial  Officer pursuant to Section
                  906 of the Sarbanes-Oxley Act.

----------
*  Filed herewith

                                       14

<PAGE>
                                   SIGNATURES

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

Astrata Group Incorporated

By:        /s/ Martin Euler                              Date:  October 17, 2005
           ------------------------
           Martin Euler
           Chief Financial Officer,
           Principal Accounting Officer and Secretary

<PAGE>

                                  EXHIBIT INDEX

Exhibit 31.1      Certification  of Chief Executive  Officer pursuant to Section
                  302 of the Sarbanes-Oxley Act.

Exhibit 31.2      Certification  of Chief Financial  Officer pursuant to Section
                  302 of the Sarbanes-Oxley Act.

Exhibit 32.1      Certification  of Chief Executive  Officer pursuant to Section
                  906 of the Sarbanes-Oxley Act.

Exhibit 32.2      Certification  of Chief Financial  Officer pursuant to Section
                  906 of the Sarbanes-Oxley Act.