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

                                   FORM 10-QSB

                                QUARTERLY REPORT
     PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

                  For quarterly period ended November 30, 2004

                           ASTRATA GROUP INCORPORATED
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

                                     NEVADA
                 ----------------------------------------------
                 (State or Other Jurisdiction of Incorporation)

                   000-32475                            84-1408762
           ------------------------          --------------------------------
           (Commission File Number)          (IRS Employer Identification No.)

1801 CENTURY PARK EAST, SUITE 1830, LOS ANGELES, CALIFORNIA        90067-2320
--------------------------------------------------------------------------------
           (Address of Principal Executive Offices)                (Zip Code)

                                 (310) 282-8646
              ----------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)

          -------------------------------------------------------------
          (Former Name or Former Address, If Changed Since Last Report)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Exchange Act during the 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 [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

10,863,029 SHARES OF COMMON STOCK OUTSTANDING AS OF JANUARY 7, 2005.

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

<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

Part I - Financial Information                                                  Page
<S>                                                                             <C>
     Item 1.     Condensed Consolidated Financial Statements (Unaudited):

                 Condensed Consolidated Balance Sheet as of November 30, 2004    F-1

                 Condensed Consolidated Statements of Operations and
                 Other Comprehensive Income (Loss) for the three month and
                 nine month periods ended November 30, 2004 and 2003             F-2

                 Condensed Consolidated Statements of Cash Flows for the

                 nine month periods ended November 30, 2004 and 2003             F-3

                 Notes to Condensed Consolidated Financial Statements            F-4

     Item 2.     Management's Discussion and Analysis of

                 Financial Condition and Results of Operations                     4

     Item 3.     Controls and Procedures                                          20

Part II - Other Information

     Item 1.     Legal Proceedings                                                21

     Item 2.     Unregistered Sales of Equity Securities and  Use of Proceeds     21

     Item 3.     Defaults Upon Senior Securities                                  21

     Item 4.     Submission of Matters to a Vote of Securities Holders            21

     Item 5.     Other Information                                                21

     Item 6.     Exhibits                                                         22

Signature Page

Index to Exhibits
</TABLE>

<PAGE>

Part I - Financial Information

Item 1.  Condensed Consolidated Financial Statements (Unaudited)

These unaudited condensed  consolidated  financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America for interim  financial  information and the SEC  instructions to Form
10-QSB. In the opinion of management, all adjustments considered necessary for a
fair presentation, which (except for the "Merger Transaction" as defined herein)
consisted only of normal recurring  adjustments,  have been included.  Operating
results for the  interim  period  ended  November  30, 2004 are not  necessarily
indicative of the results that can be expected for the full year.

<PAGE>

                  ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                NOVEMBER 30, 2004

                                                                    (Unaudited)
                                                                   -------------
ASSETS
Current Assets:
       Cash and cash equivalents                                   $    862,923
       Trade and other receivables, net                               3,010,563
       Inventories, net                                               3,929,667
       Advances for acquisitions, net                                   345,657
       Other assets                                                      88,537
                                                                   ------------
Total current assets                                                  8,237,347

Property and equipment, net                                             938,511
Identifiable intangible assets, net                                   1,363,159
Goodwill                                                              1,381,224
Investment in and advances to affiliate                                  42,792
                                                                   ------------
Total assets                                                       $ 11,963,033
                                                                   ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
       Accounts payable and accrued expenses                       $  4,276,758
       Line of credit                                                 1,295,766
       Taxes payable                                                    383,980
       Deferred tax liability- current portion                           89,000
       Liability for foreign exchange loss                              182,000
       Notes payable to shareholders                                  1,685,518
       Advance from shareholder                                          41,378
       Current portion of long term liabilities                          65,924
                                                                   ------------
Total current liabilities                                             8,020,324

Long term liabilities                                                   443,086
Deferred tax liability-non-current                                      329,000
                                                                   ------------
Total liabilities                                                     8,792,410
                                                                   ------------
Minority interest                                                     1,683,497
Commitments and contingencies
Stockholders' equity:
       Preferred stock, $0.0001 Par value,
       10,000,000 shares authorized,
       none issued or outstanding                                            --
       Common stock, $0.0001 par value,
       50,000,000 shares authorized,
       10,400,000 issued and outstanding                                  1,040
       Additional paid-in capital                                     4,561,835
       Accumulated deficit                                           (3,256,116)
       Accumulated other comprehensive income                           180,367
                                                                   ------------
Total stockholders' equity                                            1,487,126
                                                                   ------------
Total liabilities and stockholders' equity                         $ 11,963,033
                                                                   ============

    See accompanying notes to condensed consolidated financial statements.

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PAGE F-1

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
                       OTHER COMPREHENSIVE INCOME (LOSS)
                   FOR THE NINE MONTH AND THREE MONTH PERIODS
                      ENDED NOVEMBER 30, 2004 AND 2003 AND

<TABLE>
<CAPTION>
                                                       (Unaudited)                     (Unaudited)
                                               ----------------------------    ----------------------------
                                                For the nine months ended       For the three months ended
                                               ------------    ------------    ----------------------------
                                                November 30,   November 30,    November 30,    November 30,
                                                    2004           2003            2004            2003
                                               ------------    ------------    ------------    ------------
<S>                                            <C>             <C>             <C>             <C>
Net Sales                                      $ 11,068,809    $  7,392,622    $  4,131,488    $  2,800,001

Cost of goods sold                                6,657,486       4,600,174       2,483,345       1,697,554
                                               ------------    ------------    ------------    ------------

Gross profit                                      4,411,323       2,792,448       1,648,143       1,102,447

Selling, general and administrative expenses      6,599,346       2,000,080       2,271,233         698,580
Research and development                            904,252          84,020         383,005          32,661
                                               ------------    ------------    ------------    ------------

Operating (loss) income                          (3,092,275)        708,348      (1,006,095)        371,206

Other income (expense):
       Other income (expense)                       237,309          18,015          79,250          10,729
       Interest expense                            (118,982)         (3,807)       (104,972)           (810)
       Unrealized foreign exchange loss            (182,000)             --        (182,000)             --
                                               ------------    ------------    ------------    ------------

Total other income (loss)                            63,673          14,208        (207,722)          9,919
                                               ------------    ------------    ------------    ------------

(Loss) income before provision for income
  taxes and minority interest                    (3,155,948)        722,556      (1,213,817)        381,125

Provision for income taxes                          149,464         227,280          98,620         128,475
                                               ------------    ------------    ------------    ------------

(Loss) income before minority interest           (3,305,412)        495,276      (1,312,437)        252,650

Equity in net earnings of affiliate                  39,025              --          11,543              --
Minority interest                                    26,632          17,013            (651)             --
                                               ------------    ------------    ------------    ------------

Net (loss) income                              $ (3,239,755)   $    512,289    $ (1,301,545)   $    252,650
                                               ============    ============    ============    ============

Other comprehensive income (loss) and
its components consist of the following:

       Net (loss) income                       $ (3,239,755)   $    512,289    $ (1,301,545)   $    252,650

       Foreign currency translation
       adjustment, net of tax                      (330,204)        385,863        (267,010)       (113,715)
                                               ------------    ------------    ------------    ------------

Other comprehensive income (loss)              $ (3,569,959)   $    898,152    $ (1,568,555)   $    138,935
                                               ============    ============    ============    ============

Income (loss) per common share:

       Basic                                   $      (0.31)   $       0.05    $      (0.13)   $       0.02
       Diluted                                        (0.31)           0.05           (0.13)           0.02

Weighted average common shares outstanding:

       Basic                                     10,400,000      10,400,000      10,400,000      10,400,000
       Diluted                                   10,400,000      10,400,000      10,400,000      10,400,000
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

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PAGE F-2

<PAGE>
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE NINE MONTH PERIODS ENDED NOVEMBER 30, 2004 AND 2003

                                                            (Unaudited)
                                                     --------------------------
                                                      For the nine months ended
                                                     --------------------------
                                                     November 30,   November 30,
                                                        2004            2003
                                                     -----------    -----------
CASH FLOW FROM OPERATING ACTIVITIES:

Net (loss) income                                    $(3,239,755)   $   512,289
Adjustments to reconcile net (loss) income to
net cash provided by (used in) operating activities:
       Depreciation and amortization                     420,583        236,196
       Issuance of stock for services                    519,737             --
       Issuance of stock for reorganization              954,294             --
       Equity in net earnings of affiliate               (39,025)            --
       Minority interest                                  76,590      1,479,339
       Deferred income taxes                             (67,000)       (28,000)
       Unrealized foreign exchange loss                  182,000             --
Changes in operating assets and liabilities:

       Accounts receivable                              (593,108)    (1,277,441)
       Inventories                                    (2,282,802)      (524,802)
       Other assets                                      (58,463)          (201)
       Deferred tax liability                                 --        292,000
       Accounts payable and accrued expenses           1,856,588      1,201,285
                                                     -----------    -----------

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES   (2,270,361)     1,890,665

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment                      (651,035)      (318,185)
Investment in affiliates                                  (3,767)    (2,000,000)
Advances for acquisitions                               (345,657)            --
Cash of acquired company                                 678,608             --
                                                     -----------    -----------

NET CASH (USED IN) INVESTING ACTIVITIES                 (321,851)    (2,318,185)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from notes payable                              153,152         73,815
Proceeds from notes payable to shareholders            2,096,896        600,000
Proceeds from line of credit, net                      1,295,766             --
Repayments on notes payable                              (24,542)       (21,234)
                                                     -----------    -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES              3,521,272        652,581

Effect of foreign currency exchange rate
       changes on cash and cash equivalents             (330,204)       321,145

Net increase in cash and cash equivalents                598,856        546,206

Cash and cash equivalents at beginning of period         264,067        279,508
                                                     -----------    -----------

Cash and cash equivalents at end of period           $   862,923    $   825,714
                                                     ===========    ===========

Cash paid for:
       Interest                                      $    28,482    $     1,807
       Income taxes                                      152,919        286,345

See footnotes for noncash investing and financing activities.

Pre August 2, 2004 condensed assets (excluding cash),  liabilities and equity of
Optron Technologies Inc., not included above are as follows:

       Assets                                        $   739,132
       Liabilities                                       193,802
       Minority interest                                 175,094
       Equity                                          1,048,844

     See accompanying notes to condensed consolidated financial statements.

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PAGE F-3

<PAGE>

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                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

1. ORGANIZATION AND BASIS OF PRESENTATION

ORGANIZATION

On January 15, 2003, Cetalon Corporation ("Cetalon") filed a petition for relief
under Chapter 11 of the Bankruptcy  Code in the United States  Bankruptcy  Court
for the Central  District of California,  Los Angeles  Division (the "Bankruptcy
Court"),  Case  No.  LA  03-11306-VZ.  After  a  hearing  on May 27,  2004,  the
Bankruptcy Court entered an order confirming Cetalon's Second Amended Disclosure
Statement and Plan of  Reorganization  (the "Plan")  followed by confirmation of
the Plan by the  Bankruptcy  Court on May 28,  2004.  On June 8, 2004,  the Plan
became effective (the "Effective Date"), and the Cetalon Corporation Liquidating
Trust (the "Trust") was created.

Pursuant to the Plan, all equity  interests of Cetalon that existed prior to the
Effective  Date  (including,   but  not  limited  to,  common  stock,  warrants,
conversion  rights  under debt  agreements  and options)  were  cancelled on the
Effective  Date. If all unpaid  creditor  claims that were assigned to the Trust
are satisfied in full with interest,  Cetalon's pre-petition equity holders will
be entitled to a pro rata  distribution  of any remaining  Trust assets based on
their pre-petition ownership of Cetalon.

Under the terms of the Plan,  effective August 2, 2004 Cetalon combined with (i)
Cadogan  Investments  Limited  ("Cadogan"),  a  London-based  company  that owns
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,  which have only been  established  very recently,  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.

The  Company  (as  defined  below in  "Reverse  Merger  Accounting")  issued (i)
approximately 6,275,000 post-Effective Date common shares to the shareholders of
Cadogan,   and  (ii)  1,800,000   post-Effective   Date  common  shares  to  the
stockholders of Optron  Technologies in exchange for 100% ownership of those two
entities. The Company issued an additional 156,000 post-Effective Date shares of
common  stock to the Trust for  distribution  pursuant  to the terms of the Plan
(62,400  shares for pro rata  distribution  to Class Two  creditors,  and 93,600
shares for other creditors and Trust expenses).  The Company also issued 609,000
post-Effective  Date shares of common  stock in  satisfaction  of  approximately
$520,000 of  bankruptcy  administrative  fees.  Lastly,  the  Company  issued an
additional 1,560,000  post-Effective Date shares of common stock in satisfaction
of  approximately  $53,000 of  administrative-claim  notes  payable  and accrued
interest.

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PAGE F-4

<PAGE>

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                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

1. ORGANIZATION AND BASIS OF PRESENTATION (continued)

ORGANIZATION (continued)

As a result of the cancellation of all pre-petition  equity  instruments and the
issuance  of the  post-Effective  Date  common  shares of  Cetalon,  a change in
control occurred.

On December 16, 2004, the Bankruptcy Court closed the Cetalon Chapter 11 case.

REVERSE MERGER ACCOUNTING

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" by Cetalon  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  shareholders of Cadogan  obtained more
than 50% voting  control of Cetalon,  for accounting  purposes  Cadogan has been
treated as the continuing reporting entity and as the accounting acquiror in the
Merger Transaction.  This accounting  treatment resulted in Cetalon adopting the
February 28 fiscal  year-end of Cadogan.  In  connection  with the  transactions
described  above,  on August 3, 2004 Cetalon  changed its name to Astrata  Group
Incorporated  ("Astrata Group"). The Astrata Group and all of its majority-owned
subsidiaries  are  sometimes  hereinafter   collectively  referred  to  as  "the
Company".

Subsequent to the closing of the Merger Transaction, the historical consolidated
statements of operations  are those of the Astrata Group and its  majority-owned
subsidiaries.  The consolidated  balance sheets consist of 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.

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PAGE F-5

<PAGE>

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                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

1. ORGANIZATION AND BASIS OF PRESENTATION (continued)

NATURE OF OPERATIONS (continued)

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 owns a research and  development  facility  with  thirteen  years of
experience in position and wireless communication  technology that has delivered
more than 80,000  GPS/GSM fleet  management  products to customers.  GSM (Global
System for  Mobiles)  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.

Since some of the Company's sales and purchasing transactions are denominated in
currencies  other than the South African Rand, 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.  See Note 2
for additional information.

Under  the  currency  controls  of  the  Republic  of  South  Africa,   overseas
remittances  are  subject to the  review and  approval  of the  Central  Banking
Authorities.

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PAGE F-6

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

1. ORGANIZATION AND BASIS OF PRESENTATION (continued)

BASIS OF PRESENTATION

Management  of  the  Company  has  prepared,  without  audit,  the  accompanying
condensed consolidated financial statements for the three and nine-month periods
ended November 30, 2004 and 2003. 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 (except for the Merger  Transaction  described above) only of a
normal  recurring  nature.  The results of operations  for the nine months ended
November 30, 2004 are not  necessarily  indicative  of the results of operations
for the year ending February 28, 2005.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The summary of significant  accounting  policies  presented below is designed to
assist in understanding the Company's  consolidated  financial statements.  Such
consolidated financial statements and accompanying notes are the representations
of the  Company's  management,  who  is  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  consolidated
financial statements.

PRINCIPLES OF CONSOLIDATION

The condensed  consolidated financial statements include the accounts of Astrata
Group Inc., and its  majority-owned  subsidiaries  in which it has a controlling
financial interest. All significant intercompany  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.

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.

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PAGE F-7

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

1. ORGANIZATION AND BASIS OF PRESENTATION (continued)

INVENTORIES (continued)

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 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 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.

LONG-LIVED ASSETS

In July 2001,  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."  SFAS  No.  144  addresses  financial  accounting  and  reporting  for  the
impairment  or  disposal  of  long-lived  assets.  SFAS No.  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.  SFAS No. 144 also  requires  companies to
separately  report  discontinued  operations  and extends  that  reporting  to a
component of an entity that either has been disposed of (by sale, abandonment or
in a  distribution  to owners) or is classified  as held for sale.  Assets to be
disposed of are  reported at the lower of the carrying  amount or the  estimated
fair value less costs to sell.  The provisions of this statement for assets held
for sale or other  disposal  generally are required to be applied  prospectively
after the adoption date to newly  initiated  commitments to sell such assets (as
defined).  As a result,  management  cannot determine the potential effects that
adoption  of SFAS No.  144 will  have on the  Company's  condensed  consolidated
financial  statements  with  respect to any  future  disposal  decisions.  As of
November 30, 2004,  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.

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PAGE F-8

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

BUSINESS COMBINATIONS

SFAS No. 141,  "Business  Combinations,"  which is  effective  for  transactions
initiated  after June 30,  2001,  eliminates  the pooling of interest  method of
accounting for business combinations and requires that all business combinations
occurring  after July 1, 2001 be accounted  for using the purchase  method.  The
adoption  of SFAS No. 141 did not have an impact on the  Company's  consolidated
financial statements.

INTANGIBLE ASSETS

SFAS No. 142,  "Goodwill and Other  Intangible  Assets",  which is effective for
fiscal years beginning after December 15, 2001,  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
intangible assets that have indefinite useful 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  identifiable  intangible
assets that will not be amortized  for  impairment.  In  addition,  SFAS No. 142
expands the disclosure  requirements  about goodwill and other intangible assets
in the years subsequent to their  acquisition.  The principal effect of SFAS No.
142 on the Company's accompanying  consolidated financial statements is that the
goodwill described in Note 5 is not required to be amortized.

REVENUE RECOGNITION

The  Company's  revenues  are recorded in  accordance  with the  Securities  and
Exchange  Commission's  (the "SEC") Staff Accounting  Bulletin No. 104, "Revenue
Recognition." The Company recognizes product 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.

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.

--------------------------------------------------------------------------------
PAGE F-9

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

REVENUE RECOGNITION (continued)

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 a right of return.

When a sale involves multiple elements, the arrangement fee is allocated to each
respective  element based on its relative  estimated  fair value and  recognized
when  revenue  recognition  criteria  for each  element  are met.  The amount of
product revenue  allocated to an individual  element is limited to the lesser of
its relative  estimated fair value or the amount not contingent on the Company's
delivery of other elements under the arrangement,  regardless of the probability
of the Company's performance.

COMPREHENSIVE INCOME (LOSS)

The Company reports comprehensive income (loss) in accordance with SFAS No. 130,
"Reporting  Comprehensive  Income." SFAS No. 130  establishes  standards for the
reporting and display of comprehensive  income and its components.  SFAS No. 130
requires  unrealized  holding gains and losses,  net of related tax effects,  on
available-for-sale  securities  to be included  in  comprehensive  income  until
realized.  Foreign  currency  translation  gains  and  losses  are  included  in
comprehensive   income/loss  in  the  accompanying  consolidated  statements  of
operations and other comprehensive income (loss).

RESEARCH AND DEVELOPMENT COSTS

Research and development costs relating to GPS positioning hardware and software
systems  including the Astrata  Geo-Location  Platform (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 $904,000
and $84,000 of research and development  expenses during the nine-month  periods
ended  November  30,  2004 and 2003,  respectively.  In  addition,  the  Company
incurred approximately $383,000 and $33,000 of research and development expenses
during the three-month periods ended November 30, 2004 and 2003, respectively.

--------------------------------------------------------------------------------
PAGE F-10

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

RESEARCH AND DEVELOPMENT COSTS (continued)

Company 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.

INCOME TAXES

The Company  accounts  for income  taxes under the  provisions  of SFAS No. 109,
"Accounting for Income Taxes", SFAS No. 109 requires recognition of deferred tax
liabilities and assets for the expected  future tax  consequences of events that
have been included in the financial statements or the income tax returns.  Under
this method,  deferred tax  liabilities  and assets are determined  based on the
difference  between  the  financial  statement  and  tax  bases  of  assets  and
liabilities  using enacted tax rates for the year in which the  differences  are
expected to reverse.

CASH AND CASH EQUIVALENTS

The Company  considers all highly liquid short-term  investments,  with original
maturities of three months or less when purchased, to be cash equivalents.

CONCENTRATIONS

The financial instrument that potentially exposes the Company to a concentration
of credit risk  principally  consists of cash.  The Company places 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 November 30,
2004, the Company's bank balances approximated $1,186,000.

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  November  30,  2004  of
approximately $32,000 to be adequate.

--------------------------------------------------------------------------------
PAGE F-11

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

CONCENTRATIONS (continued)

The following table lists suppliers with at least 10% of the Company's purchases
for the indicated periods:

<TABLE>
<CAPTION>
                                  NINE MONTHS ENDED             THREE MONTHS ENDED
           SUPPLIER                 NOV. 30, 2004        %         NOV. 30, 2004       %
-----------------------------  ---------------------    ----    -------------------   ---
<S>                            <C>                       <C>    <C>                   <C>
Trimble Navigation Int'l Ltd.  $           3,461,000     38     $         1,227,000    34
-----------------------------  ---------------------    ----    -------------------   ---
Siemens Ltd.                                 892,000     10                 364,000    10
-----------------------------  ---------------------    ----    -------------------   ---
</TABLE>

USE OF ESTIMATES

The Company  prepares its consolidated  financial  statements in conformity with
GAAP, which require management to make estimates and assumptions that affect the
reported  amounts of assets and liabilities and disclosure of contingent  assets
and liabilities at the date of the financial statements, and reported amounts of
revenues and expenses during the reporting period. Significant estimates made by
management  include  revenue   recognition,   the  allowance  for  uncollectible
receivables,  the net realizable  value of  inventories,  and the realization of
long-lived assets. Actual results could differ from those estimates.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company  records  all  derivative  financial  instruments  in the  condensed
consolidated  financial  statements  at fair value  regardless of the purpose or
intent for  holding  the  instrument.  Changes  in the fair value of  derivative
financial  instruments  are either  recognized  periodically  in the  results of
operations  or in  stockholders'  equity as a  component  of  accumulated  other
comprehensive  income,  depending on whether the derivative instrument qualifies
for hedge  accounting  as defined by SFAS No. 133,  "Accounting  for  Derivative
Instruments and Hedging Activities" and related interpretations.  Changes in the
fair value of derivatives  not  qualifying for hedge  accounting are included in
the results of operations as they occur.

FAIR VALUE OF OTHER FINANCIAL INSTRUMENTS

The carrying amount of the Company's trade accounts  receivable,  trade accounts
payable,  accrued expenses, and line of credit approximates their estimated fair
values due to the short-term maturities of those financial  instruments.  In the
opinion of management,  the fair value of payables to related  parties cannot be
estimated  without incurring  excessive costs; for that reason,  the Company has
not provided such disclosure.  Other information about related-party liabilities
(such as the carrying  amount,  the  interest  rate,  and the maturity  date) is
provided,   where  applicable,   elsewhere  in  these  notes  to  the  condensed
consolidated financial statements.

--------------------------------------------------------------------------------
PAGE F-12

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

SEGMENT INFORMATION

The Company discloses information regarding segments in accordance with SFAS No.
131, "Disclosure About Segments of an Enterprise and Related  Information." SFAS
No. 131  establishes  standards  for  reporting of financial  information  about
operating  segments  in annual  financial  statements,  and  requires  reporting
selected  information about operating segments in interim financial reports (See
Note 12).

TRANSLATION OF FOREIGN CURRENCIES

The  Company  uses  the U.S.  dollar  as its  functional  currency.  Assets  and
liabilities  of  foreign  subsidiaries  are  translated  into  U.S.  dollars  at
period-end  exchange rates,  and revenues and expenses are translated at average
rates prevailing during the periods  presented.  In accordance with SFAS No. 52,
"Foreign Currency  Translation," such adjustments are reported as a component of
stockholders' equity.

RECLASSIFICATIONS

Certain  prior  period  information  has been  reclassified  to conform with the
current period's presentation.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

SFAS  No.  146,   "Accounting  for  Costs   Associated  with  Exit  or  Disposal
Activities," is effective for such activities initiated after December 31, 2002.
Activities of this type include restructurings (such as relocation of a business
and fundamental  reorganizations  of a business itself),  which may give rise to
costs such as contract cancellation provisions, employee relocation and one-time
termination costs. SFAS No. 146 prohibits liability  recognition based solely on
management's intent, and requires that liabilities be measured at estimated fair
value.  The  adoption  of SFAS No.  146 did not have an impact on the  Company's
condensed consolidated financial statements.

--------------------------------------------------------------------------------
PAGE F-13

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (continued)

In  November  2002,  the  FASB  issued  FASB  Interpretation   ("FIN")  No.  45,
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees  of  Indebtedness  of Others." FIN No. 45 clarifies  that a
guarantor is required to recognize, at the inception of a guarantee, a liability
for the  estimated  fair  value of the  obligation  undertaken  in  issuing  the
guarantee.  The initial recognition and measurement provisions of FIN No. 45 are
applicable  on a  prospective  basis to  guarantees  issued  or  modified  after
December 31, 2002, while the disclosure  requirements became applicable in 2002.
The requirements of this  pronouncement  did not materially affect the Company's
condensed consolidated financial statements.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities, an Interpretation of ARB 51." The primary objectives of FIN No. 46 are
to provide  guidance  on the  identification  of entities  for which  control is
achieved through means other than voting rights (variable interest entities,  or
"VIEs")  and  how  to  determine  when  and  which  business  enterprise  should
consolidate the VIE. This new model for  consolidation  applies to an entity for
which  either:  (1) the equity  investors  do not have a  controlling  financial
interest;  or (2) the equity  investment at risk is insufficient to finance that
entity's activities without receiving additional  subordinated financial support
from other  parties.  In  addition,  FIN No. 46  requires  that both the primary
beneficiary and all other enterprises with a significant  variable interest in a
VIE make additional disclosures.

As  amended  in  December  2003,  the  effective  dates of FIN No. 46 for public
entities that are small business issuers,  as defined ("SBIs"),  are as follows:
(a) For  interests in  special-purpose  entities  ("SPEs"):  periods ended after
December 15, 2003; and (b) For all other VIEs:  periods ended after December 15,
2004.  The  December  2003  amendment  of FIN No.  46 also  includes  transition
provisions that govern how an SBI which previously adopted the pronouncement (as
it was originally  issued) must account for  consolidated  VIEs.  Management has
concluded  that the  Company  does  not have an  interest  in any  SPEs,  and is
evaluating  the  other  effects  of FIN  No.  46  (as  amended)  on  its  future
consolidated financial statements.

In April 2003,  the FASB issued SFAS No. 149,  "Amendments  of Statement  133 on
Derivative  Instruments  and Hedging  Activities,"  which  amends and  clarifies
financial accounting and reporting for derivative instruments, including certain
derivative  instruments  embedded in other contracts and for hedging  activities
under SFAS No. 133. This  pronouncement is effective for contracts  entered into
or  modified  after June 30,  2003 (with  certain  exceptions),  and for hedging
relationships  designated  after June 30, 2003. The adoption of SFAS No. 149 did
not have a material  impact on the Company's  condensed  consolidated  financial
statements.

--------------------------------------------------------------------------------
PAGE F-14
<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (continued)

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity." SFAS No. 150
establishes  standards  for  how  a  company  classifies  and  measures  certain
financial  instruments with  characteristics of both liabilities and equity, and
is effective for public  companies as follows:  (i) in November  2003,  the FASB
issued  FASB Staff  Position  ("FSP")  FAS 150-3  ("FSP  150-3"),  which  defers
indefinitely (a) the measurement and classification guidance of SFAS No. 150 for
all  mandatorily  redeemable   non-controlling  interests  in  (and  issued  by)
limited-life  consolidated  subsidiaries,  and (b)  SFAS No.  150's  measurement
guidance for other types of mandatorily  redeemable  non-controlling  interests,
provided  they  were  created  before  November  5,  2003;  (ii)  for  financial
instruments  entered  into or  modified  after May 31, 2003 that are outside the
scope of FSP 150-3; and (iii)  otherwise,  at the beginning of the first interim
period  beginning  after June 15,  2003.  The Company  adopted  SFAS No. 150 (as
amended)  on  the   aforementioned   effective   dates.  The  adoption  of  this
pronouncement  did not  have a  material  impact  on the  Company's  results  of
operations or financial condition.

In November 2004, the FASB issued SFAS No. 151,  "Inventory Costs - an amendment
of ARB No. 43, Chapter 4," which  clarifies the accounting for abnormal  amounts
of idle  facility  expense,  freight,  handling  costs and wasted  material.  In
Chapter 4 of ARB 43,  paragraph  five  previously  stated  that  "...under  some
circumstances,  items such as idle facility expense,  excessive spoilage, double
freight,  and  re-handling  costs may be so abnormal as to require  treatment as
current period  charges...." SFAS No. 151 requires that such items be recognized
as current-period expenses, regardless of whether they meet the criterion of "so
abnormal" (an undefined term). This  pronouncement also requires that allocation
of fixed  production  overhead to the costs of conversion be based on the normal
capacity of the production  facilities.  SFAS No. 151 is effective for inventory
costs incurred in years beginning after June 15, 2005.

--------------------------------------------------------------------------------
PAGE F-15

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (continued)

In December 2004, the FASB issued SFAS No. 123-R,  "Share-Based Payment",  which
requires that the compensation cost relating to share-based payment transactions
(including  the  cost  of all  employee  stock  options)  be  recognized  in the
financial  statements.  That cost will be measured  based on the estimated  fair
value of the equity or  liability  instruments  issued.  SFAS No. 123-R covers a
wide range of share-based  compensation  arrangements  including  share options,
restricted share plans, performance-based awards, share appreciation rights, and
employee share purchase plans. SFAS No.123-R replaces SFAS No. 123,  "Accounting
for  Stock-Based  Compensation",  and  supersedes  Accounting  Principles  Board
("APB")  Opinion  No.  25,  "Accounting  for  Stock  Issued  to  Employees".  As
originally  issued,  SFAS No. 123  established as preferable a  fair-value-based
method of  accounting  for  share-based  payment  transactions  with  employees.
However,  that  pronouncement   permitted  entities  to  continue  applying  the
intrinsic-value-based  model of APB  Opinion  25,  provided  that the  financial
statements  disclosed  the pro forma net income or loss based on the  preferable
fair-value method.

SBI's  are  required  to apply  SFAS No.  123-R in the first  interim  or annual
reporting  period that begins  after  December  15, 2005.  Thus,  the  Company's
consolidated   financial   statements  will  reflect  an  expense  for  (a)  all
share-based  compensation  arrangements  granted after February 28, 2006 and for
any such  arrangements that are modified,  cancelled,  or repurchased after that
date, and (b) the portion of previous share-based awards for which the requisite
service has not been rendered as of that date, based on the grant-date estimated
fair value.

In December  2004,  the FASB issued  SFAS No. 152,  "Accounting  for Real Estate
Time-Sharing  Transactions - an amendment of FASB Statements No. 66 and 67." The
American  Institute of Certified Public  Accountants (the "AICPA")  concurrently
issued Statement of Position  ("SOP") 04-2 entitled  "Accounting for Real Estate
Time-Sharing  Transactions."  SFAS No. 152 amends SFAS No. 66 to  reference  the
accounting  and reporting  guidance in SOP 04-2. As amended,  SFAS No. 67 states
that its guidance for (a)  incidental  operations and (b) costs incurred to sell
real estate  projects does not apply to real estate  time-sharing  transactions;
these  matters  will now be governed by SOP 04-2.  SFAS No. 152 and SOP 04-2 are
effective for years beginning after June 15, 2005.

--------------------------------------------------------------------------------
PAGE F-16

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (continued)

In December  2004,  the FASB issued SFAS No.  153,  "Exchanges  of  Non-monetary
Assets,  an  amendment  of APB  Opinion  No.  29,  Accounting  for  Non-monetary
Transactions."  The  amendments  made by SFAS No. 153 are based on the principle
that  exchanges of  non-monetary  assets should be measured  using the estimated
fair value of the assets exchanged. SFAS No. 153 eliminates the narrow exception
for non-monetary  exchanges of similar productive assets, and replaces it with a
broader  exception  for  exchanges  of  non-monetary  assets  that  do not  have
commercial substance.  A non-monetary exchange has "commercial substance" if the
future cash flows of the entity are expected to change significantly as a result
of the transaction.  This pronouncement is effective for non-monetary  exchanges
in fiscal periods beginning after June 15, 2005.

Other  recent  accounting  pronouncements  issued  by the  FASB  (including  its
Emerging Issues Task Force),  the AICPA, and the SEC did not or are not believed
by  management  to have a  material  impact on the  Company's  present or future
consolidated financial statements.

3. INVENTORY

Inventories consisted of the following as of November 30, 2004:

             Raw materials                         $ 1,549,507
             Work-in-process                           239,027
             Finished goods                          2,155,060
             Inventory markdowns                       (13,927)
                                                   -----------
                                                   $ 3,929,667
                                                   ===========

4. PROPERTY AND EQUIPMENT

Property  and  equipment  (net of  accumulated  depreciation  and  amortization)
consisted of the following as of November 30, 2004:

            Vehicles                                  $ 54,052
            Leasehold improvements                      45,101
            Furniture and fittings                     135,394
            Workshop equipment                         165,074
            Office equipment                            23,576
            Computer equipment                         515,314
                                                      --------
                                                      $938,511
                                                      ========

See Note 12 for additional information.

--------------------------------------------------------------------------------
PAGE F-17

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

5. ACQUISITIONS

In order to allocate the purchase price of the acquisitions described below, the
Company  engaged a  third-party  valuation  firm based in the  United  States of
America to estimate the fair value of the acquirees' net assets.  Based on these
independent valuations, the purchase price allocations as of the effective dates
of the transactions discussed in this note are summarized below:

       Accounts receivable, net                           $ 1,546,190
       Property and equipment, net                            185,348
       Inventory and other assets                           2,026,868
       Customer relationships                               1,660,617
       Completed technologies                                 109,998
       In-process research and development                    102,578
       Other identifiable intangible assets                    14,208
       Preliminary goodwill (see below)                       846,224
       Less liabilities assumed                            (2,492,031)
                                                          -----------
                                                          $ 4,000,000
                                                          ===========

The estimated fair value allocated to customer  relationships is being amortized
over a weighted  average useful life of  approximately  6.5 years. The estimated
fair value  allocated to completed  technologies  is being amortized over useful
lives ranging from approximately one to five years.

Since the business  combinations  described below were nontaxable  transactions,
the  tax  basis  of  identifiable  intangible  assets  that  arise  in  purchase
accounting is zero. A $535,000 deferred tax liability, which has been charged to
goodwill,  has been  reflected in the  condensed  consolidated  balance sheet to
account  for the  estimated  tax effect of the  non-deductible  amortization  of
identifiable  intangible  assets (other than purchased  in-process  research and
development, which was expensed on a pre-tax basis at acquisition). The deferred
tax  liability  is  relieved  by  crediting  deferred  income tax expense as the
related assets are amortized for financial reporting  purposes.  Thus, the above
purchase  price   allocations   resulted  in  total  goodwill  of  approximately
$1,381,000.

Goodwill is not  deductible for income tax purposes under the tax laws of either
the Republic of South Africa or the United States of America.

--------------------------------------------------------------------------------
PAGE F-18

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

5. ACQUISITIONS (continued)

ASTRATA SOUTH AFRICA (PTY) LTD.

Effective  December  1,  2002,  the  Company  acquired  all  of the  issued  and
outstanding  capital  stock of Astrata  South Africa  (Pty) Ltd.  [then known as
Optron  (Pty)  Limited]  ("Astrata  SA")  for  an  all-cash  purchase  price  of
approximately  $2  million.  Astrata SA is a company in the  telematics  and GPS
industry  focused on advanced  location-based  IT  products  and  services  that
combine  positioning,  wireless  communications,  and information  technologies.
Based on the  independent  valuation  described  above,  the purchase  price was
allocated to the net assets of Astrata SA as follows:

         Accounts receivable, net                        $ 1,303,294
         Property and equipment, net                         130,245
         Inventory and other assets                        1,613,364
         Customer relationships                              795,329
         Other identifiable intangible assets                 14,208
         Preliminary goodwill (see above)                    143,477
         Less liabilities assumed                         (1,999,917)
                                                         -----------
                                                         $ 2,000,000
                                                         ===========

The  principal  reasons  that the  Company  agreed to pay a  purchase  price for
Astrata SA in excess of its recorded net assets plus the estimated fair value of
the identifiable  intangible  assets were (i) the acquiree's  history of profits
over an extended  period of time,  and (ii) an opportunity to enter the emerging
telematics  market.  Given that Astrata SA had been  profitable  in prior years,
management   concluded  that  the  purchase  price  was  reasonable   under  the
circumstances.

--------------------------------------------------------------------------------
PAGE F-19

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

5. ACQUISITIONS (continued)

ASTRATA SYSTEMS (PTY) LTD.

Effective  November 1, 2003,  a  wholly-owned  subsidiary  of the  Company  (the
"Subsidiary")  acquired  all of the  issued  and  outstanding  capital  stock of
Astrata Systems (Pty) Ltd. [then known as Nicon Systems (Pty) Limited] ("Astrata
Systems")  for a total  purchase  price of  approximately  $2  million.  Astrata
Systems is a South  African  company  engaged in the design and  manufacture  of
products for the GPS and telematics markets.  Based on the independent valuation
described  above,  the purchase price was allocated to the net assets of Astrata
Systems as follows:

             Accounts receivable, net                   $   242,896
             Property and equipment, net                     55,103
             Inventory and other assets                     413,504
             Customer relationships                         865,288
             Completed technologies                         109,998
             In-process research and development            102,578
             Preliminary goodwill (see above)               702,747
             Less liabilities assumed                      (492,114)
                                                        -----------
                                                        $ 2,000,000
                                                        ===========

             Consideration:
                 Cash                                       600,000
                 Redeemable preferred stock               1,400,000
                                                        -----------
                                                        $ 2,000,000
                                                        ===========

Management  has concluded  that the above  in-process  research and  development
("R&D")  asset did not have any  alternative  future use as of November 1, 2003.
Thus, the estimated fair value of approximately $103,000 allocated to in-process
R&D in the purchase accounting was immediately expensed.

The  principal  reasons  that the  Company  agreed to pay a  purchase  price for
Astrata  Systems in excess of its  recorded net assets plus the  estimated  fair
value of the identifiable  intangible assets were its strong telematics research
and  development  team,  the  manufacturing  and marketing  expertise of Astrata
Systems, and its product lines.

--------------------------------------------------------------------------------
PAGE F-20

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

5. ACQUISITIONS (continued)

ASTRATA SYSTEMS (PTY) LTD. (continued)

As  amended in June  2004,  the  merger  agreement  with  Astrata  Systems  (the
"Agreement")  provides that the agreed-upon total purchase price is comprised of
the following:

         $2 million,  which was satisfied by (a) paying $600,000 in cash and (b)
         the Subsidiary issuing 1.4 million shares of its non-voting  redeemable
         preferred  stock  with  a par  value  of  R6.8236/share  (the  "initial
         preferred   shares");   plus   approximately   $72,000  of   additional
         consideration,  which was satisfied by the  Subsidiary  issuing  71,776
         additional shares of non-voting  redeemable  preferred stock with a par
         value of R6.8236/share.

The  purchase  price in the  Astrata  Systems  acquisition  was the result of an
arm's-length negotiation among unrelated parties. Thus, management has concluded
that the  estimated  fair value of the  Subsidiary's  initial  preferred  shares
approximated  $1.4 million as of November 1, 2003, and has measured the purchase
price  accordingly.  None of the  Subsidiary's  outstanding  common or preferred
stock is publicly traded.

Under the terms of the Agreement,  the significant  rights and privileges of the
Subsidiary's non-voting redeemable preferred stock are as follows:

        The initial  preferred  shares accrue dividends at an annual rate of 2%,
        and  are  redeemable  at  the  option  of  the  stockholders  in  annual
        increments from November 2004 to November 2007 at 100% of the par value.
        The liquidation  preference of the initial  preferred shares is equal to
        the par  value  until  August  30,  2008;  thereafter,  the  liquidation
        preference increases to 125% of the par value.

The Company has reported the  Subsidiary's  preferred  stock  described above as
minority interest in the accompanying condensed consolidated balance sheet.

6.  LINE OF CREDIT

Astrata SA has secured a line of credit for use in its South Africa  operations.
This line of credit is secured by certain trade  accounts  receivable and allows
for funding up to approximately $1.7 million based on current invoices. Interest
on the  outstanding  balance  is charged  at the  current  prime rate (11% as of
November 30, 2004). The Company has drawn approximately $1.3 million on the line
of credit as of November 30, 2004.

--------------------------------------------------------------------------------
PAGE F-21

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

7. NOTES PAYABLE TO RELATED PARTIES

In September 2004,  Astrata Group entered into a series of agreements,  pursuant
to which a  stockholder  (who  then  beneficially  owned  approximately  5.5% of
Astrata Group's  outstanding common stock) lent $1.5 million to the Company,  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 the rate of 15%,  compounded  annually,
is due and payable  concurrently  with the principal.  Astrata Group granted the
stockholder  two-year warrants (which vested and became fully exercisable on the
grant date) to purchase up to 48,000 shares of Astrata  Group's  common stock at
an exercise price of $2.00 per share.  In connection with granting the warrants,
Astrata  Group  also  provided  certain   registration  rights  for  the  shares
underlying the warrants and for those shares then owned by the stockholder for a
period not to exceed five years.  The  agreement to register such stock with the
SEC does not require any specific  deadlines or financial  penalties relating to
the filing or  effectiveness  of a registration  statement that registers any of
the stockholder's  shares. The transaction described above constituted an exempt
offering under Rule 506 of Regulation D to a single accredited investor.

As of November 30, 2004,  Astrata  Group and the holder  amended the  promissory
note  described in the preceding  paragraph.  Subject to the earlier  demand for
repayment,  the holder  was  granted  the  option to  convert  any or all of the
principal and interest into shares of the Company's common stock at a 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 became 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 the  Company,  as an  unsecured  credit
facility. As of November 30, 2004, the Company has drawn approximately  $556,000
against this facility. The principal is payable in equal installments commencing
February 1, 2005 and every six months  thereafter.  The note accrues interest at
3% above the prime rate,  and is payable  quarterly in arrears.  The note has no
prepayment penalty and may be paid in full before the due date.

See Note 13 for additional  information  regarding the transaction  described in
the preceding paragraph.

In  November  2004,   Astrata  Group  accepted  an  unsecured  advance  from  an
officer/stockholder  in the amount of $41,378.  This advance accrues interest at
3% above  LIBOR  and is  payable  in full on March 1,  2005  with no  prepayment
restrictions.

--------------------------------------------------------------------------------
PAGE F-22

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

8. EQUITY TRANSACTIONS

PREFERRED STOCK OF THE COMPANY

The Company is authorized to issue  10,000,000  shares of preferred stock with a
par value of $0.0001  per  share.  The  preferred  shares do not have any voting
rights  or  liquidation  preference.  As of  November  30,  2004,  no  shares of
preferred stock were issued or outstanding, nor has any class of preferred stock
been designated.

ISSUANCE OF PREFERRED STOCK BY SUBSIDIARY

During the year ended  February  29,  2004,  a  wholly-owned  subsidiary  of the
Company  issued  approximately  1.5  million  shares  of  non-voting  redeemable
preferred  stock in connection  with an  acquisition;  see Note 5 for additional
information.

ISSUANCE OF COMMON STOCK

The Company issued (i) approximately 6,275,000 post-Effective Date common shares
to the shareholders of Cadogan,  and (ii) 1,800,000  post-Effective  Date common
shares to the stockholders of Optron Technologies in exchange for 100% ownership
of those two entities.  The Company issued an additional 156,000  post-Effective
Date shares of common stock to the Trust for distribution  pursuant to the terms
of the Plan (62,400 shares for pro rata distribution to Class Two creditors, and
93,600 shares for other creditors and Trust  expenses).  The Company also issued
609,000   post-Effective   Date  shares  of  common  stock  in  satisfaction  of
approximately  $520,000 of bankruptcy  administrative  fees. Lastly, the Company
issued an  additional  1,560,000  post-Effective  Date shares of common stock in
satisfaction of approximately $53,000 of administrative-claim  notes payable and
accrued interest.

9. OTHER RELATED PARTY TRANSACTIONS

The  Company  currently  leases  facilities  from an  entity  controlled  by two
directors 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  $123,000  and  $11,000  for the  nine-month
periods  ended  November  30,  2004 and 2003,  respectively;  and  approximately
$55,000 and $11,000 for the  three-month  periods  ended  November  30, 2004 and
2003, respectively.

--------------------------------------------------------------------------------
PAGE F-23

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

10.  INVESTMENT IN AFFILIATE

In October 2003,  Astrata SA (a wholly-owned  subsidiary of the Company) 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"),  which  is  owned  50%  each by  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.

BOT's initial capitalization  principally consisted of interest-bearing loans by
the  stockholders  represented by (i) a contribution  of inventory by Astrata SA
with an agreed-upon value of approximately  $200,000 and (ii) an equal amount in
cash to be provided by Barloworld as needed for working capital requirements.

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.

Condensed unaudited financial information of BOT as of November 30, 2004 and for
the nine month and three month periods then ended is presented below.

Current assets                              $993,893
Other assets                                  27,182
Payable to stockholders                      319,240
Other liabilities                            608,626
Equity                                        93,209

                                         9 MONTHS ENDED      3 MONTHS ENDED
                                         NOV. 30, 2004       NOV. 30, 2004
                                         ----------------------------------
Sales                                     $1,088,104          $  464,597
Cost of goods sold                           640,372             310,749
                                          ----------          ----------
Gross margin                                 447,732             153,848
Operating expenses                           316,114             100,379
                                          ----------          ----------
Operating income                          $  131,618          $   53,469
                                          ==========          ==========

Net income                                $   78,049          $   23,085
                                          ==========          ==========
Equity distributions                      $       --          $       --
                                          ==========          ==========

--------------------------------------------------------------------------------
PAGE F-24

<PAGE>
--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

11. 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 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.

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 November  30,  2004,  future  minimum
payments  under  operating  leases  approximated  $176,000  for the three months
ending February 28, 2005; and the following for the fiscal years ending February
28 listed below:

                           2006                  $ 582,000
                           2007                    433,000
                           2008                    268,000
                           2009                     94,000
                           2010                     94,000
                           Thereafter              414,000

OTHER MATTERS

See Note 13 for additional commitments.

--------------------------------------------------------------------------------
PAGE F-25

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

12. SEGMENT REPORTING AND GEOGRAPHIC INFORMATION

In the past,  the  Company  has  reported  three  segments:  Geomatics,  Machine
Guidance Products and Telematics with Machine Guidance Products  overlapping the
other segments. After review, management has concluded that the overlap with the
other  segments  had grown to such an extent  that  reporting  Machine  Guidance
Products as a separate  segment was no longer  appropriate.  Accordingly,  these
products  were  re-allocated   between  Geomatics  and  Telematics  for  segment
reporting purposes.

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 moving machinery such as graders,  dump trucks
and drills as well as agricultural products which have tractor and crop-spraying
guidance in them.

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.

--------------------------------------------------------------------------------
PAGE F-26

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

12. SEGMENT REPORTING AND GEOGRAPHIC INFORMATION (continued)

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 operating income or loss are presented below:

FOR THE NINE MONTHS ENDED NOVEMBER 30, 2004:

                               GEOMATICS      TELEMATICS    CONSOLIDATED
                              ------------   ------------   ------------
Total assets                  $  9,439,991   $  2,523,042   $ 11,963,033
                              ============   ============   ============
Revenue                          8,734,362      2,334,447     11,068,809
Gross profit                     3,007,670      1,403,653      4,411,323
Operating expenses                                            (7,503,598)
                                                            ------------
Operating loss                                              $ (3,092,275)
                                                            ============

FOR THE NINE MONTHS ENDED NOVEMBER 30, 2003:

                                 GEOMATICS     TELEMATICS   CONSOLIDATED
                                 -----------   -----------   -----------
Total assets                     $ 7,447,616   $ 1,314,745   $ 8,762,361
                                 ===========   ===========   ===========
Revenue                            6,077,931     1,314,691     7,392,622
Gross profit                       2,237,397       555,051     2,792,448
Operating expenses                                            (2,084,100)
                                                             -----------
Operating income                                             $   708,348
                                                             ===========

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2004:

                                  GEOMATICS    TELEMATICS   CONSOLIDATED
                                ------------  ------------  ------------
Total assets                    $  9,439,991  $  2,523,042  $ 11,963,033
                                ============  ============  ============
Revenue                            3,483,247       648,239     4,131,486
Gross profit                       1,131,950       516,193     1,648,143
Operating expenses                                            (2,654,238)
                                                            ------------
Operating loss                                              $(1,006,095)
                                                            ============

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2003:

                                 GEOMATICS     TELEMATICS   CONSOLIDATED
                                ------------  ------------  ------------
Total assets                    $  7,447,616  $  1,314,745  $  8,762,361
                                ============  ============  ============
Revenue                            2,067,761       732,240     2,800,001
Gross profit                         781,155       321,292     1,102,447
Operating expenses                                              (731,241)
                                                            ------------
Operating income                                            $    371,206
                                                            ============

--------------------------------------------------------------------------------
PAGE F-27

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

12. SEGMENT REPORTING AND GEOGRAPHIC INFORMATION (continued)

GEOGRAPHIC INFORMATION

Certain condensed  geographic  information is presented below including property
and equipment  ("fixed  assets"),  revenues,  gross profit and operating  income
(loss):

AS OF OR FOR THE NINE MONTHS ENDED NOVEMBER 30, 2004:

<TABLE>
<CAPTION>
                     FIXED                      GROSS       OPERATING      OPERATING
                 ASSETS (NET)    REVENUE        PROFIT      EXPENSES         (LOSS)
                 -----------   -----------   -----------   -----------    -----------
<S>              <C>           <C>           <C>           <C>            <C>
Brunei           $     2,559   $   119,309   $    35,511   $   (48,785)   $   (13,274)
Malaysia              11,684       105,324        46,158      (132,747)       (86,589)
Singapore            195,831        54,097        45,044      (647,588)      (602,544)
South Africa         499,426    10,790,079     4,284,610    (4,556,920)      (272,310)
United States         12,106            --            --    (1,364,351)    (1,364,351)
Western Europe       216,905            --            --      (753,207)      (753,207)
                 -----------   -----------   -----------   -----------    -----------
Total            $   938,511   $11,068,809   $ 4,411,323   $(7,503,598)   $(3,092,275)
                 ===========   ===========   ===========   ===========    ===========
</TABLE>

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2004:

<TABLE>
<CAPTION>
                                                GROSS        OPERATING     OPERATING
                                 REVENUE        PROFIT       EXPENSES     INCOME (LOSS)
                               -----------   -----------   -----------    -----------
<S>                            <C>           <C>           <C>            <C>
Brunei                         $   120,828   $    35,960   $   (37,490)   $    (1,530)
Malaysia                           104,668        45,890       (57,886)       (11,996)
Singapore                           43,351        34,185      (258,717)      (224,532)
South Africa                     3,862,639     1,532,108    (1,524,093)         8,015
United States                           --            --      (414,201)      (414,201)
Western Europe                          --            --      (361,851)      (361,851)
                               -----------   -----------   -----------    -----------
Total                          $ 4,131,486   $ 1,648,143   $(2,654,238)   $(1,006,095)
                               ===========   ===========   ===========    ===========
</TABLE>

--------------------------------------------------------------------------------
PAGE F-28
<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

13. SUBSEQUENT EVENTS

PENDING ACQUISITION

In June 2004, a wholly-owned subsidiary of the Company entered into an agreement
to acquire all the assets of Nanini 209 CC  ("Suretrack").  In January 2005, the
seller and the Company  executed an amendment of the  aforementioned  agreement.
Taken together, these two contracts (which are hereinafter collectively referred
to as the "Suretrack  acquisition  agreement") constitute a definitive agreement
to consummate the transaction described below. Suretrack's principal business in
the  telematics  industry  is the sale and  rental  of  equipment  and  tracking
software,  along with  providing  airtime and associated  services.  The primary
operating  areas of  Suretrack  are South Africa and other  sub-Saharan  African
countries.

Under the terms of the Suretrack acquisition agreement, the Company's subsidiary
has agreed to purchase all of Suretrack's  tangible and intangible  assets for a
total purchase price of R7.8 million which is payable as follows:

o    R1.9 million in cash at closing  (which is  presently  expected to occur in
     January  2005),  plus  R1.0  million  in  cash on  each  of the  first  two
     anniversaries of the closing date; and

o    The R3.9  million  balance  in the  equivalent  number of shares of Company
     common stock at $4.00/share,  based on the prevailing exchange rate on July
     15,  2004.  If such  common  stock is not issued for any reason  other than
     the lack of required approvals by South African regulatory authorities, the
     Company is obligated  to pay this portion of the purchase price in  cash by
     February 28, 2005.

If  Suretrack's  sole  stockholder  (the  "stockholder")  does not remain in the
Company's  employ until at least July 15, 2007, (a) the Company will be relieved
of its liability for any portion of the purchase price then remaining unpaid and
(b) the stockholder will be required to forfeit any Company common stock that is
then subject to the lock-up  provision (see below) of the Suretrack  acquisition
agreement.

As of December 31, 2004, R1.9 million represents approximately $337,000; on July
15, 2004, R3.9 million equated to approximately  161,000 shares of the Company's
common stock based on the formula  described  above.  The Suretrack  acquisition
agreement  includes a lock-up  provision which  prohibits the  stockholder  from
selling or  encumbering  (a) more than 50% of the shares of Company common stock
received until July 15, 2006, and (b) the remaining shares until July 15, 2007.

--------------------------------------------------------------------------------
PAGE F-29

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

13. SUBSEQUENT EVENTS (continued)

PRIVATE PLACEMENTS OF EQUITY SECURITIES

During  December  2004,  Astrata  Group  entered  into a series  of  agreements,
pursuant to which it sold 151,429 units of its  securities at $5.25 per unit, or
an aggregate of approximately  $716,000 in net proceeds.  Each unit consisted of
one share of common stock and one two-year  warrant to purchase one share of its
common stock at an exercise price of $5.00. The warrants vested and became fully
exercisable  on their  issuance  dates.  Astrata  Group  also  provided  certain
"piggy-back"  registration  rights for the shares and the shares  underlying the
warrants  for a period  not to exceed  three  years and agreed to file a re-sale
registration  statement with the SEC covering the  registrable  securities on or
before April,  2005. The Company is not subject to any contractual  penalties in
the  event  that any such  registration  statement  is not  filed  timely or not
declared  effective by the SEC by any specific date. The transactions  described
in this paragraph constituted exempt offerings under Rule 506 of Regulation D to
accredited investors.

CONVERSION OF DEBT INTO EQUITY SECURITIES

During December 2004, Astrata Group entered into an agreement, pursuant to which
a stockholder  who had previously  lent the Company funds on an unsecured  basis
(see Note 7) converted $525,000 of such debt into 100,000 shares of common stock
and 100,000  two-year  warrants with an exercise  price of $5.00 per share.  The
warrants vested and became fully exercisable on the issuance date. Astrata Group
also provided certain  "piggy-back" and "S-3" registration rights for the shares
and the shares  underlying  the warrants,  as well as for existing  shares for a
period  not to  exceed  three  years and  agreed to file a re-sale  registration
statement with the SEC covering the  registrable  securities on or before April,
2005. The Company is not subject to any contractual  penalties in the event that
any such registration statement is not filed timely or 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 a single
accredited investor.

--------------------------------------------------------------------------------
PAGE F-30

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

13. SUBSEQUENT EVENTS (continued)

COMMON STOCK ISSUED TO CONSULTANTS, DIRECTORS AND EMPLOYEES

During December 2004,  Astrata Group issued 37,500 shares of its common stock in
exchange for services provided to it by four consultants. The per-share value of
the  common  stock was  $5.00.  The  transactions  described  in this  paragraph
constituted  exempt  offerings under Section 4(2) of the Securities Act of 1933,
as amended.

During December 2004,  Astrata Group issued 24,100 shares of its common stock to
approximately  190  employees  in  exchange  for  services  rendered.  With  the
exception  of one  employee  and his  family  member  designees  and  two  minor
designees of a second  employee of the Company,  none of the persons was a "U.S.
person"  (as  defined in Rule 902 of  Regulation  S), and each of the  issuances
constituted an "offshore  transaction" (as defined in Rule 902 of Regulation S).
The per-share value of the common stock was $5.00. The transactions described in
this paragraph  constituted  exempt offerings under Regulation S or Section 4(2)
of the Securities Act of 1933, as amended.

During January 2005,  Astrata Group issued 150,000 shares of its common stock to
three  newly  appointed,  non-management  directors  in  consideration  of their
agreement to serve as  directors.  The  per-share  value of the common stock was
$5.00. The transactions described in this paragraph constituted exempt offerings
under Rule 506 of Regulation D to accredited investors.

DEBT FINANCING

During 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 the Company $1.5
million on an unsecured  basis (see Note 7). The holder's  conversion  privilege
expires when the Company 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 the  rate of 15%,  compounded
annually, is due and payable concurrently with the principal. In connection with
the sale of the note,  the Company  granted  warrants  (which  vested and became
fully  exercisable  on the grant  date) to the holder to  purchase  up to 12,000
shares of the Company's  common stock with an exercise price of $5.00 per share.
The transaction described in this paragraph constituted an exempt offering under
Rule 506 of Regulation D to an accredited investor.

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PAGE F-31

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           NOVEMBER 30, 2004 AND 2003
--------------------------------------------------------------------------------

13. SUBSEQUENT EVENTS (continued)

DEBT FINANCING (continued)

Further,  the Company  provided the holder with certain  "piggy-back"  and "S-3"
registration  rights for the shares underlying the note and the warrant, as well
as for the shares  underlying  the amended $1.5 million note  agreement  and the
32,000 shares  underlying the warrant  granted to the holder in connection  with
such amendment.  The Company is not subject to any contractual  penalties in the
event that any such  registration  statement is not filed timely or not declared
effective by the SEC by any specific date.

EQUITY OFFERING TO EMPLOYEES

During January 2005, Astrata Group entered into a series of agreements, offering
to sell  units of its  securities  at  $52.50  per  unit,  for an  aggregate  of
approximately   $500,000  in  gross  proceeds.  All  potential  subscribers  are
employees  of the  Company  or its  subsidiaries  and  affiliates.  None  of the
potential  subscribers is a "U.S.  person" (as defined in Rule 902 of Regulation
S), and each of the sales would constitute an "offshore transaction" (as defined
in Rule 902 of  Regulation  S). Each unit consists of ten shares of common stock
and ten  three-year  warrants,  each for the purchase of one share of its common
stock at an  exercise  price of $5.00 per  share.  The  warrants  would vest and
become fully  exercisable on their issuance dates.  Astrata Group also agreed to
provide certain  "piggy-back"  registration rights for the shares and the shares
underlying  the  warrants  for a period not to exceed  three 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 in the event that any such registration  statement is not filed timely
or not  declared  effective  by the SEC by any specific  date.  The  transaction
described in this paragraph constitutes an exempt offering under Regulation S.

CHANGE OF TRADING SYMBOL

Effective  January 10, 2005,  the Company's  trading  symbol on the OTC Bulletin
Board was changed to "ATTG"

OTHER SUBSEQUENT EVENTS

During  December  2004,  the Board of  Directors of Astrata  Group  approved the
Company's 2004 Equity Incentive Plan, which reserved  1,560,000 shares of common
stock for grants of incentive and  non-statutory  stock options,  stock bonuses,
restricted stock awards and stock appreciation rights. The terms of the plan are
included  in the May 2004  Order  Confirming  Debtor's  Second  Amended  Plan Of
Reorganization For Cetalon Corporation.

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PAGE F-32

<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

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 November 30 2004,  together
with the  results  of  operations  for the three and nine  month  periods  ended
November  30, 2004 and 2003,  and cash flows for the  nine-month  periods  ended
November 30, 2004 and 2003.

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," "intend," "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 United  States of America  and the other
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 accounting principles
generally  accepted in the United  States of America  ("GAAP").  These risks and
uncertainties should be considered in evaluating  forward-looking statements and
undue  reliance  should not be placed on such  statements.  Further  information
concerning the Company and its business, including additional factors that could
materially affect the Company's financial results, is included herein and in the
Company's other filings with the Securities and Exchange Commission.

COMPANY OVERVIEW AND RECENT TRENDS

COMPANY OVERVIEW

Astrata  Group  and its  subsidiaries  are in the  telematics  and  GPS  (Global
Positioning  System)  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 owns an assembly and
testing  facility  with  thirteen  years of  experience in position and wireless
communication  technology that has delivered in excess of 80,000 GPS/GSM (Global
System for Mobile Telecommunications) fleet management products to customers.

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PAGE 4

<PAGE>

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.

Astrata Group adds value to its products and services through the development of
proprietary  information  technologies,  such as applications  and software that
allows the customer to make use of the positioning  information in a location of
his choice.

Astrata  Group  was  founded  in  1986  as a  reseller  of  Sokkia  products,  a
manufacturer of Japanese survey  instruments.  In 1988-89 the company integrated
GPS  products  into its  portfolio  and  became  one of the first  international
dealers  of  Trimble  in 1989.  Since  then,  Astrata  Group  has won the  "Best
International  Dealer Award" on several  occasions.  In 1998 Astrata Group began
developing  its  own  software  and  proprietary   products  for  the  demanding
commercial high precision  positioning market. 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,  Ltd.,  Nikon  Surveying  Instruments,  Aquila,  Thrane and
Thrane,  Itronix  and  Optech.  In  addition,  Astrata  Group  provides  ongoing
communications  and IT  services  (e.g.  Astrata  Group is a  satellite  service
provider  for  Telenor)  for  all  its  customers  with  comprehensive  service,
training, and technical assistance.

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. In 2002 and 2003, Astrata Group purchased 100% of CyberPro
Software  Solutions (Pty) Ltd in two  transactions,  a software  solutions house
experienced  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.

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PAGE 5

<PAGE>

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 phases of construction.

This  segment also  supports  Astrata  Group's  joint  venture  with  Barloworld
Equipment  Company.  In  October  2003,  Astrata  Group  signed a joint  venture
agreement with Barloworld  Equipment,  the exclusive  distributor of Caterpillar
Corporation  in South  Africa.  The  Barloworld  joint  venture  is owned 50% by
Barloworld   Equipment  (see  Note  10,  "Investment  in  Affiliates",   to  the
accompanying condensed consolidated financial statements).

Astrata  Group  is the sole  distributor  for  Trimble  Geomatics  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, Theodolites; Itronix Products; Ag Leader
Products;  Chicago Steel  Accessories;  Garmin Handheld GPS Units;  Optech;  and
Caterpillar Technology Products.

The geomatics segment also includes  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  moving
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,  often 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, and information technology
and add measurable  value to  location-based  information.  We offer air time to
communicate  data from the  vehicle or field  location  to the  customer's  data
center or provide 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.

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PAGE 6

<PAGE>

In  addition,  we  offer  a range  of  rugged  mobile  computing,  wireless  and
location-based  solutions,  which  combine  GPS and  Global  System  for  Mobile
communications  (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 vehicles.  The Astrata GLP is based on ten years
of experience designing, manufacturing, and supporting over 80,000 GPS units 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,
biometric  driver  identification  systems,  and safety  related  monitoring  of
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 to  terrestrial
applications.  GPS is a system of twenty-four 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, to 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.
This  line-of-sight  visibility  can be blocked by buildings,  hills,  and dense
foliage.  The receiver must have a line-of-sight  to at least four satellites to
determine its latitude,  longitude,  altitude, and time. The accuracy of GPS may
also be  limited by  distortion  of GPS  signals  from  atmospheric  conditions,
intentional  or  inadvertent  signal  interference,  or Selective  Availability.
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.

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PAGE 7

<PAGE>

The  convergence of our  positioning,  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 us to combine 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  away 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.

TECHNICAL SUPPORT SERVICES

We maintain  workshops  staffed  with  factory-trained  personnel to service and
repair the  equipment  we sell.  We also provide  technical  support by means of
dedicated  personnel  via e-mail,  telephone  and  in-house,  and offer  product
training.

RECENT TRENDS

GEOGRAPHIC EXPANSION

The company  recently  expanded  the  geomatics  business  into the Asia Pacific
region with offices in Singapore, Malaysia, and Brunei.

Astrata  (Asia  Pacific)  Pte Ltd was  incorporated  on October 6, 2003 and is a
wholly owned  subsidiary of Astrata  Group.  The company serves as the corporate
Asia Pacific  Regional  Headquarters  and also the holding  entity for the other
subsidiaries,  joint ventures,  and strategic  partnerships located in Malaysia,
Brunei, and Indonesia.

Astrata  (Singapore) Pte Ltd was  incorporated on October 6, 2003 and is a Joint
Venture  Company  owned 51% by  Astrata  (Asia  Pacific)  Pte Ltd and 49% by PCS
Security  Pte  Ltd.  PCS  Security  is  one  of  Singapore's   premier  security
consultancy companies,  the management of which has served distinguished careers
in the senior ranks of security and intelligence  organizations in the Singapore
Government.  Collectively,  PCS  Security and Astrata  Group have an  impressive
range of  experience  in security  reviews of complex IT systems  combined  with
Astrata's leading edge Geo-IT systems and solutions.

Astrata  Group's  strategy is to deploy our leading edge  technologies  into the
homeland security,  hazardous  materials,  and civil defense markets in the Asia
Pacific region by providing our customers with comprehensive  solutions to their
needs.

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PAGE 8

<PAGE>

GEO-LOCATION PLATFORM (THE "GLP")

The GLP is a  GPS/GSM  transceiver  that  enables  users to track,  monitor  and
control mobile platforms or remote assets such as trucks, vessels containers and
trailers.  The  device  has been  designed  to meet  certain  international  and
domestic homeland  security  requirements and to be capable of handling vehicles
carrying  hazardous  materials.  The device has a number of  input/outputs  that
allow  connectivity  to third party sensors on board the platform being tracked.
Such  sensors  include   temperature,   ignition  on/off,  oil  pressure,   door
open/close,  tire pressure,  and engine  revolutions.  The GPS receiver provides
accurate  positional,  time,  speed and  directional  information.  All of these
variables are used to make  real-time  Boolean type decisions and the GSM engine
is used to communicate  the result to a remote  software  application.  The unit
uses  proprietary  on-board  software  executing on a Linux operating  system to
manage the operation of the unit.

Management believes that the GLP is the smallest, lowest cost, fully integrated,
state of the art GPS location  and  GSM/CDMA  (Code  Division  Multiple  Access)
wireless system, with onboard over the air programmable  intelligence  operating
on the MC Linux operating  system.  It combines a GPS system, a GSM phone, and a
computer operating system integrated into a single package approximately half of
the size of a pack of cigarettes.  The built in wireless  communication  options
include  quad-band GSM,  General Packet Radio Switching  ("GPRS),  Short Message
Service ("SMS"), circuit switched data (CSD), Bluetooth, and wireless Local Area
Networks  ("LAN").  The GLP is the  backbone  of the  Astrata  Group  telematics
product line and the foundation of our Location Based Services  ("LBS") research
and development plan.

The telematics segment includes our seventh generation GPS/GSM  transceiver (the
Astrata "GLP") that enable users to track,  monitor and control mobile platforms
or  remote  assets  such as  trucks,  vessels,  containers,  trailers  and other
vehicles. The GLP is our seventh generation GPS product and is based on over ten
years of experience  designing,  manufacturing,  and supporting  over 80,000 GPS
units  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 LBS  service  and  capability.  Management
believes that customers' can reduce costs,  increase  productivity,  and monitor
and control  virtually any equipment,  vehicles,  other assets,  or individuals,
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,  biometric  driver  identification
systems,  and safety  related  monitoring of employees for  compliance  with the
Department of Transportation Legislation of driving hours.

Astrata  Systems  built the first one hundred GLP units in May of 2004 for field
testing and then built one  thousand  additional  GLP units in September of 2004
for initial commercial  release.  The Astrata GLP system comprising the complete
software,  firmware,  and hardware was launched globally to customers in October
of 2004.

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PAGE 9

<PAGE>

RESULTS OF OPERATIONS

COMPARISON OF NINE MONTHS ENDED NOVEMBER 30, 2004 AND 2003

Net sales were  approximately  $11.1 million for the nine months ended  November
2004,  an increase of  approximately  $3.7  million  compared to the nine months
ended November 2003 of approximately $7.4 million. This was partially due to the
acquisition of Astrata Systems in November 2003 which generated  approximately a
$2  million  increase  in  sales,  and due to growth  in the  geomatics  segment
primarily within South Africa for approximately $1.7 million.

Gross profit  increased as a percentage  of revenue to 39.8% for the nine months
ended  November  2004 from 37.8% for the same period in the previous  year.  The
increase in gross profit as a  percentage  of net sales was mainly the result of
higher gross margin on its product lines.

Selling,  general and  administrative  expenses increased as a percentage of net
sales to 60% for the nine months ended  November  2004,  from 27.1% for the nine
months ended November 2003.  Selling,  general and administrative  expenses were
approximately  $6.6  million  for  the  nine  months  ended  November  2004  and
approximately  $2 million for nine months ended  November  2003.  This  increase
resulted  from the  expansion of our  business in South  Africa which  increased
operating  costs  of  approximately  $1  million;   the  start-up   expenses  of
International  operations in Singapore,  Malaysia,  Brunei,  Indonesia,  and the
United  Kingdom  representing   approximately  $1.6  million;  increased  market
development expenses of approximately $0.7 million; trade show, re-branding, and
promotion  expenses of approximately  $0.3 million;  other operating expenses of
approximately  $0.5 million;  non-recurring  expenses related to the issuance of
shares through the reverse merger valued at  approximately  $0.5 million.  Total
selling, general and administrative expenses for the South Africa operations for
the nine months ended November 2003 were approximately $2 million,  comprised of
approximately $0.9 in wages and related expenses;  approximately $0.3 million in
depreciation and amortization expense;  approximately $0.3 million in trade show
and  promotion  expenses;  and  $0.5  million  in  other  selling,  general  and
administrative expenses.

RESEARCH AND DEVELOPMENT COSTS

Research and development expenses increased as a percentage of net sales to 8.2%
for the nine months  ended  November  2004,  from 1.1% for the nine months ended
November 2003. Research and development expenses were approximately $0.9 million
for the nine months ended November 2004 and  approximately  $0.1 million for the
nine months ended  November  2003.  This is due to the expansion of our hardware
and software  development  staff and the  acceleration of the development of the
Geo-Location Platform ("GLP") and associated software applications.

The  Company's  operating  (loss)  before  other  income  (expenses)   increased
approximately  $3.8 million to a loss of approximately $3.1 million for the nine
months ended November 2004, from a profit of approximately  $0.7 million for the
nine months ended November 2003. This increase was the result of the significant
increase in selling,  general  and  administrative  expenses  and  research  and
development costs described above.

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PAGE 10

<PAGE>

CERTAIN NON-OPERATING ITEMS

See "Foreign  Currency  Exchange  Rate Risk" below for  discussion of unrealized
loss on foreign exchange contracts.

Minority  interest  represents the Company's  involvement  in the  international
relationships outside of South Africa.

NET RESULTS OF OPERATIONS

As a result of the above, the Company reported a net loss of approximately  $3.2
million  or $0.31 per  common  share for the nine  months  ended  November  2004
compared to a net profit of approximately $0.5 million or $0.05 per common share
for the nine months ended November 2003.

COMPARISON OF THREE MONTHS ENDED NOVEMBER 30, 2004 AND 2003

Revenue was approximately $4.1 million for the three months ended November 2004,
an increase of  approximately  $1.3  million  compared to the three months ended
November 2003 of approximately $2.8 million.  This was principally due to growth
in our geomatics segment primarily within South Africa.

Selling,  general and  administrative  expenses  increased  as a  percentage  of
revenue to 54.4% for the three months ended  November  2004,  from 24.9% for the
three months ended November 2003. Selling,  general and administrative  expenses
were  approximately  $2.3 million for the three months ended  November  2004 and
approximately  $0.7  million for the three  months  ended  November  2003.  This
increase  resulted  from the  expansion  of our  business in South  Africa which
increased  operating costs of approximately $0.3 million;  the start-up expenses
of International operations in Singapore,  Malaysia,  Brunei, Indonesia, and the
United Kingdom  representing  approximately  $0.8 million;  increased  marketing
development expenses of approximately $0.4 million; and trade show and promotion
expenses  for   approximately   $0.1  million.   Total   selling,   general  and
administrative  expenses  for the South Africa  operations  for the three months
ended November 2003 were approximately $0.7 million,  comprised of approximately
$0.3 in wages and related expenses;  approximately  $0.1 million in depreciation
and  amortization  expense  and $0.3  million  in  other  selling,  general  and
administrative expenses.

Research and development  expenses  increased as a percentage of net sales to 9%
for the three months ended November  2004,  from 1.2% for the three months ended
November 2003. Research and development expenses were approximately $0.4 million
for the three months ended November 2004 and approximately $0.03 million for the
three months ended November 2003.  This is due the expansion of our hardware and
software  development  staff  and the  acceleration  of the  development  of the
Geo-Location Platform.

The  Company's  operating  (loss)  before  other  income  (expenses)   increased
approximately  $1.4 million to a loss of  approximately $1 million for the three
months ended November 2004, from a profit of approximately  $0.4 million for the
three  months  ended  November  2003.  This  increase  was  the  result  of  the
significant  increase  in  selling,  general  and  administrative  expenses  and
research and development expenses as described above.

CERTAIN NON-OPERATING ITEMS

See "Foreign  Currency  Exchange  Rate Risk" below for  discussion of unrealized
loss on foreign exchange contracts.

Minority  interest  represents the Company's  involvement  in the  international
relationships outside of South Africa.

NET RESULTS OF OPERATIONS

As a result of the above, the Company reported a net loss of approximately  $1.3
million or $0.13 per  common  share for the three  months  ended  November  2004
compared to a net profit of approximately $0.3 million or $0.02 per common share
for the three months ended November 2003.

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PAGE 11

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Total assets  increased by $4,291,262 from $7,671,771 as of February 29, 2004 to
$11,963,033 as of November 30, 2004. The increase is due to the increase in cash
of $598,856; an increase in receivables of $593,766; an increase in inventory of
$2,295,885;  an advance toward an acquisition of $345,657;  an increase in other
assets of $83,707;  an increase in property and  equipment of $553,349;  and the
investment in  subsidiaries  of $42,792;  offset by  amortization  of intangible
assets by $222,750.

Total  liabilities  increased by $5,051,662  from  $3,740,748 as of February 29,
2004 to $8,792,410  as of November 30, 2004.  The increase is due to an increase
in trade and  accrued  payables of  $1,836,494;  an increase on a line of credit
(secured by trade  receivables)  of $1,295,766;  liability for foreign  exchange
loss of $182,000; an increase in notes payable of $1,625,506; and an increase in
taxes payable of $178,896; offset by the reduction of deferred taxes of $67,000.

Net cash used in operating  activities  was $2,270,361 for the nine months ended
November  30,  2004,  as compared to cash  provided of  $1,890,665  for the same
period in the  previous  year.  The cash used in operating  activities  for nine
months ended November 30, 2004 is a net loss of $3,239,755; an increase in trade
receivables of $593,108; an increase in inventory of $2,282,802;  an increase in
other assets of $58,463;  offset by an increase of trade and accrued payables of
$1,856,588 and non-cash transactions  totaling $2,047,179.  The cash provided by
operating  activities for nine months ended November 30, 2003 is a net profit of
$512,289;  an increase in trade and accrued payables of $1,201,285;  an increase
in  deferred  tax  liability  of $292,000  and  non-cash  transactions  totaling
$1,687,535;  offset  by an  increase  in trade  receivables  of  $1,277,441;  an
increase in other assets of $201; and an increase in inventory of $524,802.

Cash used in investing  activities  during the nine months  ending  November 30,
2004 was $321,851, as compared to cash used of $2,318,185 for the same period in
the previous  year.  The cash used in investing  activities  for the nine months
ended  November 30, 2004 is the purchase of property and  equipment of $651,035;
an investment in  subsidiaries  of $3,767;  an advance  toward an acquisition of
$345,657;  offset by  acquired  cash of  $678,608  through  the merger of Optron
Technologies  in  August  2004  (see  Note  1  to  the  accompanying   financial
statements).  The cash used in  investing  activities  for the nine months ended
November 30, 2003 is the purchase of property and equipment of $318,185;  and an
investment in subsidiaries of $2,000,000.

Net cash provided by financing activities during the nine months ending November
30, 2004 was  $3,521,272,  as  compared  to $652,581  for the same period in the
previous  year.  The cash provided by financing  activities  for the nine months
ended November 30, 2004 is from a capitalized  lease  agreement of equipment and
fixtures of $153,152;  proceeds  received  for loan  facilities  of  $2,096,896;
proceeds  received  from a line of  credit  (secured  by trade  receivables)  of
$1,295,766;  offset by repayments on the Company's  capital lease  agreements of
equipment and fixtures of $24,542. The cash provided by financing activities for
the nine months ended  November 30, 2003 is proceeds  received from the issuance
of a note  payable for $600,000 and capital  lese  agreements  of equipment  and
fixtures  of  $73,815;  offset by  repayments  on the  Company's  capital  lease
agreements of equipment and fixtures of $21,234.

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PAGE 12

<PAGE>

Astrata SA has secured a line of credit for use in its South Africa  operations.
This line of credit is secured by certain trade  accounts  receivable and allows
for funding up to approximately $1.7 million based on current invoices. Interest
on the  outstanding  balance  is charged  at the  current  prime rate (11% as of
November 30, 2004). The company has drawn approximately $1.3 million on the line
of credit as of November 30, 2004. This allows the company an additional  source
of funds of approximately $0.4 million.

We believe that our cash flow from  operations  (if any),  our November 30, 2004
cash balance,  additional capital raised subsequent to November 30, 2004 and the
borrowing capacity available under the line of credit described in the preceding
paragraph,  will not be sufficient to meet our projected  capital  expenditures,
working capital and other cash  requirements  for the near future.  In order for
the Company to continue  its growth  plan,  additional  funding will be required
from outside sources.

OFF BALANCE SHEET ARRANGEMENTS

As of November 30, 2004, the Company has no off balance sheet arrangements.

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  fully
offset 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.  As explained in Note 1 to the
accompanying condensed consolidated financial statements,  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 Africa 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 has
weakened  against  the  Rand by  approximately  14% for the  nine  months  ended
November  30,  2004  and 10% for the  quarter  ended  November  30,  2004.  This
increases both our revenue and costs as compared to previous periods. During the
current quarter, the Company also had transactions  involving the British Pound,
the Singapore Dollar, the Malaysian Ringgit and the Brunei Dollar.

The Company  records  all  derivative  financial  instruments  in its  financial
statements  at fair value  regardless  of the  purpose or intent for holding the
instrument.  Changes in the fair value of derivative  financial  instruments are
either recognized  periodically in the results of operations or in stockholders'
equity as a component of accumulated other  comprehensive  income,  depending on
whether the derivative  instrument  qualifies for hedge accounting as defined by
GAAP.  Changes  in the fair  value  of  derivatives  not  qualifying  for  hedge
accounting are included in the results of operations as they occur. As discussed
in the preceding  paragraph,  the U.S. dollar has weakened  considerably against
the South African Rand during the quarter ended  November 30, 2004. As a result,
the  Company  recorded  an  unrealized  loss on foreign  exchange  contracts  of
approximately $0.2 million at November 30, 2004.

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.

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<PAGE>

CRITICAL ACCOUNTING POLICIES

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 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 condensed consolidated balance sheet.

LONG-LIVED ASSETS

In July 2001,  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."  SFAS  No.  144  addresses  financial  accounting  and  reporting  for  the
impairment  or  disposal  of  long-lived  assets.  SFAS No.  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 November 30,  2004,  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",  which is effective for
fiscal years beginning after December 15, 2001,  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
intangible assets that have indefinite useful 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  identifiable  intangible
assets that will not be amortized  for  impairment.  In  addition,  SFAS No. 142
expands the disclosure  requirements  about goodwill and other intangible assets
in the years subsequent to their  acquisition.  The principal effect of SFAS No.
142 on the Company's accompanying  consolidated financial statements is that the
goodwill  described  in  Note  4  to  the  accompanying  condensed  consolidated
financial statements is not required to be amortized.

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<PAGE>

REVENUE RECOGNITION

The  Company's  revenues  are recorded in  accordance  with the  Securities  and
Exchange  Commission's  (the "SEC") Staff Accounting  Bulletin No. 104, "Revenue
Recognition." The Company recognizes product 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.

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  ("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 a right of return.

When a sale involves multiple elements, the arrangement fee is allocated to each
respective  element based on its relative  estimated  fair value and  recognized
when  revenue  recognition  criteria  for each  element  are met.  The amount of
product revenue  allocated to an individual  element is limited to the lesser of
its relative  estimated fair value or the amount not contingent on the Company's
delivery of other elements under the arrangement,  regardless of the probability
of the Company's performance.

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.

Company 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 have not
been  material.  Accordingly,  the  Company  has not  capitalized  any  software
development costs.

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PAGE 15

<PAGE>

SUBSEQUENT EVENTS

PENDING ACQUISITION

In June 2004, a wholly-owned subsidiary of the Company entered into an agreement
to acquire all the assets of Nanini 209 CC  ("Suretrack").  In January 2005, the
seller and the Company  executed an amendment of the  aforementioned  agreement.
Taken together, these two contracts (which are hereinafter collectively referred
to as the "Suretrack  acquisition  agreement") constitute a definitive agreement
to consummate the transaction described below. Suretrack's principal business in
the  telematics  industry  is the sale and  rental  of  equipment  and  tracking
software,  along with  providing  airtime and associated  services.  The primary
operating  areas of  Suretrack  are South Africa and other  sub-Saharan  African
countries.

Under the terms of the Suretrack acquisition agreement, the Company's subsidiary
has agreed to purchase all of Suretrack's  tangible and intangible  assets for a
total purchase price of R7.8 million which is payable as follows:

o    R1.9 million in cash at closing  (which is  presently  expected to occur in
     January  2005),  plus  R1.0  million  in  cash on  each  of the  first  two
     anniversaries of the closing date; and

o    The R3.9  million  balance  in the  equivalent  number of shares of Company
     common stock at $4.00/share,  based on the prevailing exchange rate on July
     15,  2004.  If such  common  stock is not issued for any reason  other than
     the lack of required approvals by South African regulatory authorities, the
     Company is obligated   to pay this portion of the purchase price in cash by
     February 28, 2005.

If  Suretrack's  sole  stockholder  (the  "stockholder")  does not remain in the
Company's  employ until at least July 15, 2007, (a) the Company will be relieved
of its liability for any portion of the purchase price then remaining unpaid and
(b) the stockholder will be required to forfeit any Company common stock that is
then subject to the lock-up  provision (see below) of the Suretrack  acquisition
agreement.

As of December 31, 2004, R1.9 million represents approximately $337,000; on July
15, 2004, R3.9 million equated to approximately  161,000 shares of the Company's
common stock based on the formula  described  above.  The Suretrack  acquisition
agreement  includes a lock-up  provision which  prohibits the  stockholder  from
selling or  encumbering  (a) more than 50% of the shares of Company common stock
received until July 15, 2006, and (b) the remaining shares until July 15, 2007.

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PAGE 16

<PAGE>

PRIVATE PLACEMENTS OF EQUITY SECURITIES

During  December  2004,  Astrata  Group  entered  into a series  of  agreements,
pursuant to which it sold 151,429 units of its  securities at $5.25 per unit, or
an aggregate of approximately  $716,000 in net proceeds.  Each unit consisted of
one share of common stock and one two-year  warrant to purchase one share of its
common stock at an exercise price of $5.00. The warrants vested and became fully
exercisable  on their  issuance  dates.  Astrata  Group  also  provided  certain
"piggy-back"  registration  rights for the shares and the shares  underlying the
warrants  for a period  not to exceed  three  years and agreed to file a re-sale
registration  statement with the SEC covering the  registrable  securities on or
before April,  2005. The Company is not subject to any contractual  penalties in
the  event  that any such  registration  statement  is not  filed  timely or not
declared  effective by the SEC by any specific date. The transactions  described
in this paragraph constituted exempt offerings under Rule 506 of Regulation D to
accredited investors.

CONVERSION OF DEBT INTO EQUITY SECURITIES

During December 2004, Astrata Group entered into an agreement, pursuant to which
a stockholder  who had previously  lent the Company funds on an unsecured  basis
(see Note 7) converted $525,000 of such debt into 100,000 shares of common stock
and 100,000  two-year  warrants with an exercise  price of $5.00 per share.  The
warrants vested and became fully exercisable on the issuance date. Astrata Group
also provided certain  "piggy-back" and "S-3" registration rights for the shares
and the shares  underlying  the warrants,  as well as for existing  shares for a
period  not to  exceed  three  years and  agreed to file a re-sale  registration
statement with the SEC covering the  registrable  securities on or before April,
2005. The Company is not subject to any contractual  penalties in the event that
any such registration statement is not filed timely or 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 a single
accredited investor.


COMMON STOCK ISSUED TO CONSULTANTS, DIRECTORS AND EMPLOYEES

During December 2004,  Astrata Group issued 37,500 shares of its common stock in
exchange for services provided to it by four consultants. The per-share value of
the  common  stock was  $5.00.  The  transactions  described  in this  paragraph
constituted  exempt  offerings under Section 4(2) of the Securities Act of 1933,
as amended.

During December 2004,  Astrata Group issued 24,100 shares of its common stock to
approximately  190  employees  in  exchange  for  services  rendered.  With  the
exception  of one  employee  and his  family  member  designees  and  two  minor
designees of a second  employee of the Company,  none of the persons was a "U.S.
person"  (as  defined in Rule 902 of  Regulation  S), and each of the  issuances
constituted an "offshore  transaction" (as defined in Rule 902 of Regulation S).
The per-share value of the common stock was $5.00. The transactions described in
this paragraph  constituted  exempt offerings under Regulation S or Section 4(2)
of the Securities Act of 1933, as amended.

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PAGE 17

<PAGE>

During January 2005,  Astrata Group issued 150,000 shares of its common stock to
three  newly  appointed,  non-management  directors  in  consideration  of their
agreement to serve as  directors.  The  per-share  value of the common stock was
$5.00. The transactions described in this paragraph constituted exempt offerings
under Rule 506 of Regulation D to accredited investors.

DEBT FINANCING

During 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 the Company $1.5
million on an unsecured  basis (see Note 7). The holder's  conversion  privilege
expires when the Company 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 the  rate of 15%,  compounded
annually, is due and payable concurrently with the principal. In connection with
the sale of the note,  the Company  granted  warrants  (which  vested and became
fully  exercisable  on the grant  date) to the holder to  purchase  up to 12,000
shares of the Company's  common stock with an exercise price of $5.00 per share.
The transaction described in this paragraph constituted an exempt offering under
Rule 506 of Regulation D to an accredited investor.

Further,  the Company  provided the holder with certain  "piggy-back"  and "S-3"
registration  rights for the shares underlying the note and the warrant, as well
as for the shares  underlying  the amended $1.5 million note  agreement  and the
32,000 shares  underlying the warrant  granted to the holder in connection  with
such amendment.  The Company is not subject to any contractual  penalties in the
event that any such  registration  statement is not filed timely or not declared
effective by the SEC by any specific date.

EQUITY OFFERING TO EMPLOYEES

During January 2005, Astrata Group entered into a series of agreements, offering
to sell  units of its  securities  at  $52.50  per  unit,  for an  aggregate  of
approximately   $500,000  in  gross  proceeds.  All  potential  subscribers  are
employees  of the  Company  or its  subsidiaries  and  affiliates.  None  of the
subscribers  is a "U.S.  person" (as defined in Rule 902 of  Regulation  S), and
each of the sales would constitute an "offshore transaction" (as defined in Rule
902 of  Regulation  S). Each unit consists of ten shares of common stock and ten
three-year  warrants,  each for the  purchase of one share of common stock at an
exercise  price of $5.00 per share.  The  warrants  would vest and become  fully
exercisable  on their  issuance  dates.  Astrata  Group  also  agreed to provide
certain  "piggy-back"   registration  rights  for  the  shares  and  the  shares
underlying  the  warrants  for a period not to exceed  three 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 in the event that any such registration  statement is not filed timely
or not  declared  effective  by the SEC by any specific  date.  The  transaction
described in this paragraph constitutes an exempt offering under Regulation S.

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<PAGE>

CHANGE OF TRADING SYMBOL

Effective  January 10, 2005,  the Company's  trading  symbol on the OTC Bulletin
Board was changed to "ATTG"

OTHER SUBSEQUENT EVENTS

During  December  2004,  the Board of  Directors of Astrata  Group  approved the
Company's 2004 Equity Incentive Plan, which reserved  1,560,000 shares of common
stock for grants of incentive and  non-statutory  stock options,  stock bonuses,
restricted stock awards and stock appreciation rights. The terms of the plan are
included  in the May 2004  Order  Confirming  Debtor's  Second  Amended  Plan Of
Reorganization For Cetalon Corporation

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PAGE 19

<PAGE>

ITEM 3.  CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. The Company carried out an
evaluation,  under the supervision and with the  participation  of the Company's
management,  including the Company's Chief  Executive  Officer ("CEO") and Chief
Financial  Officer ("CFO"),  of the  effectiveness  of the Company's  disclosure
controls and procedures.  Based upon that evaluation,  the CEO and CFO concluded
that as of November  30, 2004 our  disclosure  controls  and  procedures  are of
limited   effectiveness  at  the  reasonable   assurance  level  such  that  the
information relating to the Company, required to be disclosed in SEC reports (i)
is  recorded,  processed,  summarized  and  reported  within  the  time  periods
specified in SEC rules and forms,  and (ii) is accumulated  and  communicated to
the Company's  management,  including our CEO and CFO, as  appropriate  to allow
timely decisions regarding required disclosure.

(b) Changes in internal  control  over  financial  reporting.  There has been no
change in the Company's internal control over financial  reporting that occurred
during the fiscal quarter ended November 30, 2004 that has materially  affected,
or is reasonably  likely to materially  affect,  the Company's  internal control
over financial reporting.

LIMITATIONS ON THE EFFECTIVENESS OF INTERNAL CONTROLS

The  Company's  management,  including the CEO and CFO, 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,  and/or  the degree of
compliance with the policies or procedures may deteriorate.

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PAGE 20

<PAGE>

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

On January 15, 2003, Cetalon Corporation ("Cetalon") filed a petition for relief
under Chapter 11 of the Bankruptcy  Code in the United States  Bankruptcy  Court
for the Central  District of California,  Los Angeles  Division (the "Bankruptcy
Court"),  Case  No.  LA  03-11306-VZ.  After  a  hearing  on May 27,  2004,  the
Bankruptcy Court entered an order confirming Cetalon's Second Amended Disclosure
Statement and Plan of  Reorganization  (the "Plan")  followed by confirmation of
the Plan by the  Bankruptcy  Court on May 28,  2004.  On June 8, 2004,  the Plan
became effective, and the Cetalon Corporation Liquidating Trust was created.

On December 16, 2004, the Bankruptcy Court closed the Cetalon Chapter 11 case.

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PAGE 21

<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 Form 8-K filed on
                  August 9, 2004.

Exhibit 2.2a      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 Form 8-K filed on August 9, 2004.

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

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 Form 8-K
                  filed on August 9, 2004.

Exhibit 31.1 *    Certification of Chief Executive  Officer pursuant to Exchange
                  Act Rule 13a-14(a) or 15d-14(a).

Exhibit 31.2 *    Certification of Chief Financial  Officer pursuant to Exchange
                  Act Rule 13a-14(a) or 15d-14(a).

Exhibit 32.1 *    Certification of Chief Executive Officer pursuant to 18 U.S.C.
                  Section  1350,  as  adopted  pursuant  to  Section  906 of the
                  Sarbanes-Oxley Act of 2002.

Exhibit 32.2 *    Certification of Chief Financial Officer pursuant to 18 U.S.C.
                  Section  1350,  as  adopted  pursuant  to  Section  906 of the
                  Sarbanes-Oxley Act of 2002.

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

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PAGE 22

<PAGE>

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

Dated:   January 10, 2005                    ASTRATA GROUP INCORPORATED

                                             By:   /s/ Martin Euler
                                                   ---------------------
                                                       Martin Euler
                                                       Chief Financial Officer

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<PAGE>

                                  EXHIBIT INDEX

Exhibit 31.1      Certification of Chief Executive  Officer pursuant to Exchange
                  Act Rule 13a-14(a) or 15d-14(a).

Exhibit 31.2      Certification of Chief Financial  Officer pursuant to Exchange
                  Act Rule 13a-14(a) or 15d-14(a).

Exhibit 32.1      Certification of Chief Executive Officer pursuant to 18 U.S.C.
                  Section  1350,  as  adopted  pursuant  to  Section  906 of the
                  Sarbanes-Oxley Act of 2002.

Exhibit 32.2      Certification of Chief Financial Officer pursuant to 18 U.S.C.
                  Section  1350,  as  adopted  pursuant  to  Section  906 of the
                  Sarbanes-Oxley Act of 2002.

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