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 August 31, 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 Section13
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:

10,400,000 shares of common stock outstanding as of October 19, 2004

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

<PAGE>

                                TABLE OF CONTENTS

Part I - Financial Information                                              Page

     Item 1.     Condensed Consolidated Financial Statements (Unaudited):

                 Condensed Consolidated Balance Sheet as of August 31, 2004  F-1

                 Condensed Consolidated Statements of Operations for the
                 three months and six months ended August 31, 2004 and 2003  F-2

                 Condensed Consolidated Statements of Cash Flows for the
                 six months ended August 31, 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                                      12

Part II - Other Information

     Item 1.     Legal Proceedings                                            13

     Item 2.     Unregistered Sales of Equity Securities
                 and Use of Proceeds                                          13

     Item 3.     Defaults Upon Senior Securities                              13

     Item 4.     Submission of Matters to a Vote of Securities Holders        13

     Item 5.     Other Information                                            13

     Item 6.     Exhibits                                                     18

Signature Page

Index to Exhibits

                                       2
<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  have been included.  Operating results for the interim period
ended August 31, 2004 are not necessarily  indicative of the results that can be
expected for the full year.

                                       3

<PAGE>

                   Astrata Group Incorporated and Subsidiaries
                     (Formely Known As Cetalon Corporation)
                      Condensed Consolidated Balance Sheet
                                 August 31, 2004

                                                                    (Unaudited)
                                                                    -----------
Assets
Current Assets:
       Cash and cash equivalents                                    $   399,496
       Accounts receivable, net                                       1,906,498
       Inventories, net                                               2,819,769
       Other assets                                                      61,647
                                                                    -----------

Total current assets                                                  5,187,410

Property and equipment, net                                             627,396
Identifiable intangible assets, net                                   1,437,409
Goodwill                                                              1,381,224
                                                                    -----------

Total assets                                                        $ 8,633,439
                                                                    ===========
Liabilities and Stockholders' Equity
Current liabilities:
       Accounts payable and accrued expenses                        $ 3,226,613
       Taxes payable                                                    220,079
       Deferred tax liability                                           445,000
                                                                    -----------

Total current liabilities                                             3,891,692
Minority interest                                                     1,721,066
Commitments and contingencies
Stockholders' equity:
       Preferred stock, $0.0001 Par value,
       10,000,000 shares authorized,
       none issued and outstanding                                           --
       Common stock, $0.0001 par value,
       50,000,000 shares authorized,
       10,400,000 issued and outstanding                                  1,040
       Additional paid-in capital                                     4,543,196
       Accumulated deficit                                           (1,970,932)
       Accumulated other comprehensive income                           447,377
                                                                    -----------

Total stockholders' equity                                            3,020,681
                                                                    -----------

Total liabilities and stockholders' equity                          $ 8,633,439
                                                                    ===========

                             See accompanying notes
F-1

<PAGE>

                   Astrata Group Incorporated and Subsidiaries
                     (Formely Known As Cetalon Corporation)
               Condensed Consolidated Statements of Operations and
                        Other Comprehensive Income (Loss)
      For the Six Month Periods Ended August 31, 2004 and 2003 and for the
               Three Month Periods Ended August 31, 2004 and 2003

<TABLE>
<CAPTION>
                                                       (Unaudited)                      (Unaudited)
                                               ----------------------------    ----------------------------
                                                 For the six months ended       For the three months ended
                                               ----------------------------    ----------------------------
                                                August 31,       August 31,      August 31,     August 31,
                                                   2004            2003            2004            2003
                                               ------------    ------------    ------------    ------------
<S>                                            <C>             <C>             <C>             <C>
Net Sales                                      $  6,937,321    $  4,623,926    $  3,671,642    $  2,149,152

Cost of goods sold                                4,174,141       2,934,018       2,254,120       1,262,537
                                               ------------    ------------    ------------    ------------

Gross profit                                      2,763,180       1,689,908       1,417,522         886,615

Selling, general and administrative expenses      4,328,113       1,294,259       2,027,883         720,528
Research and development                            521,247          51,789         374,217          29,030
                                               ------------    ------------    ------------    ------------

Operating (loss) income                          (2,086,180)        343,860        (984,578)        137,057
Other income (expense):
       Other income (expense)                       185,541          13,205         141,298          (4,030)
       Interest expense                             (14,010)         (2,958)         (7,954)         (1,308)
                                               ------------    ------------    ------------    ------------

Total other income (loss)                           171,531          10,247         133,344          (5,338)
                                               ------------    ------------    ------------    ------------
(Loss) income before provision for income
  taxes and minority interest                    (1,914,649)        354,107        (851,234)        131,719
Provision for income taxes                           50,844         (87,500)         93,185          32,750
                                               ------------    ------------    ------------    ------------

(Loss) income before minority interest           (1,965,493)        266,607        (944,419)         98,969

Minority interest                                    27,283           4,532          34,224          35,590
                                               ------------    ------------    ------------    ------------

Net (loss) income                              $ (1,938,210)   $    262,075    $    910,195    $     63,379
                                               ============    ============    ============    ============
Other comprehensive income (loss) and its
     components consist of the following:
       Net (loss) income                       $ (1,938,210)   $    262,075    $    910,195    $     63,379

       Foreign currency translation
       adjustment, net of tax                       (63,194)        125,370         (52,500)         81,000
                                               ------------    ------------    ------------    ------------

Other comprehensive (loss) income              $ (2,001,404)   $    387,445    $    857,695    $    144,379
                                               ============    ============    ============    ============
(Loss) income per common share:
       Basic                                   $      (0.19)   $       0.04    $       0.08    $       0.01
       Diluted                                 $      (0.19)   $       0.04    $       0.08    $       0.01
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

F-2

<PAGE>

                   Astrata Group Incorporated and Subsidiaries
                     (Formely Known As Cetalon Corporation)
                 Condensed Consolidated Statements of Cash Flows
            For the Six Month Periods Ended August 31, 2004 and 2003

                                                             (Unaudited)
                                                    --------------------------
                                                     For the six months ended
                                                    --------------------------
                                                     August 31,     August 31,
                                                        2004           2003
                                                    -----------    -----------
Cash flow from operating activities:
Net (loss) income                                    (1,938,210)       262,075
Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities:
       Depreciation and amortization                    261,518         29,995
       Issuance of stock for services                   519,737             --
       Issuance of stock for reorganization             954,294             --
       Minority interest                                114,159             --
Changes in operating assets and liabilities:
       Accounts receivable                              510,957       (222,270)
       Inventories                                   (1,172,904)       (78,572)
       Other assets                                     (31,573)           (68)
       Accounts payable and accrued expenses            607,542        306,876
       Deferred tax liability                           (40,000)            --
                                                    -----------    -----------

Net cash (used in) provided by operating
 activities                                            (214,480)       298,036

Cash flows from investing activities:
Purchase of property and equipment                     (255,105)       (96,160)
Cash of acquired company                                678,608             --
                                                    -----------    -----------

Net cash provided by (used in) investing
  activities                                            423,503        (96,160)

Cash flows from financing activities:
Repayments on notes payable                             (10,400)        (1,584)
                                                    -----------    -----------

Net cash (used in) by financing activities              (10,400)        (1,584)

Effect of foreign currency on
  cash and cash equivalents                             (63,194)       125,370

Net increase in cash and cash equivalents               135,429        325,662

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

Cash and cash equivalents at end of period          $   399,496    $   605,170
                                                    ===========    ===========
Cash paid for:
       Interest                                     $    14,010    $     1,308
       Income taxes                                 $    75,849    $    52,177

See footnotes for noncash investing and financing activities

                             See accompanying notes


F-3

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 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,  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) Astrata Technologies, Inc. ("Astrata Technologies"),  a Nevada corporation.
The subsidiaries of Astrata Technologies,  which have only been established very
recently, are located in Singapore,  Malaysia, Brunei and England (collectively,
the "Merger Transaction"). As of August 2, 2004, Astrata Technologies was merged
into Cetalon and the subsidiaries of Astrata Technologies became subsidiaries of
Cetalon.  From June 1, 2004 to August 1, 2004, Cetalon was essentially a dormant
entity.

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  Astrata  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 2 creditors,  and 93,600 shares for other  creditors and Trust  expenses).
The Company  also issued an  additional  609,000  post-Effective  Date shares of
common stock in satisfaction of approximately  $520,000 of administrative  fees.
The Company also 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.

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.

--------------------------------------------------------------------------------
PAGE F-4

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003
--------------------------------------------------------------------------------

1. ORGANIZATION AND BASIS OF PRESENTATION (continued)

REVERSE MERGER ACCOUNTING

Because of the structure of the Merger  Transaction,  Cetalon's  acquisition  of
Cadogan and Astrata  Technologies  was  accounted  for as a "reverse  merger" by
Cetalon  because the  stockholders of Cadogan and Astrata  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. 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 its majority-owned  subsidiaries (Astrata Systems
(Pty)  Limited,  Cadogan,  Astrata SA, and Astrata  Technologies)  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 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 is transmitted in
real time using  data  links  over  cellular  telephone  networks  or  satellite
communication when a cellular network is not available.

--------------------------------------------------------------------------------
PAGE F-5

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 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 70,000  GPS/GSM fleet  management  products to customers.  GSM (Global
System for  Mobiles)  is the  dominant  cellular  telephone  standard  currently
developed throughout the world.

BASIS OF PRESENTATION

Management  of  the  Company  has  prepared,  without  audit,  the  accompanying
condensed  consolidated financial statements for the three and six-month periods
ended August 31, 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 three and six months
ended  August  31,  2004  are  not  necessarily  indicative  of the  results  of
operations for the year ending February 28, 2005.

The condensed  consolidated financial statements include the accounts of Astrata
Group Inc. and its  majority-owned  subsidiaries.  All significant  intercompany
transactions and balances have been eliminated.

2. SUMMARY OF SIGNIFICANT 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.

--------------------------------------------------------------------------------
PAGE F-6

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

INVENTORIES (continued)

Net  realizable  value is  based  on  management's  forecasts  for  sales of the
Company's products and/or 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  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, by management.  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 August 31, 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.
--------------------------------------------------------------------------------

PAGE F-7

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 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 in the financial  statements 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  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 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.

Revenues from purchased  extended  warranty and support  agreements are deferred
and  recognized   ratably  over  the  term  of  the   warranty/support   period.
Substantially all technology licenses have consisted of initial license fees and
royalties,  which were  recognized  when  earned,  provided  the  Company has no
remaining obligations.

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

PAGE F-8
<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

REVENUE RECOGNITION (continued)

Contracts  and customer  purchase  orders are  generally  used to determine  the
existence of an arrangement.  Shipping documents and customer  acceptance,  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 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 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.

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PAGE F-9

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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

Research and development costs 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 $521,000
and $52,000 of research and development  expenses  during the six-month  periods
ended August 31, 2004 and 2003, respectively.  In addition, the Company incurred
approximately  $374,000 and $29,000 of research and development  expenses during
the three-month periods ended August 31, 2004 and 2003, respectively.

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 8).

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

SFAS  No.  143,  "ACCOUNTING  FOR  ASSET  RETIREMENT  OBLIGATIONS,"  establishes
standards  associated with the retirement of tangible  long-lived assets and the
associated  asset  retirement  costs.  This statement is effective for financial
statements for fiscal years  beginning after June 15, 2002. The adoption of SFAS
No. 143 did not have an impact on the Company's condensed consolidated financial
statements.

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

PAGE F-10

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (continued)

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.

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 ending 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.

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

PAGE F-11

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (continued)

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.

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.

Other  recent  accounting  pronouncements  issued  by the  FASB  (including  its
Emerging  Issues  Task  Force),  the  American  Institute  of  Certified  Public
Accountants,  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.

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

PAGE F-12

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003
--------------------------------------------------------------------------------

3. INVENTORY

Inventories consisted of the following as of August 31, 2004:

                       Raw materials         $   875,523
                       Work-in-process           195,526
                       Finished goods          1,768,400
                       Inventory markdowns
                                                 (19,681)
                                             -----------
                                             $ 2,819,769
                                             ===========

4. 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 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
                       Goodwill                                   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.

The goodwill of approximately $846,000 is not deductible for income tax purposes
under the tax laws of either the Republic of South Africa or the United States.

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

PAGE F-13

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003
--------------------------------------------------------------------------------

4. 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
                Goodwill                                   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-14

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003
--------------------------------------------------------------------------------

4. 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
                  Other assets                              413,504
                  Customer relationships                    865,288
                  Completed technologies                    109,998
                  In-process research and development       102,578
                  Goodwill                                  702,747
                  Less liabilities assumed                 (492,114)
                                                        -----------
                                                        $ 2,000,000
                                                        ===========
                  Consideration:
                      Cash paid                             600,000
                      Redeemable preferred stock          1,400,000
                                                        -----------
                                                        $ 2,000,000
                                                        ===========


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-15

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003
--------------------------------------------------------------------------------

4. 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 $1.00/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 $1.00/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 initial preferred shares are as follows:

         The initial  preferred shares accrue dividends at an annual rate of 2%,
         and are  redeemable  at the  option of the  preferred  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.

Management has concluded that the above 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.

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

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003
--------------------------------------------------------------------------------

5. EQUITY TRANSACTIONS

PREFERRED STOCK

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 August 31, 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 preferred stock in
connection with an acquisition; see Note 4 for additional information.

ISSUANCE OF COMMON STOCK

The Company issued (i) approximately 6,275,000 post-Effective Date common shares
to the  shareholder of Cadogan,  and (ii) 1,800,000  post-Effective  Date common
shares  to the  stockholders  of  Astrata  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 2 creditors,  and 93,600 shares for other  creditors and Trust  expenses).
The Company  also issued an  additional  609,000  post-Effective  Date shares of
common stock in satisfaction of approximately  $520,000 of administrative  fees.
The Company also 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.

6. RELATED PARTY TRANSACTIONS

The  Company  currently  leases  facilities  from an  entity  controlled  by two
directors of a  subsidiary  of the Company  under  cancelable  operating  leases
expiring in 2005. 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  $69,000 and $0 for the six-month
periods ended August 31, 2004 and 2003, respectively;  and approximately $35,000
and $0 for the three-month periods ended August 31, 2004 and 2003, respectively.

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

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003
--------------------------------------------------------------------------------

7. COMMITMENTS AND CONTINGENCIES

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 new 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 consists 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.

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
result of operations.

8. SEGMENT REPORTING

The Company operates in the following three reporting segments:

GEOMATICS  -  Products,  accessories  and  services  related to the  business of
measurement and setting out (i.e.  Survey,  Mapping + GIS) and precise  position
monitoring (such as scanning excavations and industrial plants).


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 all the  agricultural  products,
which have tractor and crop-spraying guidance in them.

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

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003
--------------------------------------------------------------------------------

8. SEGMENT REPORTING (continued)

TELEMATICS  - Products,  accessories  and  services  related to the  business of
remote  monitoring  of  assets  -  covering  track-and-trace  as well -  whereby
position, attributes, status and communication are involved.

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

SIX MONTHS ENDED AUGUST 31, 2004:

                                     MACHINE
                      GEOMATICS      GUIDANCE     TELEMATICS    CONSOLIDATED
-------------------  ------------   -----------   -----------   ------------
Total assets         $ 5,352,732    $ 1,726,688   $ 1,554,019   $ 8,633,439
Revenue                4,369,208        908,826     1,659,287     6,937,321
Gross profit           1,548,414        343,730       871,036     2,763,180
Operating expenses     4,849,360
Operating loss       $(2,086,180)

SIX MONTHS ENDED AUGUST 31, 2003:

                                     MACHINE
                      GEOMATICS      GUIDANCE     TELEMATICS    CONSOLIDATED
-------------------  ------------   -----------   -----------   ------------
Total assets         $2,936,382   $  947,220       $ 852,498     $4,736,100
Revenue               3,037,753      977,397         608,776      4,623,926
Gross profit          1,108,246      351,599         230,063      1,689,908
Operating expenses                                                1,346,048
Operating income                                                 $  343,860

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

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003
--------------------------------------------------------------------------------

8. SEGMENT REPORTING (continued)

THREE MONTHS ENDED AUGUST 31, 2004:

                                     MACHINE
                      GEOMATICS      GUIDANCE     TELEMATICS    CONSOLIDATED
-------------------  ------------   -----------   -----------   ------------
Total assets         $ 5,352,732    $ 1,726,688   $ 1,554,019   $ 8,633,439
Revenue                2,529,396        435,827       706,419     3,671,642
Gross profit             879,491        156,557       381,474     1,417,522
Operating expenses                                                2,402,100
Operating loss                                                  $  (984,578)

THREE MONTHS ENDED AUGUST 31, 2003:

                                     MACHINE
                      GEOMATICS      GUIDANCE     TELEMATICS    CONSOLIDATED
-------------------  ------------   -----------   -----------   ------------
Total assets           $2,936,382   $  947,220    $  852,498     $4,736,100
Revenue                 1,330,653      378,339       440,160      2,149,152
Gross profit              503,273      161,160       222,182        886,615
Operating expenses                                                  749,558
Operating income                                                 $  137,057

9. SUBSEQUENT EVENTS

PROPOSED ACQUISITION

A wholly-owned  subsidiary of the Astrata Group has entered into an agreement to
acquire the assets,  business,  name and intellectual  property of Nanini 209 CC
(doing business as "SureTrack").  SureTrack's primary business in the telematics
sector is the sale or rental of  equipment  and  tracking  software,  along with
providing  airtime and associated  services.  The primary  geographic  operating
areas of the  target  entity  are South  Africa  and other  sub-Saharan  African
countries. Management expects that all closing conditions will be met during the
quarter  ending  November  30,  2004.  However,  under the terms of the  related
agreement,  the Astrata Group is not obligated to  consummate  this  transaction
until all such conditions are satisfied by the seller.

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

<PAGE>

--------------------------------------------------------------------------------
                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                     (FORMERLY KNOWN AS CETALON CORPORATION)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AUGUST 31, 2004 AND 2003
--------------------------------------------------------------------------------

9. SUBSEQUENT EVENTS (continued)

PRIVATE PLACEMENT OF SECURITIES

In September  2004,  Astrata Group agreed in principle to enter into a series of
agreements,  pursuant  to  which a  stockholder  (who  then  beneficially  owned
approximately six percent of the Astrata Group's  outstanding common stock) lent
$1.5 million to the Company.  The  principal is due upon fifteen  days'  written
demand,  but no later than March 2005.  Interest at the rate of 15%,  compounded
annually, is due and payable concurrently with the principal. Astrata Group also
agreed to grant 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
the  agreement  to grant the  warrants,  Astrata  Group  also  agreed to provide
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 is not  expected to contain 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.

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

<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 August 31 2004, together with
the results of  operations  for the three and six month periods ended August 31,
2004 and 2003,  and cash flows for the  six-month  periods ended August 31, 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,  legislative/regulatory  changes, availability of
capital,  interest  rates,   competition,   and  generally  accepted  accounting
principles.  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.

                                       4
<PAGE>

The  Company  is  a  worldwide   provider  of  navigation,   communications  and
information  devices,  most of which are  enabled by Global  Positioning  System
("GPS") technology.  The Company operates in three business segments,  geomatics
technologies,  machine control and guidance  technologies  and  telematics.  The
geomatics  segment  includes  products,  accessories and services related to the
business  of  measurement  and setting out (i.e.  Survey,  Mapping &  Geographic
Information  Systems ("GIS")) and precise position  monitoring (such as scanning
excavations  and  industrial  plants).  The machine  guidance  segment  includes
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 all the agricultural products,  which
have tractor and crop-spraying guidance in them. The telematics segment includes
products,  accessories and services related to the business of remote monitoring
of assets - covering  track-and-trace  as well - whereby  position,  attributes,
status and communication are involved.

RESULTS OF OPERATIONS

COMPARISON OF SIX MONTHS ENDED AUGUST 31, 2004 AND 2003

Net sales were approximately  $6.9 million for the six months ended August 2004,
an increase  of  approximately  $2.3  million  compared to the six months  ended
August  2003 of  approximately  $4.6  million.  This  was  primarily  due to the
acquisition  of a company  in  November  2003  which  generated  a $1.5  million
increase in sales.

Gross profit  increased  as a percentage  of revenue to 39.8% for the six months
ended  August  2004 from 36.5% for the same  period in the  previous  year.  The
increase in gross profit as a  percentage  of net sales was mainly the result of
the acquisition which provides a higher gross margin on its product lines.

Selling,  general and  administrative  expenses increased as a percentage of net
sales to 62.4% for the six  months  ended  August  2004,  from 27.9% for the six
months ended August 2003.  Selling,  general and  administrative  expenses  were
approximately   $4.3   million  for  the  six  months   ended  August  2004  and
approximately  $1.3  million for six months ended  August  2003.  This  increase
resulted  from the  start-up  expenses of business in  International  operations
outside of South Africa representing  approximately $1.3 million in expenses for
the six months.  Total  selling,  general and  administrative  expenses  for the
International  operations  outside  of  South  Africa  were  approximately  $1.3
million,  which is comprised of rents,  legal and wage related  expenses for the
six months ended August 2004. Total selling, general and administrative expenses
for South  Africa  operations  were  approximately  $3.0  million,  comprised of
approximately  $1.4 million in wages and related  expenses;  approximately  $0.5
million in one time cost related to  reorganization  costs;  approximately  $0.3
million in  depreciation  and  amortization  expense  and $0.8  million in other
selling, general and administrative expenses.

Research and development expenses increased as a percentage of net sales to 7.5%
for the six months ended August 2004,  from 1.1% for the six months ended August
2003. Research and development  expenses were approximately $0.5 million for the
six months ended August 2004 and approximately  $0.05 million for the six months
ended August  2003.  This is due  primarily  to the increase in our  engineering
staffing and the

                                       5
<PAGE>

development  of our seventh  generation  geomatics  product  currently due to be
released within the next quarter.

The Company's  operating (loss) profit before other income (expenses)  decreased
approximately  $2.4 million to a loss of approximately  $2.1 million for the six
months ended August 2004,  from a profit of  approximately  $0.3 million for the
six months ended August 2003.  This  decrease was the result of the  significant
increase in selling,  general  and  administrative  expenses  and  research  and
development costs described above.

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

As a result of the above, the Company reported a net loss of approximately  $2.0
million or $0.19 per common share for the six months ended August 2004  compared
to a net profit of approximately $0.4 million or $0.04 per common share for the
six months ended August 2003.

COMPARISON OF THREE MONTHS ENDED AUGUST 31, 2004 AND 2003

Revenue was  approximately  $3.7 million for the three months ended August 2004,
an increase of  approximately  $1.6  million  compared to the three months ended
August  2003 of  approximately  $2.1  million.  This  was  primarily  due to the
acquisition of a company in November 2003 which increased sales volume.

Gross profit  decreased as a percentage of revenue to 38.6% for the three months
ended  August  2004 from 41.3% for the same  period in the  previous  year.  The
decrease in gross profit as a  percentage  of net sales was mainly the result of
positioning against a competitive market place.

Selling,  general and  administrative  expenses  increased  as a  percentage  of
revenue to 55.2% for the three  months  ended  August  2004,  from 33.5% for the
three months ended August 2003.  Selling,  general and  administrative  expenses
were  approximately  $2.0  million for the three  months  ended  August 2004 and
approximately $0.7 million for the three months ended August 2003. This increase
resulted  from the  start-up  expenses of business in  International  operations
outside of South Africa representing  approximately $0.7 million in expenses for
the three months.  Total selling,  general and  administrative  expenses for the
International  operations  outside  of  South  Africa  were  approximately  $0.7
million,  which is comprised of rents,  legal and wage related  expenses for the
three  months  ended  August 2004.  Total  selling,  general and  administrative
expenses for South Africa operations were approximately $1.3 million,  comprised
of approximately $0.4 million in wages and related expenses;  approximately $0.5
million in one time cost  related to  becoming a public  company;  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
10.2% for the three months  ended  August  2004,  from 1.4% for the three months
ended August 2003.  Research and development  expenses were  approximately  $0.4
million for the three months ended August 2004 and  approximately  $0.03 million
for the three months ended August 2003. This is due primarily to the increase in
our engineering staffing and the

                                       6
<PAGE>

development  of our seventh  generation  geomatics  product  currently due to be
released within the next quarter.

The Company's  operating (loss) profit before other income (expenses)  decreased
approximately $0.9 million to a loss of   approximately $1 million for the three
months ended August 2004,  from a profit of  approximately  $0.1 million for the
three months ended August 2003.  This decrease was the result of the significant
increase in selling,  general  and  administrative  expenses  and  research  and
development expenses as described above.

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

As a result of the above, the Company reported a net loss of approximately  $0.9
million  or $0.08 per  common  share  for the three  months  ended  August  2004
compared  to a net  profit of  approximately  $0.1  million or $0.01 per common
share for the three months ended August 2003.

LIQUIDITY AND CAPITAL RESOURCES

Total assets increased by $961,668  from  $7,671,771  as of February 29, 2004 to
$8,633,439 as of August 31, 2004.  The increase is due primarily to the increase
in  inventory  of  $1,185,987.   This  increase  reflects  the  preparation  for
manufacturing our new seventh generation geomatics product.

Total  liabilities increased by $150,944 from $3,740,748 as of February 29, 2004
to $3,891,692  as of August 31, 2004.  The increase is due primarily to accounts
payable increasing.

Net cash used in  operating  activities  was  $214,480  for the six months ended
August 31, 2004, as compared to cash provided of $298,036 for the same period in
the  previous  year.  The  significant  increase is due to the  requirements  to
replenish the raw materials of a manufacturing company.

Cash  provided in investing  activities  during the six months ending August 31,
2004 was  $423,503,  compared to cash used of $96,160 for the same period in the
previous year. The company acquired  computer  equipment for internal  reporting
and external  monitoring  requirements in the amount of approximately  $255,000.
The  Company  acquired  cash of  approximately  $679,000  through  the merger of
Astrata  Technologies in August 2004 (see Note 1 to the  accompanying  financial
statements).

Net cash used in financing  activities  consist  primarily of  repayments on the
Company's capital lease agreements of equipment and fixtures.

We currently use cash flow from operations to fund our capital  expenditures and
to  support  our  working  capital  requirements.  We expect  that  future  cash
requirements  will  principally be for capital  expenditures and working capital
requirements.

                                       7
<PAGE>

We believe that our existing cash balances and cash flow from operations will be
sufficient to meet our projected capital expenditures, working capital and other
cash  requirements at least through 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 August 31, 2004, the Company had 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.

The  principal  currency  involved  is  the  South  African  Rand.  The  Company
translates all assets and  liabilities  at period-end  exchange rates and income
and expense  accounts at average  rates during the period.  The U.S.  dollar has
weakened  against the Rand by  approximately  15.5% and 16.7% for the six months
ended August 31, 2004 and the quarter ended August 31, 2003  respectively.  This
would increase both our revenue and costs over the previous year.

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/or 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  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.

                                       8
<PAGE>

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 August 31, 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 in the financial  statements 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  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.

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.

Revenues from purchased  extended  warranty and support  agreements are deferred
and  recognized   ratably  over  the  term  of  the   warranty/support   period.
Substantially all technology licenses have consisted of initial license fees and
royalties,  which were  recognized  when  earned,  provided  the  Company has no
remaining obligations.

                                       9
<PAGE>

Contracts  and customer  purchase  orders are  generally  used to determine  the
existence of an arrangement.  Shipping documents and customer  acceptance,  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 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 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

Research and development costs incurred before technological  feasibility of the
product  has been  established  and after  general  release  of the  product  to
customers are expensed as incurred.


                                       10
<PAGE>

SUBSEQUENT EVENTS

PROPOSED ACQUISITION

A  wholly-owned  subsidiary  of the  Company has entered  into an  agreement  to
acquire the assets,  business,  name and intellectual  property of Nanini 209 CC
(doing business as "SureTrack").  SureTrack's primary business in the telematics
sector is the sale or rental of  equipment  and  tracking  software,  along with
providing  airtime and associated  services.  The primary  geographic  operating
areas of the  target  entity  are South  Africa  and other  sub-Saharan  African
countries. Management expects that all closing conditions will be met during the
quarter  ending  November  30,  2004.  However,  under the terms of the  related
agreement, the Company is not obligated to consummate this transaction until all
such conditions are satisfied by the seller.

PRIVATE PLACEMENT OF SECURITIES

In  September  2004,  the Company  agreed in principle to enter into a series of
agreements,  pursuant  to  which a  stockholder  (who  then  beneficially  owned
approximately six percent of the Company's  outstanding  common stock) lent $1.5
million to the Company.  The principal is due upon fifteen days' written demand,
but no later than March 2005. Interest at the rate of 15%, compounded  annually,
is due and payable  concurrently with the principal.  The Company also agreed to
grant  the  stockholder   two-year  warrants  (which  vested  and  became  fully
exercisable  on the grant date) to purchase up to 48,000 shares of the Company's
common stock at an exercise  price of $2.00 per share.  In  connection  with the
agreement  to grant the  warrants,  the Company  also agreed to provide  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 is not  expected to contain 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.

                                       11
<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
as of August  31,  2004 that our  disclosure  controls  and  procedures  were 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 controls over financial reporting that occurred
during the fiscal quarter ended August 31, 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.

                                       12
<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,  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
result of operations.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In August  2004,  the Company  also  issued  restricted  stock as  follows:  (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 Astrata Technologies in exchange for 100% ownership of those two
entities.

The Company  also issued a total of  2,325,000  shares of common  stock that are
exempt by the Bankruptcy Court from registration under the securities laws.


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,  Astrata  Group  Incorporated,  then  known  as  Cetalon
Corporation (the  "Registrant")  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, Case No. LA 03-11306-VZ.  After a
hearing held on May 27, 2004, the Bankruptcy  Court entered an order  confirming
the Registrant'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 the  Registrant  that were in
existence  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.  When and if all unpaid  creditor  claims that
were assigned to the Trust are satisfied in full with interest, the Registrant's
pre-petition  equity  holders  will be  entitled to a pro rata

                                       13
<PAGE>

distribution of remaining Trust assets based on their pre-petition percentage of
ownership of the Registrant.

Pursuant to the Plan,  the  Registrant  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) Astrata  Technologies,
Inc. ("Astrata Technologies"),  a Nevada corporation, whose subsidiaries include
operations  in  Singapore,  Malaysia,  Brunei  and  England  (collectively,  the
"Business Combination Transaction").  As of August 2, 2004, Astrata Technologies
was merged into the Registrant  and Astrata  Technologies'  subsidiaries  became
subsidiaries of the Registrant.

The  Business  Combination  Transaction  was  effective  as of August  2,  2004.
Pursuant  to  the  Plan,   the   Registrant   issued   approximately   6,275,000
post-Effective Date common shares to the shareholders of Cadogan in exchange for
100% ownership of that entity; and 1,800,000  post-Effective  Date common shares
to the  stockholders  of Astrata  Technologies in exchange for 100% ownership of
that entity.

The Registrant 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 2  creditors  and 93,600  shares for
other creditors and Trust expenses) and an additional  1,560,000  post-Effective
Date  shares  of  common  stock  to  certain   administrative  note  holders  in
satisfaction  of $52,663 of  administrative  claim  notes  payable  and  accrued
interest.

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

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table set forth information  regarding the number of shares of the
Registrant's  common stock  beneficially  owned on August 2, 2004,  after giving
effect to the issuances  provided for in the Plan,  which result in an aggregate
of 10,400,000 shares issued or outstanding, by:

     o    each person who is known by the Registrant to beneficially own 5% or
          more of its common stock;
     o    each of the directors and executive officers of the Registrant; and
     o    all of the Registrant's directors and executive officers as a group.

                                       14
<PAGE>

For purposes of this table, a person is deemed to be the  "beneficial  owner" of
the number of shares of common  stock that such  person has the right to acquire
within 60 days of August 2, 2004, through the exercise of any option, warrant or
right,  through the  conversion of any  security,  through the power to revoke a
trust,  discretionary  account or similar  arrangement  or through the automatic
termination of a trust,  discretionary account or similar arrangement.  No other
class of voting securities is outstanding.

NAME                                                   NUMBER     PERCENT
-------------------------------------------------------------------------
DIRECTORS AND EXECUTIVE OFFICERS:
   Sandy Borthwick (1)                                 860,500      8.3%
   Martin Euler (2)                                    860,500      8.3%
   Terry Mackey (3)                                    154,000      1.5%
   Trevor Venter (4)                                   860,500      8.3%
   All directors and executive officers as a group
   (4 persons) (5)                                   2,735,500     26.3%
OTHER MORE-THAN-5% HOLDERS:
   Global Master Investments Ltd. (6)                  655,200      6.3%
   Infomax Co. Ltd. (7)                              1,080,000     10.4%
   W.J. Frost (8)                                      633,672      6.1%
   Pointe Capital Limited (9)                          712,000      6.8%
   Anthony Harrison (10)                               860,500      8.3%

     As used in this  table,  "beneficial  ownership"  means  the sole or shared
power to vote,  or to direct the voting  of, a  security,  or the sole or shared
investment power with respect to common stock (i.e., the power to dispose of, or
to direct the disposition of, a security).

     (1)  Mr. Borthwick's address is 7 Temasek Blvd., #29-03 Suntec Tower One,
          Singapore, 038987
     (2)  Mr. Euler's address is P.O. Box 941844, Houston, TX 77094-8844, USA
     (3)  Mr. Mackey's address is PO Box 69381, Bryanston, Johannesburg, 2021,
          South Africa
     (4)  Mr. Venter's address is PO Box 1462, Rivonia 2128, South Africa
     (5)  Includes all shares referenced in footnotes 1 through 4, inclusive.
          Does not include 281,000 shares beneficially owned by A. John A.
          Bryan, Jr. Mr. Bryan served as the Registrant's sole executive officer
          and one of its two directors as of the Effective Date. He was
          appointed as the trustee of the Trust as of the Effective Date and
          resigned as an executive officer and the sole director of the
          Registrant on August 2, 2004. Mr. Fridolin Voegeli, who served as the
          Registrant's other director as of the Effective Date and resigned as
          of July 29, 2004, does not have any beneficial ownership of any
          shares.
     (6)  Global Master Investments Ltd.'s address is Services Ltd, Suite 4002a,
          Central Plaza, 18 Harbour Road, Wanchai, Hong Kong
     (7)  Infomax Co. Ltd.'s address is 38 Hertfort Street, London W1J 7SG,
          England
     (8)  Mr. Frost's address is c/o Green Radovsky Maloney + Share LLP, Four
          Embarcadero Center, Suite 4000, San Francisco, CA 94111, USA
     (9)  Pointe Capital Limited's address is 37 Shepherd Street, London W1Y
          7LH, England
     (10) Mr. Harrison's address is 112-113 The Chambers Chelsea Harbour, London
          SW10 OFX, England Includes 860,500 shares. Mr. Harrison's address is
          112-113 The Chambers Chelsea Harbour, London SW10 0FX, England

                                       15
<PAGE>

     As a result of the above common stock issuances,  immediately following the
Effective Date, the voting  securities of the Registrant were  beneficially held
approximately as follows:

      STOCKHOLDER                                           PERCENTAGE OWNERSHIP
      --------------------------------------------------------------------------
      Trust                                                          1.5%
      Administrative claimants                                      20.9%
      Former stockholders of Astrata Technologies                   17.3%
      Former shareholders, officers and directors of Cadogan        60.3%


CHANGE OF NAME, TRADING SYMBOL, AND CUSIP NUMBER

As part of the Business Combination  Transaction described above, the Registrant
has changed its name from "Cetalon Corporation" to "Astrata Group Incorporated."
Substantially  all of the  subsidiaries  and  divisions  that it acquired in the
Business  Combination  Transaction are expected to adopt a similar name in their
respective markets in the near future.

Shortly after the Effective Date, the Registrant  requested that the NASD delete
the symbol,  "CETA.PK," under which the pre-petition  shares of the Registrant's
common stock had been quoted.  Subsequent to the Effective  Date, the Registrant
entered into discussions with certain  market-makers to assess their interest in
creating and  maintaining an orderly public market on the OTC Bulletin Board. In
connection  with such a public market action by a  market-maker,  the NASD would
provide the  Registrant's  post-Effective  Date common shares with a new trading
symbol.

As of the date of this Report,  the Registrant has applied for and been assigned
a CUSIP number for its post-Effective Date common shares: 04634R 10 6.

ACCOUNTING TREATMENT

FRESH-START ACCOUNTING

Upon the Effective  Date, as a result of the  cancellation  of all  pre-petition
equity instruments and the issuance of new post-effective  date common shares of
the  Registrant,  a change in control has taken place that allows the Registrant
to  adopt  fresh-start  reporting.  The  application  of  fresh-start  reporting
resulted in remaining  liabilities  being stated at their  present  values.  The
adoption of fresh-start reporting has created a reorganized entity for financial
reporting  purposes with no beginning  retained  earnings or deficit.  Under the
terms of the Plan,  approximately  $5.8 million of claims and pre-petition  debt
was either forgiven or satisfied by the issuance of common stock.

                                       16
<PAGE>

REVERSE MERGER ACCOUNTING

As  a  result  of  the  Business  Combination   Transaction,   the  Registrant's
acquisition  of Cadogan and Astrata  Technologies  has been  accounted  for as a
"reverse  merger" by the  Registrant  because  the  shareholders  of Cadogan and
Astrata  Technologies,  as the legal  acquirees,  obtained  more than 50% voting
control of the  Registrant,  the legal  acquiror.  In fact, the  shareholders of
Cadogan  obtained  more  than  50%  of the  voting  control  of the  Registrant.
Accordingly, for accounting purposes, Cadogan has been treated as the continuing
reporting  entity  and  accounting  acquirer  in the  merger,  which  accounting
treatment resulted in the Registrant adopting the February 28 fiscal year-end of
Cadogan. Subsequent to the closing of the Business Combination Transaction,  the
historical  statements  of  operations  are those of Cadogan.  The balance sheet
consists of the net assets of the Registrant,  Cadogan, and Astrata Technologies
at historical cost. All capital stock shares and amounts and per share data have
been retroactively restated.

                                       17
<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  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 13a-14(a) or 15d-14(a).

Exhibit 31.2        Certification   of  Chief  Financial   Officer  pursuant  to
                    Exchange Act 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.

                                       18
<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:   October 20, 2004                       ASTRATA GROUP INCORPORATED

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

                                       19
<PAGE>


                                  EXHIBIT INDEX

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

Exhibit 31.2        Certification   of  Chief  Financial   Officer  pursuant  to
                    Exchange Act 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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