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

                                   FORM 10-QSB

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

                  For the quarterly period ended: May 31, 2005

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

            For the transition period from __________ to ___________

                        Commission file number: 000-32475

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

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


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

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

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

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

                         Common Stock, par value $0.0001
                         -------------------------------
                                (Title of class)

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of July 8, 2005: 12,284,492

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

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

<PAGE>

                                 [ASTRATA LOGO]

                                TABLE OF CONTENTS
                                -----------------

                                                                            Page

Part I - Financial Statements

     Item 1.    Condensed Consolidated Financial Statements (Unaudited)        1

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

                Condensed Consolidated Statements of Operations and
                Comprehensive Income (Loss) for the three months
                ended May 31, 2005 and 2004                                  F-2

                Condensed Consolidated Statements of Cash Flows for the
                three months ended May 31, 2005 and 2004                     F-3

                Notes to Condensed Consolidated Financial Statements         F-4

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

     Item 3.    Controls and Procedures                                        9

Part II - Other Information

     Item 1.    Legal Proceedings                                             10

     Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds   10

     Item 3.    Defaults Upon Senior Securities                               10

     Item 4.    Submission of Matters to a Vote of Security Holders           10

     Item 5.    Other Information                                             10

     Item 6.    Exhibits                                                      11

                                       i

<PAGE>

Part I - Financial Statements

Item 1.  Condensed Consolidated Financial Statements (Unaudited)

         These unaudited condensed  consolidated  financial statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States  of  America  for  interim  financial  information  and  the  SEC
instructions  to Form  10-QSB.  In the opinion of  management,  all  adjustments
considered  necessary for a fair  presentation,  which  consisted only of normal
recurring  adjustments,  have been included.  Operating  results for the interim
period  ended  May  31,  2005  are not  necessarily  indicative  of the  results
anticipated  for the entire  fiscal year ending February 28,  2006.  This report
should be read in conjunction with the Company's February 28, 2005 annual report
on Form 10-KSB filed with the Securities and Exchange  Commission (the "SEC") on
June 14, 2005.

                                       1

<PAGE>

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

                                      ASSETS

Current assets:
     Cash and cash equivalents                                     $    884,840
     Trade and other receivables, net                                 2,858,668
     Inventories                                                      3,695,744
     Other assets                                                       164,857
                                                                   ------------
Total current assets                                                  7,604,109

Property and equipment, net                                           1,361,897
Intangible assets, net                                                1,715,154
Goodwill                                                              2,481,280
Investment in and advances to affiliate                                 373,736
                                                                   ------------
Total assets                                                       $ 13,536,176
                                                                   ============

                       LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                              $  6,736,083
     Line of credit                                                     874,797
     Income taxes payable                                               226,025
     Notes payable to stockholders                                    2,035,050
     Advances from stockholder                                          375,779
     Current portion of redeemable preferred stock of subsidiary        387,218
     Current portion of other long-term liabilities                      59,598
                                                                   ------------
Total current liabilities                                            10,694,550

Redeemable preferred stock of subsidiary                                628,715
Long-term liabilities                                                    44,169
Deferred tax liability                                                  538,080
                                                                   ------------
Total liabilities                                                    11,905,514

Minority interest                                                       200,323

Commitments and contingencies

Stockholders' equity:
     Preferred stock, $0.0001 par value, 10,000,000 shares
       authorized, none issued or outstanding                                --
     Common stock, $0.0001 par value, 40,000,000 shares
       authorized, 12,284,492 issued and outstanding                      1,228
     Additional paid-in capital, net                                 11,916,706
     Deferred compensation cost                                        (593,750)
     Accumulated deficit                                            (10,111,555)
     Accumulated other comprehensive income                             217,710
                                                                   ------------
Total stockholders' equity                                            1,430,339
                                                                   ------------
Total liabilities and stockholders' equity                         $ 13,536,176
                                                                   ============

  See accompanying notes to these condensed consolidated financial statements.

                                      F-1

<PAGE>

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

                                                        2005            2004
                                                   ------------    ------------
Net sales                                          $  3,495,358    $  3,256,404
Cost of goods sold                                    2,136,329       1,928,180
                                                   ------------    ------------
Gross profit                                          1,359,029       1,328,224

Selling, general and administrative expenses          3,254,524       1,121,778
Research and development                                332,100         152,595
                                                   ------------    ------------
Operating (loss) income                              (2,227,595)         53,851
                                                   ------------    ------------

Other income (expense):
     Interest expense                                  (565,615)         (6,102)
     Equity in net earnings (loss) of affiliate          (9,965)          4,037
     Other income                                        15,473          55,858
                                                   ------------    ------------
Total other (expense) income                           (560,107)         53,793

Income (loss) before minority interest and
     provisions for income taxes                     (2,787,702)        107,644
Income tax provision                                     15,667          26,688
                                                   ------------    ------------
Income (loss) before minority interest               (2,803,369)         80,956
Minority interest                                        19,637              --
                                                   ------------    ------------
Net income (loss)                                  $ (2,783,732)   $     80,956
                                                   ============    ============
Comprehensive income (loss) and
its components consist of the following:
     Net (loss) income                             $ (2,783,732)   $     80,956
     Foreign currency translation
     adjustment, net of tax                            (165,056)             --
                                                   ------------    ------------
Comprehensive (loss) income                        $ (2,948,788)   $     80,956
                                                   ============    ============

Income (loss) per common share:
     Basic                                         $      (0.24)   $       0.01
     Diluted                                              (0.24)           0.01

Weighted average common shares outstanding:
     Basic                                           11,713,604       6,275,000
                                                   ============    ============
     Diluted                                         11,713,604       6,275,000
                                                   ============    ============

  See accompanying notes to these condensed consolidated financial statements.

                                      F-2

<PAGE>

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

<TABLE>
<CAPTION>
                                                             2005           2004
                                                         -----------    -----------
<S>                                                      <C>            <C>
CASH FLOW FROM OPERATING ACTIVITIES:
     Net (loss) income                                   $(2,783,732)   $    80,956
     Adjustments to reconcile net (loss) income to net
     cash (used in) provided by operating activities:
         Gain on sale of property and equipment               (4,814)            --
         Depreciation and amortization                       227,428        104,826
         Amortization of deferred compensation                93,750             --
         Deferred finance costs and debt discount            358,025             --
         Issuance of stock for services                       74,375             --
         Equity in net loss (earnings) of affiliate            9,965         (4,037)
         Minority interest                                   (19,636)        68,397
         Deferred income taxes                               (15,593)       (22,275)
         Unrealized foreign exchange gain                   (118,265)            --
     Changes in operating assets and liabilities:
         Accounts receivable                                (208,265)      (226,275)
         Inventories                                         295,222       (284,224)
         Other assets                                         82,660        (89,883)
         Accounts payable and accrued liabilities            364,924        866,752
                                                         -----------    -----------
Net cash (used in) provided by operating activities       (1,643,956)       494,237
                                                         -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property and equipment                     (185,984)       (56,489)
     Investment in affiliates                                (18,030)        (3,767)
     Proceeds from sale of property and equipment             14,899             --
                                                         -----------    -----------
Net cash (used in) investing activities                     (189,115)       (60,256)
                                                         -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Repayment of line of credit                            (280,252)            --
     Repayment of bridge loan                             (1,500,000)            --
     Repayment of long term liabilities                      (24,077)        (8,978)
     Proceeds from advances by stockholders                  332,998             --
     Proceeds from issuance of common stock                3,073,234             --
                                                         -----------    -----------
Net cash provided by (used in) financing activities        1,601,903         (8,978)
                                                         -----------    -----------
Effect of foreign currency exchange rate changes
     on cash and cash equivalents                           (165,056)       (40,411)

Net (decrease) increase in cash and cash equivalents        (396,224)       384,592

Cash and cash equivalents at beginning of period           1,281,064        264,067

Cash and cash equivalents at end of period               $   884,840    $   648,659
                                                         ===========    ===========
Cash paid during the period for:
     Interest                                            $    60,516    $       102
                                                         ===========    ===========
     Income taxes                                        $        --    $    79,962
                                                         ===========    ===========
</TABLE>

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

  See accompanying notes to these condensed consolidated financial statements.

                                      F-3

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 2005 AND 2004
                                   (UNAUDITED)

1. ORGANIZATION AND BASIS OF PRESENTATION

Organization

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

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

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

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

Nature of operations

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

         The  Company  provides  advanced  positioning   products,  as  well  as
monitoring  and  airtime  services  to  industrial,   commercial,   governmental
entities, academic/research institutions, and professional customers in a number
of  markets  including  surveying,  utility,  construction,  homeland  security,
military,   intelligence,   mining,  agriculture,  marine,  public  safety,  and
transportation.  The Company leases  facilities which  accommodate the assembly,
testing;  and  research  and  development   personnel  with  thirteen  years  of
experience in position and wireless communication  technology that has delivered
more than 83,000  GPS/GSM fleet  management  products to customers.  GSM (Global
System  for  Mobile  Telecommunications)  is  the  dominant  cellular  telephone
standard currently developed throughout the world.

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

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

                                      F-4

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 2005 AND 2004
                                   (UNAUDITED)

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

Basis of Presentation

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

Liquidity and Future Funding Requirements

         The accompanying  consolidated  financial statements have been prepared
assuming  the Company will  continue in its present  form,  which  contemplates,
among other things, the realization of assets and satisfaction of liabilities in
the ordinary  course of business.  For the three months ended May 31, 2005,  the
Company had a net loss of approximately $2.8 million and negative cash flow from
operating activities of approximately $1.6 million. In addition, the Company had
a working capital deficit of approximately $3.1 million as of May 31, 2005.

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

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

         In order for the  Company  to fund its  operations  and  continue  this
growth  plan,  substantial  additional  funding will be required  from  external
sources.  Management  currently intends to fund operations through a combination
of equity,  lines of credit, and collateralized  debt facilities.  Management is
currently  in  negotiations  with a  number  of  strategic  investors,  who have
expressed  an  interest  in making  equity  investments  in the  Company.  These
discussions  are ongoing,  and some of the  potential  investors  are  currently
conducting their due diligence procedures. However, there can be no assurance of
the outcome of these negotiations.  In the event that the Company is not able to
secure  equity  financing on  acceptable  terms beyond the $3.6 million of gross
proceeds received in April and May 2005 (see Note 6),  management  believes that
it has the ability to access debt markets using sale and leaseback  arrangements
and/or  collateralized  debt  facilities.   In  addition,   management  has  the
flexibility  to revise the Company's  business plan and thereby  reduce its cash
requirements  by using  alternate  channels  to  access  Telematics  markets  in
selected  geographic  locations.   While  such  revisions  may  yield  immediate
improvements in short-term profitability and cash flow, this will be achieved at
the cost of a reduction in the Company's  future growth rate and  profitability,
if any.

2.  CERTAIN SIGNIFICANT ACCOUNTING POLICIES

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

Principles of Consolidation

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

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

                                      F-5

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 2005 AND 2004
                                   (UNAUDITED)

Concentrations

         The  financial  instrument  that  potentially  exposes the Company to a
concentration of credit risk principally  consists of cash. The Company deposits
its cash with high credit financial institutions, principally in the Republic of
South Africa. This country does not have any institutional  depository insurance
comparable to the United States, which insures bank balances up to $100,000.  At
May 31, 2005, the Company's  foreign bank balances  approximated  $794,000.  The
Company had approximately $8,000 in U.S. bank accounts, which are insured by the
Federal Deposit Insurance Corporation to $100,000.

Inventories

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

Property and Equipment

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

Goodwill and Other Intangible Assets

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

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

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

Long-Lived Assets

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

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

                                      F-6

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 2005 AND 2004
                                   (UNAUDITED)

Revenue Recognition

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

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

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

         The  Company's  orders  are  generally  shipped  free-on-board  ("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
also means that the  Company  bears all costs and risks of loss or damage to the
goods prior to their delivery.

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

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

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

Research and Development Costs

         Research and development costs relating to GPS positioning hardware and
software  systems  including  the GLP to be sold or otherwise  marketed that are
incurred before  technological  feasibility of the product has been  established
and after general  release of the product to customers are expensed as incurred.
The Company incurred approximately $0.3 million and $0.2 million of research and
development  expenses  during  the three  months  ended  May 31,  2005 and 2004,
respectively.

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

                                      F-7

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 2005 AND 2004
                                   (UNAUDITED)

Stock-Based Compensation

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

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

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

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

         SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure,  an  amendment  of SFAS No. 123,"  provides  alternative  methods of
transition  for a voluntary  change to the fair value based method of accounting
for  stock-based  employee  compensation.  In addition,  SFAS No. 148 amends the
disclosure  requirements of SFAS No. 123 to require prominent disclosure in both
annual and  interim  financial  statements  about the method of  accounting  for
stock-based employee  compensation and the effect of the method used on reported
results. At May 31, 2005 the Company had one stock-based  employee  compensation
plan,  which is described in Note 7. The following table  illustrates the effect
on net loss and loss per common share for the quarter  ended May 31, 2005, as if
the Company had applied the fair value  recognition  provisions  of SFAS No. 123
for its stock-based employee compensation plan.

           Net (loss) as reported                       $(2,783,732)
           Stock based compensation, net of tax             (59,767)
                                                        -----------
           Pro forma net (loss)                         $(2,843,499)
                                                        -----------

           Basic and diluted (loss) per common share:

           As reported                                  $     (0.24)
                                                        ===========
           Pro forma                                    $     (0.24)
                                                        ===========

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

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


                                      F-8

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 2005 AND 2004
                                   (UNAUDITED)

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

Recently Issued Accounting Pronouncements

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

3. INVENTORY

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

                         South
                         Africa        Europe       Asia         Total
                       ----------   ----------   ----------   ----------
    Raw materials      $  649,698   $       --   $       --   $  649,698
    Work in progress      443,021           --           --      443,021
    Finished goods      2,309,500      138,569      154,956    2,603,025
                       ----------   ----------   ----------   ----------
           Totals      $3,402,219   $  138,569   $  154,956   $3,695,744
                       ==========   ==========   ==========   ==========

4. NOTES PAYABLE TO/AND ADVANCES FROM RELATED PARTIES

         In September  2004,  Astrata Group entered into a series of agreements,
pursuant to which a stockholder (who then beneficially owned  approximately 5.5%
of the Company's  outstanding common stock) lent $1.5 million to the Company, as
an unsecured  note payable.  Under the amended loan  agreement  described in the
following paragraph, the principal is due upon fifteen days' written demand, but
no later  than  June  30,  2005.  Interest  at a fixed  rate of 15%,  compounded
annually,  is due and payable  concurrently with the principal.  The outstanding
balance of this demand note was $1,500,000 as of May 31, 2005 and is included in
notes payable to stockholders in the accompanying condensed consolidated balance
sheet. The transaction described above constituted an exempt offering under Rule
506 of  Regulation  D to a single  accredited  investor.  This note is currently
being renegotiated.

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

         In October 2004,  Astrata  Group entered into an agreement  pursuant to
which a  stockholder  agreed to lend  $600,000 to the  Company,  as an unsecured
credit  facility.  The note accrues interest at 3% above the U.S. prime rate (6%
at May 31, 2005).  Principal and accrued  interest are payable by June 30, 2005.
The note has no prepayment  penalty and may be paid in full before the due date.
The outstanding  balance of this credit facility was $151,000 as of May 31, 2005
and is included in notes payable to stockholders in the  accompanying  condensed
consolidated balance sheet. This note is currently being renegotiated.

         In November 2004,  Astrata Group received an unsecured  advance from an
officer/stockholder  in the amount of $41,378.  This advance accrues interest at
the London Inter-bank  Offered Rate ("LIBOR") (3.1% at May 31, 2005) plus 3% and
had an original maturity date of March 1, 2005 with no prepayment  restrictions.
The maturity date was extended to June 30, 2005. The outstanding balance of this
demand note was  $41,378 as of May 31,  2005 and is  included  in advances  from
stockholders in the accompanying condensed consolidated balance sheet. This note
is currently being renegotiated.

         In December 2004, the Company sold a $384,000  convertible  demand note
to one of its stockholders,  who then beneficially owned approximately 6% of the
Company's  outstanding  common  stock and had  previously  lent the Company $1.5
million  on an  unsecured  basis (see the first  paragraph  of this  Note).  The

                                      F-9

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 2005 AND 2004
                                   (UNAUDITED)

holder's conversion  privilege expires when the Company has privately issued its
common stock for an aggregate of at least $10 million. The principal is due upon
fifteen days'  written  demand,  but no later than June 30, 2005.  Interest at a
fixed rate of 15%, compounded annually, is due and payable concurrently with the
principal.  The outstanding balance of this note was $384,000 as of May 31, 2005
and is included in notes payable to stockholders in the  accompanying  condensed
consolidated   balance  sheet  The  transaction   described  in  this  paragraph
constituted  an exempt  offering under Rule 506 of Regulation D to an accredited
investor. This note is currently being renegotiated.

         During the quarter  ended May 31, 2005, a director of the Company,  two
of its executive  officers,  and a director of two wholly-owned  subsidiaries of
the Company  provided  unsecured  short-term  loans to four  subsidiaries of the
Company totaling $332,998.  Of this amount, loans of approximately  $168,500 and
$50,000  are due on  August  31,  2005  and  June 30,  2005,  respectively;  the
remaining loans do not have a scheduled due date at this time. The $168,500 loan
bears  interest at LIBOR plus 3%. The total  borrowings  also  include a loan of
$97,654,  which  bears  interest at the rate of 11% per annum (the prime rate of
interest  when the  transaction  was  consummated).  The other  $66,844 of loans
described in the first sentence of this paragraph are non-interest  bearing. The
total  outstanding  balance of the notes was  $332,998 as of May 31, 2005 and is
included  in  advances  from   stockholders   in  the   accompanying   condensed
consolidated  balance  sheet.  The $50,000  note due June 30, 2005 is  currently
being renegotiated.

5. OTHER DEBT TRANSACTIONS

Line of Credit

         Astrata  SA has  secured a line of credit  for use in its South  Africa
operations.  The line of credit is secured by certain trade accounts  receivable
and allows for funding up to 70% of the outstanding  accounts receivable offered
for sale and accepted by the lender with a maximum of R10,000,000 (approximately
$1.5 million at May 31, 2005). Interest on the outstanding balance is charged at
the  current  prime  rate  in  South  Africa  (10.5%  as of May 31,  2005).  The
outstanding  balance is  approximately  $0.9 million on the line of credit as of
May 31, 2005.

Bridge Loan

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

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

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

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


                                      F-10

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 2005 AND 2004
                                   (UNAUDITED)

         On June 27, 2005, the Company filed the registration statement required
by the bridge loan  transaction  and by certain  other  transactions,  including
those  described in the "Issuance of Common Stock and Other Equity  Instruments"
section of Note 6. As of July 12, 2005, such registration statement had not been
declared effective by the SEC.

6. EQUITY TRANSACTIONS

Issuance of Common Stock and Other Equity Instruments

         In March 2005,  the Company issued 12,500 shares of its common stock in
exchange for  services  provided by a  consultant.  The  per-share  value of the
common stock was $5.95 for an aggregate of $74,375. The transaction described in
this  paragraph  constituted  an  exempt  offering  under  Section  4(2)  of the
Securities Act of 1933, as amended.

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

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

Stock Option Plan

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

         During March 2005, the Company issued 14,000 stock options to employees
with an exercise  price of $5.00, a three year vesting  period,  and each became
exercisable upon issuance.

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

7.  OTHER RELATED PARTY TRANSACTIONS

         The Company  currently leases  facilities from an entity  controlled by
two directors of a Company subsidiary under cancelable operating leases expiring
in 2007.  The annual  rent is subject  to  adjustment  based on the terms of the
leases.  The condensed  consolidated  statements of operations  include expenses
from these operating leases of  approximately  $66,000 and $34,000 for the three
months ended May 31, 2005 and 2004, respectively.

                                      F-11

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 2005 AND 2004
                                   (UNAUDITED)

8.  INVESTMENT IN AFFILIATE

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

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

         Condensed unaudited historical  financial  information of BOT as of May
31, 2005 and for the quarter then ended is presented below:

                                                     As of
                                                 May 31, 2005
                                                 ------------
                     Current assets               $ 800,887
                     Other assets                   110,907
                     Payable to stockholders        580,718
                     Other liabilties               249,705
                     Equity                          81,371

                                              Three Months Ended
                                                 May 31, 2005
                                              ------------------

                         Sales                    $ 187,451
                         Cost of good sold          (97,306)
                                                  ---------
                         Gross margin                90,145
                         Operating expenses         (82,433)
                                                  ---------
                     Operating income             $   7,712
                                                  =========

                     Net (loss)                   $ (19,930)
                                                  =========

                     Equity distributions         $      --
                                                  =========

                                      F-12

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 2005 AND 2004
                                   (UNAUDITED)

9. OTHER COMMITMENTS AND CONTINGENCIES

Legal Matters

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

Operating Leases

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

                              2007   $  401,000
                              2008      252,000
                              2009       91,000
                              2010       91,000
                              2011       91,000
                        Thereafter      310,000
                                     ----------
                                     $1,236,000
                                     ==========

         Rent  expense  approximated  $187,000  and $67,000 for the three months
ended May 31, 2005 and 2004, respectively.

Government Contract

         In December 2004, a subsidiary of the Company was awarded a fixed-price
contract to provide the Singapore  government's Civil Defence Force (the "SCDF")
with software and hardware in an integrated  control system  designed to provide
real-time  tracking (the  "System") of vehicles that are authorized to transport
hazardous  materials within the country.  The contract amount  approximates  2.0
million  Singapore  dollars,  or about  $1.2  million  as of May 31,  2005  (the
"Contract").  During the quarter  ended May 31,  2005,  the  Company  recognized
revenue on the Contract of approximately $0.1 million.

         In the event that the Company  does not  complete  the  Contract by the
specified date  (including any  agreed-upon  extensions  thereof),  SCDF has the
right to assess liquidated damages up to a maximum of 10% of the Contract price.
SCDF also has the right to withhold  the final 10% of the  Contract  price until
approximately sixteen months after the System has successfully completed certain
acceptance tests specified in the Contract.  The Company is obligated to warrant
the System for a one-year period  beginning  approximately  fourteen weeks after
the  System  has passed all of the  aforementioned  acceptance  tests.  The time
frames  described in the preceding two  sentences  assume that the  "performance
guarantee  period"  (as  defined)  is not  extended  beyond  the  original  time
specified in the Contract.

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

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

                                      F-13

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 2005 AND 2004
                                   (UNAUDITED)

10.  SEGMENT REPORTING AND GEOGRAPHIC INFORMATION

         The Company is operating in the following two reportable segments:

Geomatics

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

Telematics

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

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

For the three months ended May 31, 2005:

                                 Geomatics       Telematics     Consolidated
                                ------------    ------------    ------------
Total assets                    $  9,770,871    $  3,765,305    $ 13,536,176
                                ============    ============    ============
Revenue:
   Outsiders                    $  2,523,068    $    972,290    $  3,495,358
   Company subsidiaries              125,471         232,859         358,330
                                ------------    ------------    ------------
Total segment revenues          $  2,648,539    $  1,205,149    $  3,853,688
   Intercompany eliminations        (125,471)       (232,859)       (358,330)
Consolidated revenues           $  2,523,068    $    972,290    $  3,495,358
                                ============    ============    ============
Gross profit                       1,057,259         301,770       1,359,029
Operating expenses                                                (3,586,624)
Operating loss                                                  $ (2,227,595)
                                                                ============

For the three months ended May 31, 2004:

                                 Geomatics       Telematics     Consolidated
                                ------------    ------------    ------------
Total assets                    $  6,031,125    $  2,585,088    $  8,616,213
                                ============    ============    ============
Revenue:
   Outsiders                    $  2,279,398    $    977,006    $  3,256,404
   Company subsidiaries                   --           8,242           8,242
                                ------------    ------------    ------------
Total segment revenues          $  2,279,398    $    985,248    $  3,264,646
   Intercompany eliminations              --          (8,242)         (8,242)
                                ------------    ------------    ------------
Consolidated revenues           $  2,279,398    $    977,006    $  3,256,404
                                ============    ============    ============
Gross profit                         828,793         499,431       1,328,224
Operating expenses                                                (1,274,373)
                                                                ------------
Operating income                                                $     53,851
                                                                ============

                                      F-14

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 2005 AND 2004
                                   (UNAUDITED)

Geographic Information

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

For the three months ended May 31, 2005:

<TABLE>
<CAPTION>
                 Property and                   Gross         Operating     Operating
                 Equipment, net  Revenue        Profit        Expenses        (Loss)
                 ---------------------------------------------------------------------
<S>              <C>           <C>           <C>            <C>           <C>
Asia             $   375,813   $   450,106   $   200,844    $   574,809   $  (373,965)
Africa               655,642     3,040,120     1,160,318      1,601,828      (441,510)
United States          4,693            --            --        476,348      (476,348)
Western Europe       325,749         5,132        (2,133)       933,639      (935,772)
                 -----------   -----------   -----------    -----------   -----------
Total            $ 1,361,897   $ 3,495,358   $ 1,359,029    $ 3,586,624   $(2,227,595)
                 ===========   ===========   ===========    ===========   ===========
</TABLE>

For the three months ended May 31, 2004:

<TABLE>
<CAPTION>
                 Property and                   Gross         Operating     Operating
                 Equipment, net  Revenue        Profit        Expenses        Income
                 ---------------------------------------------------------------------
<S>              <C>           <C>           <C>            <C>           <C>
Asia              $       --    $       --    $       --     $       --    $       --
Africa               411,075     3,256,404     1,328,224      1,274,373        53,851
United States             --            --            --             --            --
Western Europe            --            --            --             --            --
                  ----------    ----------    ----------     ----------    ----------
Total             $  411,075    $3,256,404    $1,328,224     $1,274,373    $   53,851
                  ==========    ==========    ==========     ==========    ==========
</TABLE>

     See Note 3 for geographic information on inventory.

11.  INCOME/LOSS PER COMMON SHARE

         The following is a reconciliation of the numerators and denominators of
the basic and diluted income/loss per common share computations for the quarters
ended May 31, 2005 and 2004:

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

     Net (loss) income attributed to common shareholders    $ (2,783,732)         $     80,956

Denominator for basic and diluted income (loss)
per common share:

     Weighted average number of common shares outstanding     11,713,604             6,275,000
                                                            ------------          ------------
Basic and diluted (loss) income per common share            $      (0.24)         $       0.01
                                                            ============          ============
</TABLE>

                                      F-15

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 2005 AND 2004
                                   (UNAUDITED)

12.  SUBSEQUENT EVENTS

         See Notes 5 and 6 regarding registration  statements filed with the SEC
after May 31, 2005.

         In June  2005,  Astrata  SA  obtained a  R7,000,000  (approximately  $1
million as of May 31, 2005) line of credit with a South African finance company.
This revolving  facility is repayable within sixty days of funding with interest
at 2% above the South African prime rate (currently 10.5%) plus a 3% fee on each
advance, and is secured by subordination of certain intercompany  liabilities of
Astrata SA and its  subsidiary,  and a bond  secured  by  certain  assets (up to
R12,000,000) of the Company's South African subsidiaries.

                                      F-16

<PAGE>

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

Overview

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

Forward-Looking Statements

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

Company Overview

         Astrata Group and its  subsidiaries are in the telematics and geomatics
sectors of Global Positioning System ("GPS") industries. The Company's expertise
is focused on advanced  location-based  IT products  and  services  that combine
positioning,  wireless  communications,  and information  technologies.  Astrata
Group provides advanced positioning  products, as well as monitoring and airtime
services to industrial,  commercial,  governmental  entities,  academic/research
institutions,  and  professional  customers  in a number  of  markets  including
surveying,  utility,  construction,  homeland security, military,  intelligence,
mining,  agriculture,  public safety, marine, and transportation.  Astrata Group
leases  facilities  which  accommodate the assembly,  testing,  and research and
development  personnel  with  experience in position and wireless  communication
technology  that has delivered in excess of 83,000  GPS/GSM  (Global  System for
Mobile Telecommunications) fleet management products to customers.

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

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

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

         One of Astrata  Group's  predecessor  entities was founded in 1986 as a
reseller of Sokkia products, a Japanese  manufacturer of survey instruments.  In
1988-89,  the Company  integrated GPS products into its portfolio and became one
of the first international  dealers of Trimble Navigation Limited in 1989. Since
then,  Astrata  Group has won the "Best  International  Dealer Award" on several
occasions.  In  1998,  Astrata  Group  began  developing  its own  software  and
proprietary  products for the demanding  commercial  high precision  positioning
market.  The Company sells  geo-information  technology  ("Geo IT") products and
services to commercial customers in the mining, surveying,  utility, government,
agriculture,  oil and gas,  construction,  and offshore  fleet  markets often in
demanding  environments.  Astrata Group's products

                                       2

<PAGE>

include  proprietary  products  and  services as well as products  from  Trimble
Navigation  Limited,  Nikon Surveying  Instruments,  Aquila,  Thrane and Thrane,
Itronix, and Optech. In addition,  Astrata Group provides ongoing communications
and IT services  (e.g.,  Astrata  Group is a  satellite  services  provider  for
Telenor) for its customers with comprehensive  service,  training, and technical
assistance.

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

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

Geomatics

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

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

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

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

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

Telematics

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

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

                                       3

<PAGE>

         The  Telematics  segment also includes our seventh  generation  GPS/GSM
transceiver (the Astrata Geo-Location  Platform, or "GLP") that enables users to
track,  monitor,  and control mobile  platforms or remote assets such as trucks,
vessels,  containers,  trailers, and other vehicles. The Astrata GLP is based on
years of experience  designing,  manufacturing,  and supporting  over 83,000 GLP
units  for  major  global  commercial   telematics  companies  such  as  Thales.
Management  believes  that  the  GLP  sets  a new  standard  of  capability  and
functionality,  more expandability, and high reliability, while at the same time
dramatically  reducing the cost of Location Based Services  ("LBS").  Management
believes that customers can reduce costs, increase productivity, and monitor and
control virtually any equipment, vehicles, assets, or persons using state of the
art monitoring, routing, control or other real-time information systems. The GLP
platform allows Astrata Group to integrate customized applications for virtually
any requirement in markets such as container  tracking for homeland security and
employees  for  compliance  with the  Department of  Transportation  Legislation
relating to driving hours.

Technology Overview

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

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

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

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

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

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

         Net sales were  approximately  $3.5  million for the three months ended
May 31, 2005, an increase of  approximately  $0.2 million  compared to the three
months  ended May 31,  2004 of  approximately  $3.3  million.  This  reflects  a
moderate growth quarter to quarter,  however, 54% of the non-recurring  original
equipment  manufacturer and sub-contract  manufacturing business in May 2004 was
replaced with recurring Telematics business, representing a 102% growth over the
quarter ended May 31, 2004.

         Gross profit increased approximately $0.1 million to approximately $1.4
million for the three  months  ended May 31, 2005  compared to the three  months
ended May 31, 2004 of  approximately  $1.3  million.  Gross profit  overall as a
percentage of revenue  decreased from 41% to 39%.  Telematics  margins decreased
from approximately 52% to 31% and Geomatics margins increased from approximately
37% to 42%. During the quarter ended May 31, 2005,  inefficient data routing has
resulted in excessive Telematics communication expenditures. This cost could not
be  passed on to the end users and as a result  eroded  margins.  Management  is
confident  this matter has been resolved.  The increase in Geomatics  margins is
attributable primarily to changes in product mix.

                                       4

<PAGE>

         Selling general and administrative  expenses for the three months ended
May 31, 2005 were approximately $3.3 million,  an increase of approximately $2.2
million  compared to the three months ended May 31, 2004 of  approximately  $1.1
million.  In Africa,  overhead increased by approximately $0.2 million which was
attributable  to the  expansion  of our  Telematics  business.  As  part  of our
commitment to global  expansion,  the Company entered South East Asia (including
Singapore,  Malaysia, Brunei and Indonesia) and Europe during the latter part of
the previous fiscal year, and has successfully  established an infrastructure to
support  anticipated  revenue  programs.  Our  operations in South East Asia and
Europe  for the  quarter  ended  May,  31 2005  incurred  overhead  expenses  of
approximately  $0.6 million and $0.5 million,  respectively.  These expenses are
primarily related to staffing,  facilities and travel costs.  Corporate overhead
of approximately  $0.9 million included public company expenses of approximately
$0.3 million and  administrative  expenses of approximately $0.6 million for the
quarter ended May 31, 2005.  Public  company  expenses  include audit  expenses,
legal  fees,  and  director  fees.  Administrative  expenses  primarily  include
marketing,  salaries, facilities and travel expenses. For the three months ended
May 31, 2004,  the $1.1 million was directly  related to the African  operations
covering selling, general and administrative expenses.

         Research and development  expenses were  approximately $0.3 million for
the three  months  ended May 31, 2005,  and  approximately  $0.1 million for the
three months ended May 31, 2004, an increase of approximately $0.2 million. This
is due to the  expansion  of our hardware  and  software  development  staff and
acceleration of the development of GLP derivatives.

         Interest   expense  for  the  three  months  ended  May  31,  2005  was
approximately  $0.6  million.  This  increase  includes  the  finance  costs  of
approximately  $0.4 million directly  associated with the debt financing and the
bridge  loan  (see  Notes  4  and  5 to  the  condensed  consolidated  financial
statements included elsewhere herein) and interest expense of approximately $0.2
million.

         The  Company's  operating  loss for the three months ended May 31, 2005
was approximately  $2.2 million,  an increase of approximately $2.3 million over
the three months ended May 31, 2004. This increase  reflects the operating costs
of businesses in Asia and Europe;  business  expansion in Africa;  and corporate
overhead   relating  to  public   company   expenses,   capital   raising,   and
administrative expenses.

Certain Non-Operating Items

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

Net Results of Operations

         The Company reported a net loss of approximately  $2.8 million or $0.24
per common share for the three months ended May 31, 2005  compared to net income
of  approximately  $0.08  million or $0.01 per common share for the three months
ended May 31, 2004.

         Our basic and  diluted  income  (loss) per  common  share for the three
months ended May 31, 2005 was $(0.24),  and $0.01 for the three months ended May
31, 2004.

Liquidity and Capital Resources

         Total assets  decreased by $794,831 from $14,331,007 as of February 28,
2005 to  $13,536,176  as of May 31, 2005.  The decrease is due to an increase in
trade receivables,  net of $249,889; an increase in property and equipment,  net
of $50,525;  and advances to an  affiliate  of $8,065;  offset by a reduction in
cash of $396,224; a decrease in inventory of $295,222; deferred finance costs of
$227,150  related to the debt financing and the bridge loan; a decrease in other
assets of $82,660 related to Value Added Tax ("VAT") receivable for the European
operation; and the amortization of intangible assets of $102,054.

         Total  liabilities  decreased  by  $1,067,764  from  $12,973,278  as of
February 28, 2005 to  $11,905,514  as of May 31, 2005. The decrease is due to an
increase in trade and accrued payables of $337,926;  an increase in income taxes
payable of $21,502;  advances  received from officers and directors of $332,998;
debt issuance  discount of $130,875  related to the bridge loan; and an increase
in redeemable  preferred  stock of  subsidiary of $5,499 for accrued  dividends;
offset  by a  decrease  in  borrowing  on a line of  credit  (secured  by  trade
receivables)  by $280,252;  repayment of  $1,500,000  bridge loan; a decrease in
liability for foreign exchange loss of $76,641;  a decrease in deferred taxes of
$15,593; and repayment on long term debt of $24,078.

         Net cash used in  operating  activities  was  $1,643,956  for the three
months  ended May 31,  2005,  as compared to cash  provided of $494,237  for the
three months ended May 31, 2004.  The cash used in operating  activities for the
three months ended May 31, 2005 is a net loss of  $2,783,732;  a gain on sale of
assets of $4,814; and an increase in trade receivables of $208,265;  offset by a
decrease in  inventory of  $295,222;  a decrease in other  assets of $82,660;  a
increase of trade and accrued  payables of $364,924;  and non-cash  transactions
totaling

                                       5

<PAGE>

$610,049.  The cash provided by operating  activities for the three months ended
May 31,  2004 is a net  profit of  $80,956;  an  increase  in trade and  accrued
payables of $866,752; and non-cash transactions totalling $146,911; offset by an
increase in trade receivables of $226,275; an increase in inventory of $284,224;
an increase in other assets of $89,883.

         Cash used in investing activities during the three months ended May 31,
2005 was  $189,115,  as compared to $60,256 for the three  months  ended May 31,
2004.  The cash used in investing  activities for the three months ended May 31,
2005 is the purchase of property and equipment of $185,984; and an investment in
affiliate of $18,030; offset by proceeds from the sale of assets of $14,899. The
cash used in investing activities for the three months ended May 31, 2004 is the
purchase of property and  equipment of $56,489 and an investment in affiliate of
$3,767.

         Net cash provided by financing activities during the three months ended
May 31,  2005 was  $1,601,903,  as compared to cash used of $8,978 for the three
months ended May 31, 2004.  The cash  provided by financing  activities  for the
three months ended May 31, 2005 is principally  from proceeds  received from the
issuance of common stock of $3,073,234;  and short-term  loans from officers and
directors of the Company of  $332,998;  offset by repayment of a bridge loan for
$1,500,000,  repayment on lines of credit of $280,252;  and  repayments  on long
term debt of $24,077. The cash used in financing activities for the three months
ended May 31, 2004 is from repayments on long term debt.

         Astrata  SA has  obtained  a line  of  credit  for  use in its  African
operations.  This line of credit is secured by certain trade accounts receivable
and allows for funding up to R10,000,000  (approximately  $1.5 million as of May
31,  2005) based on current  invoices.  Interest on the  outstanding  balance is
charged at the current  prime rate in South Africa  (10.5% as of May 31,  2005).
Astrata SA has drawn  approximately $0.9 million on the line of credit as of May
31, 2005.  This allows it an additional  source of funds of  approximately  $0.6
million.

         In  June  2005,  Astrata  SA  obtained  a  R7,000,000  line  of  credit
(approximately  $1 million  as of May 31,  2005)  with a South  African  finance
company.  This revolving facility is repayable within sixty days of funding with
interest at 2% above the South  African prime rate  (currently  10.5%) plus a 3%
fee on each advance,  and is secured by  subordination  of certain  intercompany
liabilities  of Astrata  SA and its  subsidiary,  and a bond  secured by certain
assets (up to R12,000,000) of the Company's South African subsidiaries.

Liquidity and Future Funding Requirements

         The accompanying  consolidated  financial statements have been prepared
assuming  the Company will  continue in its present  form,  which  contemplates,
among other things, the realization of assets and satisfaction of liabilities in
the ordinary  course of business.  For the three months ended May 31, 2005,  the
Company had a net loss of approximately $2.8 million and negative cash flow from
operating activities of approximately $1.6 million. In addition, the Company had
a working capital deficit of approximately $3.1 million as of May 31, 2005.

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

         The  Company has  various  debt  facilities  which it is  currently  in
negotiations  for  extension  of the due  dates,  (see  Note 4 to the  condensed
consolidated financial statements included elsewhere herein ).

         In order for the  Company  to fund its  operations  and  continue  this
growth  plan,  substantial  additional  funding will be required  from  external
sources.  Management  currently intends to fund operations through a combination
of equity,  lines of credit, and collateralized  debt facilities.  Management is
currently  in  negotiations  with a  number  of  strategic  investors,  who have
expressed  an  interest  in making  equity  investments  in the  Company.  These
discussions  are ongoing,  and some of the  potential  investors  are  currently
conducting their due diligence procedures. However, there can be no assurance of
the outcome of these negotiations.  In the event that the Company is not able to
secure  equity  financing on  acceptable  terms beyond the $3.6 million of gross
proceeds  received in April and May 2005,  management  believes  that it has the
ability to access debt  markets  using sale and  leaseback  arrangements  and/or
collateralized debt facilities.  In addition,  management has the flexibility to
revise the Company's  business plan and thereby reduce its cash  requirements by
using alternate  channels to access  Telematics  markets in selected  geographic
locations.  While such revisions may yield immediate  improvements in short-term
profitability and cash flow, this will be achieved at the cost of a reduction in
the Company's future growth rate and profitability, if any.

                                       6

<PAGE>

Off Balance Sheet Arrangements

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

Inflation

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

Foreign Currency Exchange Rate Risk

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

         The principal  foreign currency involved is the South African Rand. The
Company  translates all assets and liabilities at period-end  exchange rates and
income and expense accounts at average rates during the period.  The U.S. dollar
strengthened  against the Rand by  approximately  14% for the three months ended
May 31, 2005; and the U.S. dollar weakened 1% for the three months ended May 31,
2004. The U.S. dollar average rate weakened against the Rand by approximately 7%
for the three months  ended May 31, 2005  compared to the three months ended May
31,  2004.  This  increases  both our  revenue and costs as compared to previous
periods.  During the May 31, 2005  quarter,  the Company  also had  transactions
denominated in the British Pound, the Singapore dollar,  the Malaysian  Ringgit,
and the Brunei dollar.

Interest Rate Risk

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

Critical Accounting Policies

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

Inventories

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

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

Long-Lived Assets

         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 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


                                       7

<PAGE>

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

Intangible Assets

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

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

Revenue Recognition

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

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

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

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

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

         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 revenue allocated to an individual element is limited to the lesser of
its relative  estimated fair value or the amount not contingent on the Company's
delivery of other elements under the arrangement,  regardless of the probability
of the Company's performance.

                                       8

<PAGE>

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

Research and Development Costs

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

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

Recently Issued Accounting Pronouncements

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

Item 3:  Controls and Procedures

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

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

Limitations on the Effectiveness of Internal Controls

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

                                       9

<PAGE>

                                     PART II

Item 1.  Legal Proceedings

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

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

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

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

         On June 27, 2005, the registration statement described in the preceding
two paragraphs was filed. As of July 12, 2005, such  registration  statement had
not been  declared  effective  by the SEC.  Management  used $1.5 million of the
proceeds from the April 2005 transaction to repay the February 2005 bridge loan,
and expects to use the remaining proceeds from the transactions  described above
for general working capital purposes.

Item 3.  Defaults Upon Senior Securities

         None

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

         None

Item 5.  Other Information

         None

                                       10

<PAGE>

Item 6.  Exhibits

Exhibit No.       Description
------------      --------------------------------------------------------------
Exhibit 2.1       Cetalon  Corporation  Court  Order of May 27,  2004 and Second
                  Amended  Disclosure   Statement  and  Plan  of  Reorganization
                  incorporated  by reference to Exhibit 2.1 to Form 8-K filed on
                  August 9, 2004.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       11

<PAGE>

Exhibit No.       Description
------------      --------------------------------------------------------------
Exhibit 10.14     Engagement  Letter among Westminster  Securities  Corporation,
                  Rodman & Renshaw,  LLC, and Astrata Group Incorporated,  dated
                  March 2, 2005  incorporated  by reference to Exhibit  10.14 to
                  the  Company's  Annual Report on Form 10-KSB filed on June 14,
                  2005.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       12

<PAGE>

                                   SIGNATURES

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

Astrata Group Incorporated

By:        /s/ Martin Euler                                 Date:  July 15, 2005
           ------------------------------------------
           Martin Euler
           Chief Financial Officer,
           Principal Accounting Officer and Secretary

<PAGE>

                                  EXHIBIT INDEX

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

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

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

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