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: NOVEMBER 30, 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 [ ]

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of January 20, 2006: 12,358,196

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

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

 Part I - Financial Information

      Item 1   Financial Statements..........................................F-1

               Condensed Consolidated Balance Sheet as of November 30, 2005..F-1

               Condensed Consolidated Statements of Operations and
               Comprehensive Loss for the three and nine-months
               ended November 30, 2005 and 2004..............................F-2

               Condensed Consolidated Statements of Cash Flows for the
               Nine-months ended November 30, 2005 and 2004..................F-3

               Notes to Condensed Consolidated Financial Statements..........F-5

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

      Item 3   Controls and Procedures........................................12

 Part II - Other Information

      Item 1   Legal Proceedings..............................................13

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

      Item 3   Defaults upon Senior Securities................................13

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

      Item 5   Other Information..............................................13

      Item 6   Exhibits.......................................................14

                                        i

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)
                                November 30, 2005

                                     ASSETS
Current assets:
     Cash and cash equivalents                                     $    850,837
     Trade and other receivables, net                                 3,547,194
     Inventories                                                      3,312,758
     Deferred financing costs, net                                      105,000
     Other assets                                                       204,541
                                                                   ------------
Total current assets                                                  8,020,330
Property and equipment, net                                           1,520,881
Intangible assets, net                                                1,377,570
Goodwill                                                              1,887,676
Investment in and advances to affiliate                                   8,403
                                                                   ------------

Total assets                                                       $ 12,814,860
                                                                   ============
                      LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
     Accounts payable and accrued liabilities                      $  9,790,979
     Lines of credit                                                  1,646,752
     Debenture, net of discounts                                        297,000
     Income taxes payable                                               207,511
     Notes payable to stockholders                                    2,509,607
     Current portion of redeemable preferred stock of subsidiary        858,924
     Current portion of other long-term liabilities                      82,641
                                                                   ------------
Total current liabilities                                            15,393,414
Redeemable preferred stock of subsidiary                                283,783
Long-term liabilities                                                    82,548
Deferred tax liability                                                  454,867
                                                                   ------------
Total liabilities                                                    16,214,612
                                                                   ------------
Minority interest                                                        35,132
Commitments and contingencies
Stockholders' deficit:
     Preferred stock, $0.0001 par value, 10,000,000 shares
       authorized, none issued or outstanding                              --
     Common stock, $0.0001 par value, 40,000,000 shares
       authorized, 12,518,394 issued and 12,358,196 outstanding           1,251
     Treasury stock, at cost                                           (483,798)
     Additional paid-in capital, net                                 13,367,886
     Deferred compensation cost                                        (457,250)
     Accumulated deficit                                            (16,053,432)
     Accumulated other comprehensive income                             190,459
                                                                   ------------
Total stockholders' deficit                                          (3,434,884)
                                                                   ------------

Total liabilities and stockholders' deficit                        $ 12,814,860
                                                                   ============

  See accompanying notes to these condensed consolidated financial statements.

                                       F-1

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                  Three Months Ended November 30,  Nine Months Ended November 30,
                                                       2005            2004            2005            2004
                                                   ------------    ------------    ------------    ------------
                                                                                                   (As Restated)

<S>                                                <C>             <C>             <C>             <C>
Net sales                                          $  3,884,772    $  4,131,488    $ 12,171,470    $ 11,068,809
Cost of goods sold                                    2,568,050       2,483,345       7,776,225       6,657,486
                                                   ------------    ------------    ------------    ------------
Gross profit                                          1,316,722       1,648,143       4,395,245       4,411,323
Selling, general and administrative expenses          3,332,392       2,271,233       9,984,301       6,599,346
Research and development                                457,835         383,005       1,475,125         904,252
                                                   ------------    ------------    ------------    ------------
Operating loss                                       (2,473,505)     (1,006,095)     (7,064,181)     (3,092,275)
                                                   ------------    ------------    ------------    ------------
Other income (expense):
     Interest expense                                  (994,011)       (104,972)     (1,796,817)       (118,982)
     Unrealized foreign exchange loss                      --          (182,000)           --          (182,000)
     Other income                                        89,635          51,768          85,330         237,309
                                                   ------------    ------------    ------------    ------------
Total other (expense)                                  (904,376)       (235,204)     (1,711,487)        (63,673)
                                                   ------------    ------------    ------------    ------------
Loss before minority interest and
     provision for income taxes                      (3,377,881)     (1,241,299)     (8,775,668)     (3,155,948)
Income tax provision                                    (42,572)         98,620         (90,786)        149,464
                                                   ------------    ------------    ------------    ------------
Loss before minority interest                        (3,335,309)     (1,339,919)     (8,684,882)     (3,305,412)
Equity in net earnings (loss) of affiliate              (47,356)         39,025         (43,687)         39,025
Minority interest                                        (3,816)           (651)          2,958          26,632
                                                   ------------    ------------    ------------    ------------

Net loss                                           $ (3,386,481)   $ (1,301,545)   $ (8,725,611)   $ (3,239,755)
                                                   ============    ============    ============    ============
Comprehensive loss and its components
consist of the following:
     Net loss                                      $ (3,386,481)   $ (1,301,545)   $ (8,725,611)   $ (3,239,755)
     Foreign currency translation
     adjustment, net of tax                              35,197        (267,010)       (192,307)       (330,204)
                                                   ------------    ------------    ------------    ------------

Comprehensive loss                                 $ (3,351,284)   $ (1,568,555)   $ (8,917,918)   $ (3,569,959)
                                                   ============    ============    ============    ============

Loss per common share: *
     Basic                                         $      (0.27)   $      (0.13)   $      (0.72)   $      (0.39)
     Diluted                                       $      (0.27)   $      (0.13)   $      (0.72)   $      (0.39)

Weighted average common shares outstanding: *
     Basic                                           12,399,885      10,400,000      12,131,689       8,337,500
                                                   ============    ============    ============    ============

     Diluted                                         12,399,885      10,400,000      12,131,689       8,337,500
                                                   ============    ============    ============    ============

*  As restated for the nine-month period ended November 30, 2004

</TABLE>

  See accompanying notes to these condensed consolidated financial statements.

                                       F-2

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    2005           2004
                                                                -----------    -----------
                                                                               (As Restated)

<S>                                                             <C>            <C>
CASH FLOW FROM OPERATING ACTIVITIES:
     Net loss                                                   $(8,725,611)   $(3,239,755)
     Adjustments to reconcile net loss to net
     cash used in operating activities:
         Gain on sale of property and equipment                      (4,721)          --
         Depreciation and amortization                              713,611        420,583
         Amortization of deferred compensation cost                 281,250           --
         Deferred finance costs and debt discount                   474,025           --
         Issuance of equity instruments for services                177,125        519,737
         Issuance of stock for reorganization                          --          954,294
         Equity in net earnings of affiliate                        (43,687)       (39,025)
         Minority interest                                            2,958         76,590
         Deferred income taxes                                      (57,932)       (67,000)
         Unrealized foreign currency exchange (gain) loss           (73,985)       182,000
     Changes in operating assets and liabilities:
         Accounts receivable                                     (1,192,356)      (271,679)
         Inventories                                                256,904     (1,926,000)
         Other assets                                                17,739        (56,141)
         Accounts payable and accrued liabilities                 4,497,048      1,465,820
                                                                -----------    -----------
Net cash used in operating activities                            (3,677,632)    (1,980,576)
                                                                -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property and equipment                            (629,907)      (651,035)
     Proceeds from sale of assets                                    14,899           --
     Investment in affiliates                                       175,131         (3,767)
     Advances for acquisitions                                         --         (345,657)
     Cash of acquired company                                          --          678,608
                                                                -----------    -----------
Net cash used in investing activities                              (439,877)      (321,851)
                                                                -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Repayment of long term liabilities                             (70,419)       (24,542)
     Repayment of bridge loan                                    (1,500,000)          --
     Repayment of advance from stockholders                        (116,289)          --
     Proceeds from notes payable                                    113,336        141,803
     Proceeds from lines of credit, net                             614,724      1,192,747
     Proceeds from note payable to stockholders                     563,103      2,078,686
     Proceeds from debenture                                      1,200,000           --
     Proceeds from issuance of common stock                       3,073,234           --
                                                                -----------    -----------
Net cash provided by financing activities                         3,877,689      3,388,694
                                                                -----------    -----------
Effect of foreign currency exchange rate changes
     on cash and cash equivalents                                  (190,407)      (487,411)
Net (decrease) increase in cash and cash equivalents               (430,227)       598,856
Cash and cash equivalents at beginning of period                  1,281,064        264,067
                                                                -----------    -----------
Cash and cash equivalents at end of period                      $   850,837    $   862,923
                                                                ===========    ===========
</TABLE>
                                   (Continued)

  See accompanying notes to these condensed consolidated financial statements.

                                       F-3

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

                                   (Continued)

<TABLE>
<CAPTION>

                                                                                  2005          2004
                                                                              -----------    -----------
<S>                                                                           <C>            <C>
Cash paid during the period for:
     Interest                                                                 $   244,378    $    28,482
                                                                              ===========    ===========
     Income taxes                                                             $      --      $   152,919
                                                                              ===========    ===========
Supplemental disclosure of non-cash investing and financing activities:

Pre-August 2, 2004 condensed assets, liabilities and equity of
Astrata Technologies not included above are as follows:
     Purchase price in common stock                                                          $ 1,048,844
     Assets (excluding cash)                                                                     739,132
     Liabilities                                                                                 193,802
     Minority interest                                                                           175,094
                                                                                             -----------
         Cash of acquired company                                                            $ 2,156,872
                                                                                             ===========


SureTrack separation agreement:
     Goodwill                                                                 $   601,346
     Other intangible assets                                                      136,247
     Accounts payable                                                            (212,921)
     Deferred taxes                                                               (40,874)
     Treasury stock                                                              (483,798)
                                                                              -----------
                                                                              $      --
                                                                              ===========

</TABLE>


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

  See accompanying notes to these condensed consolidated financial statements.

                                       F-4

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)


1. ORGANIZATION AND BASIS OF PRESENTATION

Organization
------------

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

        Because  of  the   structure  of  the  Merger   Transaction,   Cetalon's
acquisition of Cadogan  (including its subsidiary) and Optron  Technologies  was
accounted  for as a "reverse  merger"  because the  stockholders  of Cadogan and
Optron  Technologies,  as the legal  acquirees,  obtained  more than 50%  voting
control  of  Cetalon,  the legal  acquiror.  Since the  stockholders  of Cadogan
obtained majority voting control of Cetalon, for accounting purposes Cadogan has
been treated as the continuing  reporting entity and the accounting  acquiror in
the Merger Transaction. As a result, the accompanying November 30 2004 condensed
consolidated  financial  statements are those of Cadogan and its  majority-owned
subsidiaries.

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

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

Nature of Operations
--------------------

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

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

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

                                       F-5
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

        Since many of the Company's sales and some of its purchase  transactions
are  denominated  in  foreign  currencies,  the  Company  is  exposed to foreign
currency  exchange  rate risk.  Astrata SA purchases  forward  foreign  exchange
contracts to cover certain product - purchase  transactions  denominated in U.S.
dollars.  During the nine months ended November 30, 2005, the South African Rand
strengthened  against the U.S.  dollar,  and the Company  reported an immaterial
unrealized loss on forward foreign exchange contracts.

Basis of Presentation
---------------------

        Management of the Company has prepared,  without audit, the accompanying
condensed  consolidated financial statements for the three and nine months ended
November  30, 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 (except as  described  in Note 14) are only of a normal  recurring
nature.  The results of operations  for the nine months ended  November 30, 2005
are not necessarily  indicative of the results of operations for the year ending
February 28, 2006.

Liquidity and Going Concern Considerations
------------------------------------------

        The accompanying  condensed  consolidated financial statements have been
prepared  assuming the Company will  continue as a going  concern.  For the nine
months ended November 30, 2005, the Company had a net loss of approximately $8.7
million;  negative cash flow from  operating  activities of  approximately  $3.7
million;  and negative  equity of $3.4 million.  In addition,  the Company had a
working capital deficit of approximately $7.4 million as of November 30, 2005.

        The  Company's  independent  public  accountants  have  included a going
concern  paragraph  in their  re-issued  audit  report on our  February 28, 2005
consolidated financial statements included in the Company's amended registration
statement on Form SB-2 filed with the  Securities and Exchange  Commission  (the
"SEC") on October 27, 2005.  The going  concern  paragraph  states that there is
substantial  doubt about the Company's  ability to continue as a going  concern.
Such  financial  statements  and the  accompanying  November 30, 2005  condensed
consolidated  financial  statements were prepared assuming that the Company will
continue as a going concern  (based upon  management's  plans  discussed in this
Note) which  contemplates,  among other things,  the  realization  of assets and
satisfaction of liabilities in the ordinary course of business. Accordingly, the
aforementioned  financial  statements do not include any adjustments  related to
the  recoverability  and  classification of asset carrying amounts or the amount
and  classification  of  liabilities  that might  result,  should the Company be
unable to continue as a going concern.

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

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

In order for the Company to fund its  operations  and continue this growth plan,
substantial   additional   funding  will  be  required  from  external  sources.
Management currently intends to fund operations through a combination of equity,
lines of credit, and collateralized debt facilities.  Management is currently in
negotiations  with  strategic and  financial  investors,  who have  expressed an
interest in making  investments in the Company.  These  discussions are ongoing,
and one of the  potential  investors is currently  conducting  its due diligence
procedures.  However,  there  can  be no  assurance  of  the  outcome  of  these
negotiations.  In the event that the Company is not able to secure  financing on
acceptable  terms beyond the $3.2 million of net proceeds  received in April and
May 2005  (see  Note 6) and the  $1,750,000  related  to the  October  2005 debt
financing  described in Note 5,  management  believes that it has the ability to
access debt markets using sale and leaseback  arrangements and/or collateralized
debt facilities. In addition, management has revised the Company's business plan
and thereby reduced its cash requirements by using alternate  channels to access
telematics markets in selected  geographic  locations.  While such revisions may
yield  immediate  improvements in short-term  profitability  and cash flow, this
will be achieved at the cost of a reduction in the Company's  future growth rate
and profitability, if any.

                                       F-6

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

2.  CERTAIN SIGNIFICANT ACCOUNTING POLICIES

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

Principles of Consolidation
---------------------------

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

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

Concentrations
--------------

        The  financial  instrument  that  potentially  exposes  the Company to a
concentration of credit risk principally  consists of cash. The Company deposits
its cash with high credit financial institutions, principally in the Republic of
South Africa. This country does not have any institutional  depository insurance
comparable to the United States, which insures bank balances up to $100,000.  At
November 30, 2005, the Company's  foreign bank balances  approximated  $700,000.
The Company had approximately $150,000 in U.S. bank accounts,  which are insured
by the Federal Deposit Insurance Corporation to $100,000.

        The Company does not require collateral from its customers, but performs
ongoing credit evaluations of its customers'  financial  condition.  Credit risk
with respect to the accounts  receivable is limited  because of the large number
of  customers  included  in the  Company's  customer  base  and  the  geographic
dispersion of those  customers.  The Company also performs  periodic  reviews of
collectibility  and provides an  allowance  for  doubtful  accounts  receivable.
Management  considers the allowance for doubtful accounts receivable at November
30, 2005 of approximately $71,000 to be adequate.

Inventories
-----------

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

Property and Equipment
----------------------

        Property and  equipment  are stated at cost,  and are being  depreciated
using the  straight-line  method over the estimated  useful lives of the assets,
which  generally  range from three to 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.

                                       F-7
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

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.

        The first  update of the  fiscal  2006  budget for the  Company's  South
African  subsidiaries  was completed in August 2005, after the Company's May 31,
2005 Form quarterly report on 10-QSB was filed with the SEC. This revised fiscal
2006 budget suggested that the original budgets for those  subsidiaries were not
achievable.  Thus, management conducted an impairment test as of August 31, 2005
of the goodwill  recorded by those entities  using the latest  forecast (for the
remainder  of  the  fiscal  2006)  and  other  current  information.  Management
concluded  that no impairment of the  Company's  goodwill  existed at August 31,
2005 and, hence, no adjustment of its carrying value was recorded.

        As of November 30, 2005,  management has  determined  that no impairment
indicators  exist and therefore,  no adjustments  have been made to the carrying
values of long-lived  assets.  There can be no assurance,  however,  that market
conditions  will not change or demand for the  Company's  services  and products
will  continue  which could result in  impairment  of  long-lived  assets in the
future.

Revenue Recognition
-------------------

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

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

                                       F-8
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

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

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

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

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

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

Services Revenue
----------------

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

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

Research and Development Costs
------------------------------

        Research and development costs relating to GPS positioning  hardware and
software  systems  including  the GLP to be sold or otherwise  marketed that are
incurred before  technological  feasibility of the product has been  established
and after general  release of the product to customers are expensed as incurred.
The Company incurred approximately $1.5 million and $0.9 million of research and
development  expenses  during the nine months ended  November 30, 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-9
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 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  equity
instrument,  estimated  stock-price  volatility and the annual rate of quarterly
dividends.  Compensation  expense,  if any, is  recognized  over the  applicable
service period, which is usually the vesting period.

        Adoption of the accounting  methodology of SFAS No. 123 is optional, and
the Company has elected to account for stock-based  employee  compensation using
APB Opinion 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," 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 November
30, 2005 the Company had one stock-based  employee  compensation  plan, which is
described in Note 6. The following table  illustrates the effect on net loss and
loss per common share for the three  months and nine months  ended  November 30,
2005  and  2004,  as if the  Company  had  applied  the fair  value  recognition
provisions of SFAS No. 123 for its stock-based employee compensation plan.

<TABLE>
<CAPTION>

                                   Three  Months Ended             Nine Months Ended
                              -------------   -------------   -------------   -------------
                               November 30,    November 30,    November 30,   November 30,
                                   2005            2004            2005           2004
                              -------------   -------------   -------------   -------------

<S>                          <C>             <C>             <C>             <C>

Net (loss) as reported        $  (3,386,481)  $  (1,301,545)  $  (8,725,611)  $  (3,239,755)

Stock based compensation,
 net of tax                         (27,078)           --           (86,845)           --
                              -------------   -------------   -------------   -------------
Pro forma net (loss)          $  (3,413,559)  $  (1,301,545)  $  (8,812,456)  $  (3,239,755)
                              -------------   -------------   -------------   -------------
Basic and diluted (loss)
 per common share:
     As reported*             $       (0.27)  $       (0.13)  $       (0.72)  $       (0.39)
                              =============   =============   =============   =============
     Pro forma                $       (0.28)  $       (0.13)  $       (0.73)  $       (0.39)
                              =============   =============   =============   =============
</TABLE>
* Restated for the November 2004 periods

                                      F-10
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

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

             Risk-free interest rate                        3%
             Estimated volatility                         133%
             Expected life (years)                           3
             Expected dividend yield                        --

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

Recently Issued Accounting Pronouncements
-----------------------------------------

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

3. INVENTORY

        Inventories consisted of the following as of November 30, 2005:

<TABLE>
<S>               <C>            <C>            <C>            <C>             <C>


                   South Africa      Europe          Asia           U.S.           Total
                   ------------   ------------   ------------   ------------    ------------

Raw materials      $    386,308   $       --     $       --     $       --      $    386,308
Work in progress        347,734           --             --             --           347,734
Finished goods        2,291,863        129,165        178,958         18,775       2,618,761
                   ------------   ------------   ------------   ------------    ------------
Provision               (40,045)          --             --             --           (40,045)
                   ------------   ------------   ------------   ------------    ------------
Net                $  2,985,860   $    129,165   $    178,958   $     18,775    $  3,312,758
                   ============   ============   ============   ============    ============

</TABLE>


4.  NOTES PAYABLE TO STOCKHOLDERS

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

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

                                      F-11
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

        In October 2004,  Astrata  Group  entered into an agreement  pursuant to
which a stockholder  agreed to lend $600,000 to Astrata  Group,  as an unsecured
credit  facility.  The note  accrues  interest  at 3% above the U.S.  prime rate
(7.25% at November 30, 2005). Principal and accrued interest was due by June 30,
2005. The outstanding balance is approximately  $376,000 as of November 30, 2005
and is included in notes payable to stockholders in the  accompanying  condensed
consolidated  balance sheet.  The original note of $151,000 was not paid on June
30, 2005, and along with  additional  funds of $225,000 was negotiated to become
due and payable on September 30, 2005. We have not paid the notes as of November
30, 2005. We are currently negotiating new terms with the holder.

        In November 2004,  Astrata Group  received an unsecured  advance from an
officer/stockholder  in the amount of $42,781.  This advance accrues interest at
the London  Inter-bank  Offered Rate ("LIBOR")  (4.3% at November 30, 2005) plus
3%, and had an original  maturity  date of March 1, 2005.  The maturity date was
extended to June 30, 2005 and has recently become a demand note. The outstanding
balance of this note payable was $42,781 as of November 30, 2005 and is included
in advances from stockholders in the accompanying condensed consolidated balance
sheet.

        In December 2004, Astrata Group sold a $384,000  convertible demand note
to one of its stockholders,  who then beneficially owned approximately 6% of the
Company's  outstanding  common stock and had previously  lent Astrata Group $1.5
million  on an  unsecured  basis (see the first  paragraph  of this  Note).  The
holder's conversion  privilege expires when 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 November 30,
2005 and is  included  in notes  payable  to  stockholders  in the  accompanying
condensed   consolidated  balance  sheet.  The  transaction  described  in  this
paragraph  constituted  an exempt  offering under Rule 506 of Regulation D to an
accredited  investor.  The note was not paid on the due date, nor was demand for
payment  made by the holder.  We are  currently  negotiating  new terms with the
holder.

        During the quarter ended May 31, 2005, a director of the Company, two of
its executive officers,  and a director of two wholly-owned  subsidiaries of the
Company provided unsecured  short-term loans to four subsidiaries of the Company
totaling $323,000.  Of this amount, loans of approximately  $157,000 and $50,000
were due on November 30, 2005 and June 30,  2005,  respectively;  the  remaining
loans do not have a scheduled  due date at this time.  The  $157,000  loan bears
interest at LIBOR plus 3%. The total borrowings also include a loan of $116,000,
which bears interest at 11% per annum.  The other $50,000 of loans  described in
the first  sentence  of this  paragraph  accrues  interest at LIBOR plus 3%. The
total outstanding balance of the notes approximates  $207,000 as of November 30,
2005 and is  included  in notes  payable  to  stockholders  in the  accompanying
condensed  consolidated  balance sheet. The $157,000 and $50,000 advances due on
November 30, 2005 and June 30, 2005,  respectively,  have not been paid and have
been converted to demand notes with the other terms remaining the same. The loan
for $116,000 was paid during the quarter ended November 30, 2005

5. OTHER DEBT TRANSACTIONS

Lines of Credit
---------------

        Astrata  SA has  secured  a line of credit  for use in its South  Africa
operations.  The line of credit is secured by certain trade accounts  receivable
and allows for funding up to 70% of the outstanding  accounts  receivable with a
maximum of  R10,000,000  (approximately  $1.5  million at  November  30,  2005).
Interest  on the  outstanding  balance is charged at the  current  prime rate in
South  Africa  (10.5% as of  November  30,  2005).  The  outstanding  balance is
approximately  $1.0 million as of November 30, 2005, and is included in lines of
credit in the accompanying condensed consolidated balance sheet.

        In  June  2005,   Astrata  SA  obtained  a  R7,000,000  line  of  credit
(approximately  $1.1  million as of  November  30,  2005)  from a South  African
finance  company.  This  revolving  facility is  repayable  within sixty days of
funding with  interest at 2% above the South African prime rate plus a 3% fee on
each  advance,   and  is  secured  by  subordination  of  certain   intercompany
liabilities  of Astrata  SA and its  subsidiary,  and a bond  secured by certain
assets (up to  R12,000,000)  of the Company's  South African  subsidiaries.  The
outstanding  balance is approximately  $0.6 million as of November 30, 2005, and
is  included  in lines of  credit  in the  accompanying  condensed  consolidated
balance sheet.

                                      F-12
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

Bridge Loan
-----------

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

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

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

        In  accordance  with EITF  Issue No.  88-9 and APB  Opinion  No. 14, the
Company  allocated a portion of the  $1,500,000  loan  proceeds to the  warrants
issued.  The amount allocated was approximately  $196,000,  which was originally
recorded as additional paid-in capital and a debt issue discount. The debt issue
discount was  amortized on a  straight-line  basis to interest  expense over the
life of the loan (considering its early maturity of April 26, 2005).  During the
quarter ended May 31, 2005,  amortization  of the remaining  debt issue discount
resulted  in expense of  approximately  $131,000,  which is included in interest
expense in the accompanying  condensed  consolidated statement of operations for
the nine months ended November 30, 2005.

        On June 27, 2005, the Company filed the registration  statement required
by the bridge loan and by certain other transactions,  including those described
in the "Issuance of Common Stock and Other Equity  Instruments"  section of Note
6. As of January 20, 2006,  such  registration  statement  had not been declared
effective by the SEC.

Debt Financing Transaction
--------------------------

        In October 2005,  the Company  completed a private  placement  financing
transaction and agreed to issue secured  convertible notes payable to a group of
accredited  investors in the total amount of  $2,170,000.  The Company  received
$700,000 in cash on October 7, 2005,  and  $500,000 on November  22,  2005.  The
remaining  $550,000 of net  proceeds  have been placed in an escrow  account and
will be released when the related registration statement (see below) is declared
effective  by the SEC.  These notes  payable,  which are due October  2008,  are
convertible  into  shares  of the  Company's  common  stock  at any  time at the
holder's option at a fixed price of $0.78 per share.

                                      F-13
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

        The excess of the face amount of the notes payable over the net proceeds
principally  represents  interest at a rate of approximately 5.7% per annum. The
Company has recorded  cash of $1.2  million,  debt  discount of $288,000,  and a
credit to  debentures  payable of  $1,488,000  for the two tranches  that funded
during the November 30, 2005 quarter.  The debt discount is being amortized over
the three-year life of the debt. Accordingly,  the Company recorded amortization
of the debt discount of  approximately  $9,000 during the quarter ended November
30, 2005, which is included in interest  expense in the  accompanying  condensed
consolidated statements of operations.

        If the notes  payable are not repaid when due, the annual  interest rate
will be  increased  by 15%.  These  notes  payable are secured by all of Astrata
Group's property and equipment, trade and other accounts receivable,  inventory,
general   intangible   assets  (including  but  not  limited  to  all  licenses,
distributorship  agreements,  customer lists, goodwill, trade names, patents and
patent  applications),  and all of Astrata Group's other  intellectual  property
including  software  code  and  related   documentation,   trade  secrets,   and
copyrights.  However,  there is no security in favor of the lenders at the level
of Astrata Group's  subsidiaries.  Such notes payable are also collateralized by
the assignment of 900,000 shares of the Company's  common stock owned by certain
members of the Company's executive management team.

        In connection with the  transaction  described  above,  the Company also
issued  five-year  warrants to  purchase a total of up to 480,000  shares of its
common stock at an exercise price of $2.00 per share.  Such warrants  vested and
became fully exercisable upon issuance.  Concurrently with the Company's receipt
of the remaining  tranche of net proceeds  under the secured  convertible  notes
payable,  the Company will issue  additional  warrants to purchase up to 220,000
additional shares of its common stock, for an aggregate  issuance of warrants to
purchase a maximum of 700,000  shares.  However,  the exercise of such  warrants
and/or the  conversion  of the related notes payable may not result in ownership
(other than  unexercised  warrants  and any  unconverted  notes  payable) by any
creditor and its affiliates of more than 4.99% of the Company's then outstanding
shares of common stock.

        The  creditors/warrant  holders in the above  transaction  have  certain
registration  rights for the common stock  underlying  both the warrants and the
convertible debt. The related  registration  rights agreement includes financial
penalties  because  the  Company  failed  to  meet  the  registration  statement
effectiveness  deadline,  which was January 16, 2006. Such penalty,  which is 2%
per month  (approximately  $43,000/month),  can be paid in  common  stock at the
option of the Company. See Note 14 for additional information.

        Under the circumstances described in the following sentence, the Company
would be in default of the aforementioned notes payable. As explained above, the
Company failed to meet the registration statement  effectiveness-date  deadline;
if and when the creditors  provide the Company with the  contractually  required
notice to that  effect,  this  condition  will  become an "Event of  Default" as
defined in the  underlying  debt  agreements.  When a default event exists,  the
notes become immediately due and payable. The Company would then be obligated to
pay,  within forty five days of the receipt of any such  notice,  the sum of (a)
130% of the then outstanding  principal  amount,  (b) additional  interest at an
annual  rate of 15%  (commencing  on the  forty-sixth  day after  receipt of the
notice),  (c) any unpaid liquidated damages for failure to meet the registration
statement  deadline,  and  (d)  certain  other  penalties  if  the  Company  had
previously  been unable to timely  deliver the common stock required to effect a
partial or complete conversion of any of the notes payable.

        In  connection  with the October 2005 debt  financing  transaction,  the
Company also issued  warrants to purchase  93,400 shares of its common stock for
placement  agent  services.  Such  warrants  were valued at  $111,000  using the
Black-Scholes option pricing model.  Accordingly,  the Company recorded deferred
financing  costs  of  approximately  $111,000  and  a  corresponding  credit  to
additional paid-in capital;  the deferred financing cost is being amortized over
the  three-year  life of the debt.  This  resulted  in expense of  approximately
$6,000 for the quarter  ended  November 30, 2005,  which is included in interest
expense in the accompanying condensed consolidated statements of operations.

ACCOUNTING FOR CERTAIN ELEMENTS OF THE OCTOBER 2005 DEBT FINANCING TRANSACTION

        Registration Rights Penalty
        ---------------------------

        As noted above, the creditors/warrant  holders (hereinafter collectively
referred to as "the  investors") in the October 2005 debt financing  transaction
(the "debt  financing  transaction")  have certain  registration  rights for the
common stock  underlying both the warrants and the convertible  debt. On October
27, 2005, the Company satisfied the filing-date deadline (which was November 21,

                                      F-14
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

2005) by filing the second  amendment of its Form SB-2  registration  statement.
See  Note  14 for a  discussion  of  accounting  for the  contractual  financial
penalties associated with the investors' other registration rights.

        The  Company's  accounting  for  certain  other  elements  of  the  debt
financing transaction is discussed below.

        The Conversion Option
        ---------------------

        As amended,  SFAS No. 133  ("Accounting  for Derivative  Instruments and
Hedging Activities") states that a contract issued by an entity that is both (a)
indexed to its own stock and (b) would be classified in stockholders'  equity if
it were a freestanding  financial instrument is not a derivative for purposes of
that   pronouncement.   Management   has  concluded   that  the  debt  financing
transaction's  conversion option is "indexed to the Company's own stock" as that
term is defined by EITF Issue No.  01-6 ("The  Meaning of Indexed to a Company's
Own  Stock").  In  addition,  since  the  debt  financing  transaction  has been
determined to be a "conventional convertible debt instrument" as defined in EITF
Issue No.  05-2,  the  requirements  of EITF Issue No.  00-19  ("Accounting  for
Derivative  Financial  Instruments  Indexed  to, and  Potentially  Settled in, a
Company's  Own  Stock") do not apply.  Lastly,  the debt host  contract is not a
derivative  in its  entirety and (based on SFAS No. 133) the  conversion  option
need not be bifurcated from such contract.  Therefore,  the conversion option is
not a  derivative  instrument  as  contemplated  by EITF Issue No.  00-19 ("EITF
00-19") or SFAS No. 133. As explained below,  the Company has therefore  applied
intrinsic value accounting to the beneficial conversion feature ("BCF") embedded
in the conversion option.

        Intrinsic Value Accounting for the BCF
        --------------------------------------

        As explained in the following  paragraph,  the Company has accounted for
the BCF in the debt  financing  transaction  in accordance  EITF Issue No. 98-5,
EITF Issue No. 00-27, and APB Opinion No. 14.

        The excess of the proceeds over the estimated fair value of the warrants
(see "Accounting for the Warrants" below) of approximately  $955,000 was used to
calculate  the effective  conversion  price of $0.50 per share.  The  difference
between  the  effective  conversion  price and the fair value of the debt at the
commitment  date of $0.75  per  share  resulted  in a  "theoretical"  beneficial
conversion feature of approximately $1,445,000.  Since the BCF cannot exceed the
proceeds allocated to the debt, the Company recorded a debt issuance discount on
the notes  payable of $955,000  which is being  amortized  to  interest  expense
(using the effective interest method) over the three-year term of the notes. The
Company recorded  interest  expense of approximately  $42,000 during the quarter
ended November 30, 2005 in the accompanying condensed consolidated statements of
operations.

        Accounting for the Warrants
        ---------------------------

        Under  GAAP,  accounting  for  certain  warrants  can  be  significantly
affected by the terms of a registration  rights  penalty.  In the debt financing
transaction, once the registration statement required by the registration rights
agreement  (the  "Agreement")  has  been  declared  effective  by the  SEC,  the
Company's  liability for the registration  rights penalty will cease only if (1)
the  registration  statement's  effectiveness  is maintained for the time period
defined in the Agreement,  (2) the Company otherwise  complies with SEC Rule 415
(which  governs  continuous  offerings)  during the time period set forth in the
Agreement,  (3)  the  Company's  common  stock  continues  to be  quoted  on the
Over-the-Counter  Bulletin Board,  and (4) trading in the Company's common stock
is not halted.  However, the Agreement limits the registration rights penalty to
a specific time period only when the  continuing  requirements  described in the
preceding  sentence have been met, and it does not explicitly  limit the maximum
dollar amount of any such penalty.

        Based on the preceding paragraph,  the registration rights penalty could
exceed  the  difference  between  the fair  value of a  registered  share of the
Company's  common stock and the estimated fair value of an  unregistered  share.
According to EITF 00-19,  the ability to register a company's  securities is not
within  the  issuer's  control.  Furthermore,  since  payment of a penalty in an
indeterminate amount is considered an uneconomic  settlement  alternative,  EITF
00-19  requires the Company to assume that the warrant will be net-cash  settled
even  though  the  warrant  agreement  does  not  include  any  such  provision.
Therefore,  the warrants (which are an embedded  derivative) have been separated
from the convertible debt instrument,  reported as a liability,  and measured at
estimated fair value.

                                      F-15
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

        The fair value of the  warrants in the debt  financing  transaction  has
been estimated at $245,000 based on the Black-Scholes option-pricing model. This
amount has been reported as a current  liability in the  accompanying  condensed
consolidated  balance  sheet;  the Company  has  recorded  the related  interest
expense of  $245,000  which is  included  in its  November  30,  2005  condensed
consolidated  statements of operations.  The assumptions  used in estimating the
fair value are as follows:

        Estimated future volatility:          133%
        Estimated life of the warrants:       3YRS
        Risk-free interest rate:              5.7%
        Dividends:                             --

        Other Matters
        -------------

        Because of the debt financing  transaction described above, the exercise
prices of the warrants  outstanding at February 28, 2005 and all of the warrants
issued from March 1, 2005 to October 6, 2005 (see Notes 8 and 15,  respectively,
to the Company's fiscal 2005/2004  consolidated  financial statements) have been
reduced pursuant to anti-dilution contractual  requirements.  As a result of the
same  transaction,  the conversion  prices of the $1.5 million  convertible note
payable to a stockholder  issued in September 2004 (as amended in November 2004)
and a  $384,000  convertible  note  payable  issued to the same  stockholder  in
December  2004  have  been  reduced   pursuant  to   anti-dilution   contractual
requirements.

        The  combined  effect  of the  adjustments  described  in the  preceding
paragraph  and of similar  adjustments  relating  to  previous  transactions  is
summarized as follows:
                                                     Exercise or Conversion
                                                         Price per Share
                                                     ---------     ---------
                                                      Original      Adjusted
                                                       Amount        Amount
                                                     ---------     ---------

48,000 warrants outstanding at February 28, 2005     $    2.00     $   1.87

580,148 warrants outstanding at February 28, 2005         5.00         4.27


1,043,106 warrants issued in April/May 2005               3.50         3.18

Other warrants issued after February 28, 2005:

   108,196 warrants                                       5.00         4.27

   4.955 warrants                                         3.50         3.18

$1,884,000 of convertible debt outstanding at
February 28, 2005                                         5.00         4.27


                                      F-16
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

6. EQUITY TRANSACTIONS

Issuance of Common Stock and Other Equity Instruments
-----------------------------------------------------

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

        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.

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

        In October 2005, the Company issued 40,724 shares of its common stock to
convert a  liability  for  services  provided by  consultants.  Such shares were
valued at $45,000  (estimated to be the fair value based on the trading price on
the issuance date with a 15% discount from the market  price).  The  transaction
described in this paragraph constituted an exempt offering under Section 4(2) of
the Securities Act of 1933, as amended.

        In October 2005, the Company issued 50,000 shares of its common stock in
exchange  for  services  provided  by  consultants.  Such  shares were valued at
$102,750  (estimated  to be the fair  value  based on the  trading  price on the
issuance  date with a 15%  discount  from the  market  price).  Such  amount was
recorded  as  compensation   expense  and  included  in  selling,   general  and
administrative  in  the  accompanying  condensed   consolidated   statements  of
operations.  The transaction  described in this paragraph  constituted an exempt
offering under Section 4(2) of the Securities Act of 1933, as amended.

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

                                      F-17
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

Stock Option Plan
-----------------

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

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

        On October 7, 2005, the Company's Board of Directors  approved  granting
500,000 stock options to certain employees. These stock options have an exercise
price of $1.30 per share (the  trading  price on the grant  date),  expire  five
years from the issuance date, and vest monthly over a three-year period.

7.  OTHER RELATED PARTY TRANSACTIONS

        The Company  currently leases  facilities from an entity controlled by a
director  and  a  former  director  of a  Company  subsidiary  under  cancelable
operating  leases  expiring in 2007.  The annual  rent is subject to  adjustment
based on the terms of the  leases.  The  condensed  consolidated  statements  of
operations  include  expenses  from  these  operating  leases  of  approximately
$182,000  and  $123,000  for the nine months  ended  November 30, 2005 and 2004,
respectively.

8.  INVESTMENT IN AFFILIATE

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

        Since Astrata SA does not own a majority voting interest in BOT and does
not  otherwise  have a  controlling  financial  interest  therein,  the  Company
accounts for its  investment in BOT using the equity method of  accounting.  BOT
has a  September  30 fiscal  year end.  On August 15,  2005,  the joint  venture
partners  mutually  agreed to dissolve BOT for a value to be  determined  in the
near future.

9. OTHER COMMITMENTS AND CONTINGENCIES

Legal Matters
-------------

        From time to time,  the  Company  may be  involved  in  various  claims,
lawsuits,  and 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.

                                      F-18
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

Operating Leases
----------------

        The  Company  occupies   facilities  under  operating  lease  agreements
expiring on various dates through  August 2014.  Certain  leases  include future
rental  escalations  and renewal  options.  As of  November  30,  2005,  minimum
payments under operating leases  approximated the following for the fiscal years
ending February 28 listed below:

               2007   $  636,000
               2008      542,000
               2009      385,000
               2010      411,000
               2011      377,000
         Thereafter      292,000
                      ----------
                      $2,643,000
                      ==========

Rent  expense  approximated  $594,000  and  $376,000  for the nine months  ended
November 30, 2005 and 2004,  respectively which is included in selling,  general
and administrative expenses in the accompanying statements of operations.

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 November 30, 2005 (the
"Contract").  During the quarter ended November 30, 2005, the Company recognized
revenue on the Contract of approximately  $0.3 million,  and for the nine months
ended November 30, 2005 we recognized approximately $0.8 million.

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

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

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

                                      F-19
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

Employment Agreements
---------------------

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

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

LoJack Corporation Teaming Agreement
------------------------------------

        On  November  9, 2005,  the Company  executed a teaming  agreement  with
LoJack  Corporation  whereby Astrata will provide exclusive support to LoJack in
seeking  contracts  to  supply  federal  and  state  governments  with  complete
solutions  for  locating,   tracking  and  recovering  vehicles  that  transport
hazardous materials within the United States by combining Astrata's services and
systems, LoJack's tracking and recovery systems, and other technologies.  LoJack
and the  Company  intend to  collaborate  on  bidding  contracts  for  services,
equipment networks, and related systems in this market.

        If a contract is awarded during the initial one-year term of the teaming
agreement,  the Company will be responsible for the design and  customization of
software to analyze available information in order to assess the risk associated
with transporting  hazardous  materials.  To accomplish this objective,  Astrata
intends to design and  manufacture  a security  solution  that  monitors  driver
verification,  route deviation,  traffic accidents,  hijacking/stealing,  driver
behavior,  cargo tampering,  and unauthorized delivery.  Using such information,
the  Company's  integrated  system will assess the relative  risk and notify the
government-agency customer accordingly. Management anticipates that the hardware
components of the aforementioned  system will be based on the Company's GLP, its
Sub-Processing  Unit/Inertial  Navigation Systems, and its Rapid Deployment Unit
as well as back-end  hardware,  software,  and web  applications  that  leverage
Astrata's GEO-IT platform.

Other Matters
-------------

        As more fully  described  in Note 6, the Company is required to register
the common stock that was sold to certain  investors in April and May 2005,  and
the common stock  underlying the warrants issued in the same  transactions.  The
related  registration  rights agreements  provide that the Company is subject to
liquidated  damages in an amount  equivalent  to 1.5% per month of the  purchase
price (about  $55,000/month)  of the  securities  referenced  above  because the
registration  statement  was not declared  effective by the SEC by September 26,
2005. As of December 31, 2005 the potential penalty  approximates  $175,000 plus
interest at an annual rate of 12% compounded monthly. See Note 14 for additional
information.

                                      F-20
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 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:

<TABLE>
<CAPTION>

   For the three months ended November 30, 2005:
                                                      Geomatics       Telematics     Consolidated
                                                     ------------    ------------    ------------
   <S>                                               <C>             <C>             <C>

   Total assets                                      $  8,524,444    $  4,290,416    $ 12,814,860
                                                     ============    ============    ============
   Revenue:
      Outsiders                                      $  2,584,097    $  1,300,675    $  3,884,772
      Company subsidiaries                                 59,403         552,893         612,296
                                                     ------------    ------------    ------------
   Total segment revenues                            $  2,643,500    $  1,853,568    $  4,497,068
      Intercompany eliminations                           (59,403)       (552,893)       (612,296)
                                                     ------------    ------------    ------------
   Consolidated revenues                             $  2,584,097    $  1,300,675    $  3,884,772
                                                     ============    ============    ============
   Gross profit                                      $    717,503    $    599,219       1,316,722
   Operating expenses                                                                  (3,790,228)
                                                                                     ------------
   Operating loss                                                                    $ (2,473,406)
                                                                                     ============

   For the three months ended November 30, 2004:
                                                      Geomatics       Telematics     Consolidated
                                                     ------------    ------------    ------------
   Total assets                                      $  9,439,991    $  2,523,042    $ 11,963,033
                                                     ============    ============    ============
   Revenue:
      Outsiders                                      $  3,483,249    $    648,239    $  4,131,488
      Company subsidiaries                                 53,498          14,879          68,377
                                                     ------------    ------------    ------------
   Total segment revenues                            $  3,536,747    $    663,118    $  4,199,865
      Intercompany eliminations                           (53,498)        (14,879)        (68,377)
                                                     ------------    ------------    ------------
   Consolidated revenues                             $  3,483,249    $    648,239    $  4,131,488
                                                     ============    ============    ============
   Gross profit                                      $  1,131,950    $    516,193       1,648,143
   Operating expenses                                                                  (2,654,238)
                                                                                     ------------
   Operating loss                                                                    $ (1,006,095)
                                                                                     ============
</TABLE>
                                      F-21
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>

        For the nine months ended November 30, 2005:
                                                           Geomatics      Telematics     Consolidated
                                                         ------------    ------------    ------------
        <S>                                              <C>             <C>             <C>

        Total assets                                     $  8,524,444    $  4,290,416    $ 12,814,860
                                                         ============    ============    ============
        Revenue:
           Outsiders                                     $  8,372,570    $  3,798,900    $ 12,171,470
           Company subsidiaries                               252,181       1,553,291       1,805,472
                                                         ------------    ------------    ------------
        Total segment revenues                           $  8,624,751    $  5,352,191    $ 13,976,942
           Intercompany eliminations                         (252,181)     (1,553,291)     (1,805,472)
                                                         ------------    ------------    ------------
        Consolidated revenues                            $  8,372,570    $  3,798,900    $ 12,171,470
                                                         ============    ============    ============
        Gross profit                                     $  2,802,403    $  1,592,842       4,395,245
        Operating expenses                                                                (11,459,426)
                                                                                         ------------
        Operating loss                                                                   $ (7,064,181)
                                                                                         ============

        For the nine months ended November 30, 2004:
                                                          Geomatics       Telematics     Consolidated
                                                         ------------    ------------    ------------
        Total assets                                     $  9,439,991    $  2,523,042    $ 11,963,033
                                                         ============    ============    ============
        Revenue:
           Outsiders                                     $  8,734,362    $  2,334,447    $ 11,068,809
           Company subsidiaries                                53,498          14,879          68,377
                                                         ------------    ------------    ------------
        Total segment revenues                           $  8,787,860    $  2,349,326    $ 11,137,186
           Intercompany eliminations                          (53,498)        (14,879)        (68,377)
                                                         ------------    ------------    ------------
        Consolidated revenues                            $  8,734,362    $  2,334,447    $ 11,068,809
                                                         ============    ============    ============
        Gross profit                                     $  3,007,670    $  1,403,653       4,411,323
        Operating expenses                                                                 (7,503,598)
                                                                                         ------------
        Operating loss                                                                   $ (3,092,275)
                                                                                         ============
</TABLE>

                                      F-22

<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

Geographic Information
----------------------

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

<TABLE>
<CAPTION>

  For the three months ended November 30, 2005:

                                      Property and      Gross      Operating     Operating
                                      Equipment, net   Revenue       Profit       Expenses       Loss
                                      -----------   -----------   -----------   -----------   -----------
  <S>                                 <C>           <C>           <C>           <C>           <C>
  Asia                                $   413,079   $   932,583   $   284,197   $   442,113   $  (157,916)
  Africa                                  773,333     2,808,016       907,659     1,776,946      (869,287)
  United States                             3,519          --            --       1,013,071    (1,013,071)
  Western Europe                          330,950       144,173       124,866       558,098      (433,232)
                                      -----------   -----------   -----------   -----------   -----------
  Total                               $ 1,520,881   $ 3,884,772   $ 1,316,722   $ 3,790,228   $(2,473,506)
                                      ===========   ===========   ===========   ===========   ===========

  For the three months ended November 30, 2004:

                                      Property and      Gross      Operating     Operating
                                      Equipment, net   Revenue       Profit       Expenses    Income (Loss)
                                      -----------   -----------   -----------   -----------   -----------

  Asia                                $   210,074   $   311,164   $   116,035   $   354,093   $  (238,058)
  Africa                                  499,426     3,820,324     1,532,108     1,524,093         8,015
  United States                            12,106          --            --         414,201      (414,201)
  Western Europe                          216,905          --            --         361,851      (361,851)
                                      -----------   -----------   -----------   -----------   -----------
  Total                               $   938,511   $ 4,131,488   $ 1,648,143   $ 2,654,238   $(1,006,095)
                                      ===========   ===========   ===========   ===========   ===========
</TABLE>


                                      F-23
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)
<TABLE>
<CAPTION>

  For the nine months ended November 30, 2005:

                                      Property and      Gross      Operating     Operating
                                      Equipment, net   Revenue       Profit       Expenses       Loss
                                      -----------   -----------   -----------   -----------   -----------
  <S>                                 <C>           <C>           <C>           <C>           <C>
  Asia                                $   413,079   $ 2,141,304   $   643,509   $ 1,412,826   $  (769,317)
  Africa                                  773,333     9,684,844     3,624,190     5,570,813    (1,946,623)
  United States                             3,519          --            --       2,082,201    (2,082,201)
  Western Europe                          330,950       345,322       127,546     2,393,586    (2,266,040)
                                      -----------   -----------   -----------   -----------   -----------
  Total                               $ 1,520,881   $12,171,470   $ 4,395,245   $11,459,426   $(7,064,181)
                                      ===========   ===========   ===========   ===========   ===========

  For the nine months ended November 30, 2004:

                                      Property and      Gross      Operating    Operating
                                      Equipment, net   Revenue      Profit       Expenses       Loss
                                      -----------   -----------   -----------   -----------   -----------

  Asia                                $   210,074   $   320,526   $   126,713   $   829,120   $  (702,407)
  Africa                                  499,426    10,748,283     4,284,610     4,556,920      (272,310)
  United States                            12,106          --            --       1,364,351    (1,364,351)
  Western Europe                          216,905          --            --         753,207      (753,207)
                                      -----------   -----------   -----------   -----------   -----------
  Total                               $   938,511   $11,068,809   $ 4,411,323   $ 7,503,598   $(3,092,275)
                                      ===========   ===========   ===========   ===========   ===========
</TABLE>

See Note 3 for geographic information on inventory

                                      F-24
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

11.  LOSS PER COMMON SHARE

        The following is a reconciliation  of the numerators and denominators of
the basic and diluted  loss per common share  computations  for the three months
and nine months ended November 30, 2005 and 2004:

<TABLE>
<CAPTION>
                                                                 Three Months Ended                Nine Months Ended
                                                             ----------------------------    -----------------------------
                                                              November 30,   November 30,      November 30,   November 30,
                                                                  2005          2004              2005           2004
                                                             ------------    ------------    -------------   -------------
                                                                                                             (As Restated)

<S>                                                          <C>             <C>             <C>             <C>
Numerator for basic and
diluted loss
per common share:

    Net loss attributed
    to common stockholders                                   $ (3,386,481)   $ (1,301,545)   $ (8,725,611)   $ (3,239,755)

Denominator for basic and
diluted loss per common share:

    Weighted average number of
    common shares outstanding*                                 12,399,885      10,400,000      12,131,689       8,337,500

                                                             ------------    ------------    ------------    ------------
Basic and diluted loss
per common share*                                            $      (0.27)   $      (0.13)   $      (0.72)   $      (0.39)
                                                             ============    ============    ============    ============

* As restated for the nine-month period ended November 30, 2004.

</TABLE>

                                      F-25
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

12.  SUBSEQUENT EVENTS

Proposed Strategic Financing
----------------------------

        The Company is presently negotiating a debt/equity financing transaction
with a U.S.-based entity.  Under the proposed terms, Astrata Group, Inc. ("AGI")
would issue a maximum of $20 million of junior  convertible  notes payable which
would mature in five years. In addition, a to-be-formed  indirectly wholly-owned
South African subsidiary of AGI (the  "Subsidiary")  would issue $5.5 million of
notes  payable,  which would be guaranteed by AGI and which would mature in four
years.  These  proposed  notes payable would be secured by all the assets of the
Company and the Subsidiary,  and would require monthly  payments of interest (at
14%) and principal.  Management  anticipates  that a fixed  conversion price per
share for the convertible  notes would be negotiated  prior to consummating  the
proposed transaction, if at all.

        Under the proposed terms, AGI would also issue detachable  warrants (the
"AGI warrants") to purchase 28% of its  fully-diluted  outstanding  common stock
(to be defined in the  transaction  documents) at an exercise price of $2.00 per
share.  Management  expects that the holder of the AGI warrants would be granted
certain  demand  registration  rights  for  the  common  stock  underlying  such
warrants.  As of November 30, 2005,  management  estimates that the AGI warrants
would be exercisable into  approximately 5.7 million shares of its common stock.
The  Subsidiary  would also issue  warrants to acquire 30% of its  fully-diluted
common stock (to be defined in the transaction  documents).  If this transaction
is  consummated  under the terms  described  above,  management is considering a
"re-set"  to $2.00  per  share of (i) the  exercise  price  for all  outstanding
warrants  and options  whose  current  exercise  price is greater than $2.00 per
share, and (ii) the conversion price for all outstanding  convertible debt whose
current  conversion  price is greater  than $2.00 per share;  all other terms of
such equity  instruments and debt agreements  would remain  unchanged.  However,
since a definitive  agreement  has not been  executed,  and because  there is no
assurance that this proposed  transaction  will be  consummated  under the terms
described  above  (if at  all),  management  has not  made  any  final  decision
regarding the proposed  "re-set" of the exercise and conversion prices described
in the preceding sentence.

Geolocation/Telemetry Contract In Jordan
----------------------------------------

        Astrata has recently been awarded a three-year contract from TrakLink, a
newly established  Jordanian tracking and vehicle management company and part of
The Kawasmi Group, one of the largest vehicle transport  operators in Jordan and
the Middle  East  region.  The  contract  is  initially  for the supply of 1,000
Astrata-GLP  units through  August 2006,  with annual  minimum  volumes of 1,000
thereafter  during  the term of the  agreement.  TrakLink  intends  to offer the
Astrata-GLP units to transport  companies in Jordan as a solution to monitor the
movement of vehicle  fleets and the management of trucks.  Thereafter,  TrakLink
intends to introduce the product to the market for integrated  fleet  management
and tracking system covering all of Jordan.

Singapore CISCO Contract
------------------------

Astrata  has  recently  been  awarded a contract  from CISCO  Security  Pte Ltd,
Singapore's  leading  security  organization.  Astrata's  GLP  system (or Sirius
system as it is known  outside  the US) will be  installed  in CISCO's  fleet of
vehicles,  which includes cash-in-transit trucks and vans as well as motorcycles
that are used to provide  outrider  escort for celebrities and public figures to
ensure safe transit on public roads.  This contract is scheduled for  completion
by the first  quarter of calendar  2006.  Astrata's  system will enable CISCO to
centrally  track the  movement of its  vehicles  throughout  Singapore  from its
control  room at the  headquarters.  This  will  ensure  optimum  deployment  of
resources for operational efficiency.

New Zealand Joint Venture
-------------------------

        In January 2006,  Astrata (Asia Pacific) Pte Ltd ("AAP"), a wholly-owned
subsidiary  of the  Company,  entered  into an  agreement  with  Xterne  Limited
("Xterne"),  a New Zealand  company.  The agreement  established a new corporate
entity known as Astrata (New Zealand) Limited ("ANZ"), which is owned 51% by AAP
and 49% by Xterne. The principal business of ANZ will be the sale of "Sirius" XP
and Sirius-lite  products,  and related maintenance and support of networks used
with products sold.

        ANZ's  initial  capitalization  principally  consists of (i)  NZ$200,000
payable  by  Xterne  in  installments  and  (ii)  a  contribution  of  inventory
(consisting  of  the  aforementioned  products)  by  AAP.  Any  working  capital
requirements  will  be  provided  by  debt  financing  based  on  the  ownership
interests. The owners of ANZ will have equal Board representation, and Xterne is
entitled to 60% of any  distributions.  The day-to-day  business  affairs of ANZ
will be managed by a representative of Xterne.

                                      F-26
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

13. RESTATEMENT OF CERTAIN UNAUDITED FINANCIAL STATEMENTS

November 30, 2004 Statement of Cash Flows
-----------------------------------------

        It has come to the attention of management  that the  computation of the
effect of foreign  currency  exchange rate changes on cash and cash  equivalents
for the nine months ended November 30, 2004 was not in accordance  with SFAS No.
95. Accordingly,  the Company's accompanying condensed consolidated statement of
cash flows for the  aforementioned  period has been  retroactively  adjusted  as
summarized below.

<TABLE>
<CAPTION>

                                                 As Previously    Retroactive
                                                   Reported       Adjustment     As Restated
                                                 ------------    ------------    -----------
    <S>                                          <C>             <C>             <C>

    Net cash used in operating activities        $(2,270,361)    $   (289,785)   $(1,980,576)
                                                 ============    ============    ===========

    Net cash provided by financing activities    $ 3,521,272     $   (132,578)   $ 3,388,694
                                                 ===========     ============    ===========
    Effect of foreign currency exchange rate
        changes on cash and cash equivalents     $  (330,204)    $    157,207    $  (487,411)
                                                 ===========     ============    ===========
</TABLE>

        The  reclassification  adjustments  described  above do not  affect  the
previously reported  stockholder's equity at November 30, 2004 or the results of
operations for the three or nine-month periods then ended.

November 30, 2004 Statement of Operations
-----------------------------------------

        Management has determined that the previously  reported weighted average
common shares outstanding for the nine-month period ended November 30, 2004 were
not correct. As explained in the following paragraph, the re-computation of this
weighted  average  increased the loss per common share for the nine months ended
November  30,  2004  from  ($0.31)  to  ($0.39);   the  accompanying   condensed
consolidated   statement  of  operations  for  that  period  has  been  restated
accordingly.

        For the period  from the  beginning  of fiscal  2005 to the August  2004
merger date (see the "Organization" section of Note 1), the Company included the
legal  parent's  total common  shares  outstanding  as of the merger  date.  The
weighted  average  of  Cadogan's  outstanding  common  shares  adjusted  for the
exchange  ratio in the  transaction  and the legal  parent's total common shares
outstanding  as of the merger date have been  included  in the revised  weighted
average common shares  outstanding  during the nine-month  period ended November
30, 2004.

        The adjustment  described in the preceding paragraph does not affect the
previously  reported  stockholder's  equity at November 30, 2004 or the net loss
for the nine-month period then ended.

14. OTHER TRANSACTIONS

SureTrack Acquisition and Separation Agreement
----------------------------------------------

        As more fully  explained in the "Nanini 209 CC" section of Note 5 to the
Company's fiscal 2005/2004  consolidated  financial  statements,  a wholly-owned
subsidiary of the Company acquired certain assets ("SureTrack") of Nanini 209 CC
("Nanini") in January 2005. In November  2005,  the parties to such  transaction
agreed to partially unwind the  acquisition.  The principal terms and conditions
of the separation agreement are outlined below.

                                      F-27
<PAGE>

                   ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

        The  Company  has  agreed  (1) to waive its  claim  against  Nanini  for
R580,000 (about $88,000 as of November 4, 2005) relating to uncollectible  trade
accounts  receivable sold to Astrata by Nanini and (2) to transfer to Nanini all
of the rights to the Satellite  Assisted  Machine  Management  System  ("SAMMS")
software  acquired  in the  original  transaction,  along  with  the  associated
customer  relationship  asset.  The  Company  will  retain the Global  Telemetry
Monitoring  System  software along with the telematics  business,  including the
related customer base.

        Nanini and its sole stockholder, William B. McKenzie, have agreed to (1)
waive their  claim to the  remaining  R2 million  cash  portion of the  purchase
price, which  approximated  $391,000 at February 28, 2005 (and was otherwise due
in  equal   installments   in  January  2006  and  January  2007),   (2)  return
approximately  160,000 shares of Company common stock issued in connection  with
the original  transaction,  (3) not use the  "SureTrack"  name in conducting any
future business,  and (4) execute a one year  non-compete  agreement in favor of
the Company.

        The Company  accounted for the  separation  transaction in a manner that
will restore  both parties to the position  that would have existed if the SAMMS
business had not been sold in the original acquisition. Accordingly, the Company
recorded a debit to  accounts  payable of  approximately  $213,000 to reduce the
liability owed to William B. McKenzie (approximately R1.4 million),  reduced the
deferred tax liability in an amount approximating 30% of the unamortized balance
of the customer  relationship  asset  recorded in connection  with the SureTrack
acquisition,   a  debit  to  treasury  stock  of  approximately  $484,000  which
represents the return of  approximately  160,000 shares of the Company's  common
stock issued in the original transaction, a credit to other intangible assets of
approximately  $136,000  (representing  the  unamortized  balance  of the  SAMMS
customer relationship asset), and a credit to goodwill of approximately $601,000
representing  the  goodwill  acquired  in  the  original  transaction  that  was
attributable to the SAMMS business.

Acquisition of Minority Interest in Majority-Owned Subsidiary
-------------------------------------------------------------

        Astrata (Singapore) Pte. Ltd ("Astrata Singapore"),  which was formed in
April 2004 pursuant to a joint venture agreement,  was a 51%-owned subsidiary of
Astrata (Asia  Pacific) Pte. Ltd ("Astrata  AP");  Astrata AP is a  wholly-owned
subsidiary of the Company. In November 2005, the minority stockholder of Astrata
Singapore  (the  "Stockholder")  and Astrata AP entered into an  agreement  (the
"Agreement")  whereby  Astrata AP acquired the 49% minority  interest in Astrata
Singapore.  The principal  terms and  conditions of the Agreement are summarized
below.

        Astrata AP purchased  all of the  Stockholder's  common  stock  (294,000
shares)  in  Astrata  Singapore  at a price  of  S$1.10  per  share,  for  total
consideration  of  S$323,400  (about  $190,000 as of November 14,  2005).  As of
December 31, 2005,  approximately S$150,000 of the purchase price had been paid;
the balance is payable (without interest) in installments through February 2006.

        Any outstanding  trade debts between Astrata AP and the Stockholder will
be settled on terms to be negotiated by the parties.  Astrata AP may not off-set
any payments due from the Stockholder against the unpaid portion of the purchase
price.  Astrata AP has  released  the  Stockholder  from all  Astrata  Singapore
liabilities and obligations under the aforementioned joint venture agreement.

        Under the terms of the Agreement, all of the Stockholder's rights (i) as
the exclusive  Singapore  distributor for certain telematics and GPS products of
the  Company,  and (ii) for research  and  development  relating to GPS products
under its agreement with Astrata Singapore were terminated.

Accrual of Registration Rights Penalties
----------------------------------------

        As discussed in Notes 5 and 9, the Company is  contractually  liable for
certain  penalties  because its  registration  statement  (on Form SB-2) was not
declared  effective by the deadline dates.  Management expects to file the fifth
amendment of such  registration  statement with the SEC shortly after the filing
of this quarterly report on Form 10-QSB. Based on the expected effective date of
such registration  statement and the  effectiveness-date  contractual deadlines,
the  Company has accrued  estimated  penalties  of  approximately  $363,000  and
$130,000, respectively, relating to the April/May 2005 sale of equity units (see
Note 6) and the October 2005 debt financing transaction.

                                      F-28
<PAGE>

ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS

Overview
--------

        The  following  discussion  should  be  read  in  conjunction  with  the
condensed unaudited  consolidated  financial statements and notes thereto of the
Company appearing elsewhere in this report. Such financial  statements have been
prepared to reflect the  Company's  financial  position as of November 30, 2005,
together  with the results of  operations  for the three and nine  months  ended
November 30, 2005 and 2004,  and cash flows for the nine months  ended  November
30, 2005 and 2004, respectively.

Forward-Looking Statements
--------------------------

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

Company Overview
----------------

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

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

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

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

                                        1
<PAGE>

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

        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.

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

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

Telematics
----------

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

                                        2
<PAGE>

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

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

Technology Overview
-------------------

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

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

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

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

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

                                        3
<PAGE>

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED NOVEMBER 30, 2005 AND 2004

Revenues
--------

        Total  revenues  were  approximately  $3.9  million for the three months
ended November 30, 2005; a decrease of  approximately  $0.2 million  compared to
the three months ended  November 30, 2004 of  approximately  $4.1 million.  This
reflects a 4.9% decrease quarter to quarter.

        Our geomatics  segment  revenue  reflects a decrease of 25.8% quarter to
quarter.  While  we  have  increased  revenues  in our  construction  ranges  of
approximately  $0.1 million,  and approximately $0.3 million in Asia; these have
been  offset by  reduced  volumes in GPS survey  (approximately  $0.3  million),
mapping and GIS (approximately $0.2 million), laser scanning (approximately $0.2
million), and precision farming (approximately $0.3 million).

        Our  telematics  segment  revenue  reflects a 100%  increase  quarter to
quarter, primarily from expansion into the Asia and Europe markets.

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

        On July 28,  2005,  the  Company  announced  that it had been  awarded a
contract by Italy's  Motivegeeks for 3,600 GLP units.  Shipments began in August
2005. As part of the contract,  Motivegeeks,  a specialist  security and vehicle
tracking  organization,  will  distribute the Astrata-GLP for asset tracking and
fleet  management  applications  throughout  Italy,  and will also bring to this
market a new range of  services,  including  personal  and medical  information,
using the iButton(r) devised by Dalsemi-Maxim  (Dallas  Semiconductor  Corp. and
Maxim  Integrated  Products).  Such  technology  will  be  integrated  by  using
Astrata's optional secondary processor unit, which has a 'Dallas  Semiconductor'
interface (a built-in  means of  communication).  The Company  expects that this
contract will contribute to our future revenues.

Gross Profits
-------------

        Gross profit decreased  approximately $0.3 million to approximately $1.3
million for the three  months  ended  November  30,  2005  compared to the three
months ended  November 30, 2004 of  approximately  $1.6  million.  As more fully
explained in the next two  paragraphs,  gross profit  overall as a percentage of
revenue decreased from 40% to 34%.

        Our  geomatics  margins  are  subject  to  changes  in  product  mix  of
geographic information systems and mapping products; optics and accessories; and
our ability to expand into other geographic markets.  Our geomatics margins have
declined from 32% to 27%. The South  African  region  decreased  from 32% to 29%
quarter to quarter,  primarily due to competitive  pressures;  our contract with
Brunei Shell in Asia has significantly lower geomatics margins due to the direct
overhead costs  associated with the project.  This Asia contract  relates to the
provision of geomatics  equipment as well as various other services which do not
generate  margins as  traditional  equipment  sales  would.  With respect to our
overall product mix during the current  quarter,  a greater  percentage of sales
have been on survey products.

        Our telematics location-based service Geo-Location devices are installed
for the  tracking of  customers'  remote  assets;  these  devices  use  cellular
networks  for the  transmission  of data from the asset to the client or control
center. Our telematics margins have decreased from 79% to 46%. Due to the change
in our telematics  model from hardware sales to a service based business and the
global   expansion  into  Europe  and  Asia,  these  margins  are  not  directly
comparable.

                                        4
<PAGE>

Selling, General and Administrative Expenses
--------------------------------------------

        Selling general and  administrative  expenses for the three months ended
November 30, 2005 were approximately $3.3 million,  an increase of approximately
$1.0  million   compared  to  the  three  months  ended  November  30,  2004  of
approximately $2.3 million. In Africa,  overhead was approximately $1.7 million.
As part of our commitment to global  expansion,  the Company  entered South East
Asia (including Singapore, Malaysia, Brunei and Indonesia) and Europe during the
latter part of fiscal 2005. This includes facilities in Singapore,  Malaysia and
Brunei with sales staff of 46  individuals;  and facilities for Europe in London
and Crawley with sales staff of 22 individuals. The cost of establishing our new
operations  has been  largely  in line with  expectations;  however  the time to
market and sales  penetration was slower than planned and our revenues have been
below budget.  Our revenues in Europe and Asia have not been sufficient to cover
our operating and start-up  costs and in turn have resulted in operating  losses
in excess of budget.  Our  management  believed  that while these  regions  were
gaining in penetrating their respective markets, implementation of reductions in
the  overhead  cost base  toward  the end of the August 31,  2005  quarter  were
necessary. The South East Asia staff has been reduced from 46 to 41 individuals,
and the  facilities  for Europe in Crawley  have been closed and the staff of 22
individuals  reduced  to 15 who are  now  housed  in our  London  facility.  Our
operations in South East Asia and Europe for the quarter ended  November 30 2005
incurred  overhead  expenses of  approximately  $0.4  million and $0.6  million,
respectively.  These expenses are primarily related to staffing,  facilities and
travel costs.  Corporate  overhead of approximately $0.6 million included public
company expenses of approximately  $0.2 million and  administrative  expenses of
approximately  $0.4 million for the quarter  ended  November  30,  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  November  30,  2004,  the $2.3 million was
related to the African operations  covering selling,  general and administrative
expenses of approximately  $1.5 million;  start-up costs for South East Asia and
Europe of approximately $0.8 million.

Research and Development
------------------------

        Research and development  expenses were  approximately  $0.5 million for
the three months ended November 30, 2005, and approximately $0.4 million for the
three months ended  November 30, 2004. Our research and  development  activities
are currently related to the expansion of our hardware and software  development
staff and acceleration of the development of GLP derivatives and supplements.

Interest Expense
----------------

        Interest  expense  for the three  months  ended  November  30,  2005 was
approximately  $1 million.  The current  quarter  includes the finance  costs of
approximately  $0.3  million  directly  associated  with the  October  2005 debt
financing  (see  Note  5 to  the  condensed  consolidated  financial  statements
included  elsewhere  herein) and other debt financing  expenses of approximately
$0.5 million.

Operating Results
-----------------

        Our  operating  loss for the three  months  ended  November 30, 2005 was
approximately  $2.5 million,  an increase of approximately $1.5 million over the
three months ended November 30, 2004 of approximately $1 million.  This increase
reflects  the  operating  costs  of  businesses  in Asia  and  Europe;  business
expansion in Africa; and corporate overhead relating to public company expenses,
capital raising, and administrative expenses.

        We are reporting a net loss of  approximately  $3.4 million or $0.27 per
common share for the three months ended November 30, 2005 compared to a net loss
of  approximately  $1.3  million or $0.13 per common  share for the three months
ended November 30, 2004.

                                        5
<PAGE>

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED NOVEMBER 30, 2005 AND 2004

Revenues
--------

        Total  revenues  were  approximately  $12.2  million for the nine months
ended November 30, 2005; and increase of approximately  $1.1 million compared to
the nine months ended November 30, 2004 of  approximately  $11.1  million.  This
reflects a 10% growth period to period.

        Our geomatics segment revenue reflects a decrease of approximately  4.1%
for the nine months ended  November  30, 2005  compared to the nine months ended
November  30,  2004.  While we have  increased  revenues by  approximately  $1.8
million in Asia and approximately  $0.3 million in Europe,  this has been offset
by reduced volumes of approximately  $1.0 million in South Africa.  Although our
GPS survey,  optics and construction ranges have maintained consistent levels of
revenue, we have faced declining revenues in mapping and GIS (approximately $0.2
million),   precision  farming   (approximately   $0.5  million),   and  Itronix
(approximately  $0.1  million).  We attribute  these  declines to increased lead
times from order to market.

        Our  telematics  segment  revenue  reflects a 63%  increase for the nine
months ended  November 30, 2005  compared to the nine months ended  November 30,
2004, primarily from expansion into the Asia and Europe markets.

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

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

Gross Profits
-------------

        Gross  profit was  approximately  $4.4 million for the nine months ended
November 30, 2005 and 2004. As more fully  explained in the next two paragraphs,
gross profit overall as a percentage of revenue decreased from 40% to 36%.

        Our  geomatics  margins  are  subject  to  changes  in  product  mix  of
geographic information systems and mapping products; optics and accessories; and
our ability to expand into other geographic  markets.  Our geomatics  margins of
33% decreased slightly for the nine months ended November 30, 2005,  compared to
the gross  margins  for the nine months  ended  November  30, 2004 of 34%.  This
primarily was due to the South African region  improving  their average  margins
period to period while our contract  with Brunei Shell in Asia had lower margins
in this  segment  during  the nine month  period.  With  respect to our  overall
product mix during the nine months  ended  November  30,  2005,  we saw a higher
proportion of revenue  generated  from our  geographic  information  systems and
mapping  products  which have  higher  margins,  which was  partly  offset by an
increase in optics and accessories  sales which are at lower margin levels.  The
proportion of revenue from our construction machine control declined, which have
lower margins on average as compared to the Geomatics division as a whole.

                                        6
<PAGE>

        Our telematics margins have decreased from 60% to 42%. Due to the change
in our telematics  model from hardware sales to a service based business,  these
margins are not directly  comparable.  This reflects the geographic expansion of
telematics business beyond South Africa. Our telematics  location-based  service
Geo-Location devices are installed for the tracking of customers' remote assets;
these devices use cellular  networks for the transmission of data from the asset
to the client or control center.  By default,  our GLP uses general packet radio
service  (or  GPRS)  for  the  transmission  of  data;  however,  if this is not
available or if an immediate  emergency  transmission is required,  the GLP uses
short message service or SMS. The fees charged by the cellular providers for SMS
transmission are considerably  higher than GPRS. The use of SMS for data routing
is, however,  anticipated to be minimal. During the quarter ended May 31 2005, a
significant  number of our GLP devices were incorrectly  using SMS transmissions
when GPRS was available;  we incurred excessive airtime costs which could not be
recovered from our clients. Once this problem was identified, a software program
adjustment was implemented to correct the transmission selection.

Selling, General and Administrative Expenses
--------------------------------------------

        Selling  general and  administrative  expenses for the nine months ended
November 30, 2005 were approximately $10.0 million, an increase of approximately
$3.4  million   compared  to  the  nine  months  ended   November  30,  2004  of
approximately $6.6 million. In Africa,  overhead was approximately $4.1 million,
approximately  $0.9 million of 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 fiscal 2005.  This  includes  facilities in
Singapore,  Malaysia  and  Brunei  with  sales  staff  of  46  individuals;  and
facilities for Europe in London and Crawley with sales staff of 22  individuals.
The cost of  establishing  our new  operations  has been  largely  in line  with
expectations;  however the time to market and sales  penetration was slower than
planned and our revenues have been below budget. Our revenues in Europe and Asia
have not been  sufficient to cover our operating and start-up  costs and in turn
have resulted in operating losses in excess of budget.  Our management  believed
that while  these  regions  were  gaining  in  penetrating  in their  respective
markets,  implementation  of reductions in the overhead cost base toward the end
of the August 31, 2005 quarter was necessary. The South East Asia staff has been
reduced from 46 to 41 individuals, and the facilities for Europe in Crawley have
been closed and the staff of 22  individuals  reduced to 15. Our  operations  in
South East Asia and Europe for the nine months ended  November 30 2005  incurred
overhead expenses of approximately $1.4 million and $2.4 million,  respectively.
These expenses are primarily  related to staffing,  facilities and travel costs.
Corporate  overhead  of  approximately  $2.3  million  included  public  company
expenses  of  approximately   $1.0  million  and   administrative   expenses  of
approximately  $1.3 million for the nine months ended November 30, 2005.  Public
company  expenses  include  audit  expenses,  legal  fees,  and  director  fees.
Administrative  expenses primarily include marketing,  salaries,  facilities and
travel expenses.

        For the nine  months  ended  November  30,  2004,  the $6.6  million was
related  to the  expansion  of South  Africa  which  increased  operating  costs
approximately $1.0 million; the start-up costs for South East Asia and Europe of
approximately  $1.6 million;  increased  marketing,  trade show and  re-branding
expenses of approximately  $1.5 million;  non-recurring  expenses related to the
issuance of shares  through  the reverse  merger  valued at  approximately  $0.1
million; and the African operations covering selling, general and administrative
expenses of approximately $2.0 million.

Research and Development
------------------------

        Research and development  expenses were  approximately  $1.5 million for
the nine months ended November 30, 2005, and approximately  $0.9 million for the
nine months ended November 30, 2004, an increase of approximately  $0.6 million.
This is due to the expansion of our hardware and software  development staff and
acceleration of the development of GLP derivatives and supplements.

Operating Results

        We are reporting an operating loss of approximately $7.1 million for the
nine months ended November 30, 2005 compared to $3.1 million for the nine months
ended  November  30,  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.

                                        7
<PAGE>

Interest Expense
----------------

        Interest  expense  for the  nine  months  ended  November  30,  2005 was
approximately  $1.8  million.  This  increase  includes  the  finance  costs  of
approximately  $1.2 million  directly  associated with the bridge loan and other
debt  financing  (see  Notes  4 and 5 to the  condensed  consolidated  financial
statements included elsewhere herein) and interest expense of approximately $0.6
million.

Certain Non-Operating Items
---------------------------

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

Net Results of Operations
-------------------------

        We are reporting a net loss of  approximately  $8.7 million or $0.72 per
common share for the nine months ended  November 30, 2005 compared to a net loss
of  approximately  $3.2  million or $0.39 per common  share for the nine  months
ended November 30, 2004.

Liquidity and Capital Resources
-------------------------------

        Total assets decreased by $1,516,147 from $14,331,007 as of February 28,
2005 to  $12,814,860 as of November 30, 2005. The decrease is due to an increase
in  trade  receivables,  net  of  $938,415;  and an  increase  in  property  and
equipment,  net of  $209,509;  offset  by a  reduction  in cash of  $430,227;  a
decrease in  inventory  of  $678,208;  a decrease in deferred  finance  costs of
$122,150  related to debt  financing  and the bridge  loan;  a decrease in other
assets of $42,976; a decrease in goodwill of $593,604;  related to the SureTrack
transaction;  the amortization of intangible assets of $439,638;  and a decrease
in our investment in an affiliate of $357,268.

        Total  liabilities  increased  by  $3,241,334  from  $12,973,278  as  of
February 28, 2005 to $16,214,612 as of November 30, 2005. The increase is due to
an increase in trade and accrued payables of $3,390,166; an increase in lines of
credit of $491,703;  notes payable  received from  stockholders  of $431,776 for
working  capital;  proceeds from the issuance of $1,488,000  in  debentures;  an
increase of $132,273 in the redeemable  preferred stock of a subsidiary;  offset
by the repayment of  $1,369,125 on a bridge loan;  and an increase in debt issue
discount of $1,191,000 related to debenture funding.

        Operating  activities  used  approximately  $3.7 million in cash for the
nine  months  ended  November  30,  2005.  Our net loss of $8.7  million was the
primary  component of our negative  operating  cash flow.  Included in such loss
were certain  non-cash  expenses such as the issuance of equity  instruments for
services of approximately  $0.4 million,  $0.7 million of deferred finance costs
and debt discount  related to the $1.5 million bridge loan, other debt financing
(see below),  amortization of deferred  compensation  cost of $0.3 million,  and
depreciation and amortization of approximately  $0.7 million.  The effect of the
non-cash  expenses  described  in  the  preceding  sentence  was  reduced  by an
unrealized  foreign exchange gain of $0.1 million.  Negative operating cash flow
was further  increased  by the increase of  approximately  $4.5 million in trade
payables with the extension of payment terms to vendors;  offset by the increase
of $1.2 million in trade receivables.

        Cash used in investing  activities during the nine months ended November
30,  2005  principally  related to the  purchase of property  and  equipment  of
approximately  $0.6 million for our expansion  into Europe and  Southeast  Asia;
offset by the  reduction of  investment  in an affiliate of  approximately  $0.2
million.

        Cash flows provided by financing activities during the nine months ended
November 30, 2005 consisted of  approximately  $3.1 million of proceeds from the
issuance  of common  stock;  approximately  $0.6  million  advanced  on lines of
credit;  approximately  $1.2 million of debenture  funding;  approximately  $0.6
million of advances by certain Company stockholders for working capital. Of this
total,  $1.5 million was used to repay the  aforementioned  bridge loan in April
2005 and $0.1 million of advances by certain Company stockholders.

        At  November  30,  2005,  the Company had  negative  working  capital of
approximately  $7.4 million.  The primary reason for the working capital deficit
is the increase in trade accounts payable of approximately $4.5 million.

                                        8
<PAGE>

        It is apparent from this analysis that the Company  primarily  relied on
equity capital, loan proceeds and extended payment terms with certain vendors to
fund its operations during the nine months ended November 30, 2005. In order for
the Company to finance  operations  and continue  its growth  plan,  substantial
additional  funding will be required from external sources.  Management plans on
funding operations through a combination of equity capital, lines of credit, and
collateralized  debt  facilities.  Management is currently in negotiations  with
certain  strategic   investors,   who  have  expressed  an  interest  in  making
investments  in the Company.  In addition,  management has revised the Company's
business  plan and thereby  reduced  its cash  requirements  by using  alternate
channels to access Telematics markets in selected  geographic  locations.  While
such revisions may yield immediate improvements in short-term  profitability and
cash flow,  this will be achieved at the cost of a  reduction  in the  Company's
future growth rate and profitability, if any.

        Astrata  SA has  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 with a
maximum of  R10,000,000  (approximately  $1.5  million at  November  30,  2005).
Interest  on the  outstanding  balance is charged at the  current  prime rate in
South  Africa  (10.5% as of  November  30,  2005).  The  outstanding  balance is
approximately  $1.0 million as of November 30, 2005, and is included in lines of
credit in the accompanying condensed consolidated balance sheet.

        In  June  2005,   Astrata  SA  obtained  a  R7,000,000  line  of  credit
(approximately  $1.1  million as of  November  30,  2005)  with a South  African
finance  company.  This  revolving  facility is  repayable  within sixty days of
funding with  interest at 2% above the South African prime rate plus a 3% fee on
each  advance,   and  is  secured  by  subordination  of  certain   intercompany
liabilities  of Astrata  SA and its  subsidiary,  and a bond  secured by certain
assets (up to  R12,000,000)  of the Company's  South African  subsidiaries.  The
outstanding  balance is approximately  $0.6 million as of November 30, 2005, and
is  included  in lines of  credit  in the  accompanying  condensed  consolidated
balance sheet.

Liquidity and Future Funding Requirements
-----------------------------------------

        The Company's condensed (interim) consolidated financial statements have
been  prepared  assuming  that  we  will  continue  as a  going  concern,  which
contemplates,  among other things, the realization of assets and satisfaction of
liabilities  in the  ordinary  course of  business.  For the nine  months  ended
November 30, 2005, we had a net loss of approximately  $8.7 million and negative
cash flow from operating  activities of approximately $3.7 million. In addition,
we had a working  capital deficit of  approximately  $7.4 million as of November
30, 2005. Our  independent  auditors have included a going concern  paragraph in
their  re-issued  audit report on our February 28, 2005  consolidated  financial
statements.  The going concern  paragraph states that there is substantial doubt
about the  Company's  ability to continue  as a going  concern.  Such  financial
statements  and  the  accompanying  November  30,  2005  condensed  consolidated
financial  statements were prepared assuming that the Company will continue as a
going  concern  (based  upon   management's   plans   discussed   herein)  which
contemplates,  among other things, the realization of assets and satisfaction of
liabilities in the ordinary course of business.  Accordingly, the aforementioned
financial   statements   do  not  included  any   adjustments   related  to  the
recoverability  and  classification  of asset carrying amounts or the amount and
classification of liabilities that might result, should the Company be unable to
continue as a going concern.

        Management is projecting  growth in our  Telematics  sales during fiscal
2006.  It is  anticipated  that a  substantial  amount  of our  growth  will  be
generated by our GLP product,  which was first  introduced  in November 2004 and
subsequently  supported with international sales and a marketing  infrastructure
in fiscal 2005.  Comparison of Telematics revenue and gross margin for the first
nine months of fiscal 2006 with our original  budget is no longer  meaningful as
an assumption in that budget was based on an accelerated  roll-out program which
in turn assumed raising a specified  amount of capital between January and March
of 2005. To date,  we have only been able to raise a portion of our  anticipated
capital requirements.

        Based on our revised forecast of Telematics revenues,  which grew by 63%
during the nine months  ended  November  30, 2005 as compared to the nine months
ended  November 30, 2004,  such  revenues  exceeded our  expectations.  Margins,
primarily due to higher  communication costs experienced earlier in the year, as
disclosed  in the  10-QSB for the  quarter  ended May 31,  2005,  were below our
expectations.

        There can be no assurance that revenue growth under the revised forecast
will generate margins that provide an adequate return on our invested assets, if
at all, or that we will have  sufficient  resources  to produce the products and
provide the services required to support any such growth.

                                        9
<PAGE>

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

        We continue to require funding in an amount substantially  equivalent to
the funding that we sought in calendar  2005,  less the amounts that we received
in the April/May  funding of the  Rodman/Westminster  Private  Placement and the
October 2005. series of secured  convertible notes with estimated  proceeds (net
of fees and costs) of $1.75 million.

        In order for us to fund our  operations  and continue  this growth plan,
substantial   additional   funding  will  be  required  from  external  sources.
Management intends to fund operations through a combination of equity,  lines of
credit,  and  collateralized   debt  facilities.   Management  is  currently  in
negotiations with certain strategic investors, who have expressed an interest in
making  investments  in  us.  These  discussions  are  ongoing,  and  one of the
potential  creditors  has  recently  concluded  its  due  diligence  procedures.
However, there can be no assurance of the outcome of these negotiations.  In the
event that we are not able to secure  financing on  acceptable  terms beyond the
$3.9 million of net proceeds  received in the first and third quarters of fiscal
2006 (plus the  additional  $550,000 of net  proceeds  to be  received  from the
October 2005 debt financing transaction described immediately below), management
believes that it has the ability to access debt markets using sale and leaseback
arrangements and/or collateralized debt facilities.

Debt Financing Transaction
--------------------------

        In October 2005,  the Company  completed a private  placement  financing
transaction and agreed to issue secured  convertible notes payable to a group of
accredited  investors in the total amount of  $2,170,000.  The Company  received
$700,000 in cash on October 7, 2005,  and  $500,000 on November  22,  2005.  The
remaining  $550,000 of net  proceeds  have been placed in an escrow  account and
will be released when the related registration statement (see below) is declared
effective  by the SEC.  These notes  payable,  which are due October  2008,  are
convertible  into  shares  of the  Company's  common  stock  at any  time at the
holder's option at a fixed price of $0.78 per share.

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

        In connection with the  transaction  described  above,  the Company also
issued  five-year  warrants to  purchase a total of up to 480,000  shares of its
common stock at an exercise price of $2.00 per share.  Such warrants  vested and
became fully exercisable upon issuance.  Concurrently with the Company's receipt
of the remaining  tranche of net proceeds  under the secured  convertible  notes
payable,  the  Company  will issue  additional  warrants  to  purchase  up to an
additional  220,000  shares of its common  stock,  for an aggregate  issuance of
warrants to purchase a maximum of 700,000 shares.  However, the exercise of such
warrants  and/or the  conversion  of the related notes payable may not result in
ownership (other than unexercised warrants and any unconverted notes payable) by
any  creditor  and its  affiliates  of more  than  4.99% of the  Company's  then
outstanding shares of common stock.

        The  creditors/warrant  holders in the above  transaction  have  certain
registration  rights for the common stock  underlying  both the warrants and the
convertible debt. The related  registration  rights agreement includes financial
penalties  since  the  Company  failed  to  meet  the   registration   statement
effectiveness  deadline date, which was January 16, 2006. Such penalty, which is
2% per month (approximately  $43,000/month),  can be paid in common stock at the
option  of the  Company.  See Note 14 to the  condensed  consolidated  financial
statements included elsewhere herein for additional information.

                                       10
<PAGE>

        Under the circumstances described in the following sentence, the Company
would be in default of the aforementioned notes payable. As explained above, the
Company failed to meet the registration statement  effectiveness-date  deadline;
if and when the creditors  provide the Company with the  contractually  required
notice to that  effect,  this  condition  will  become an "Event of  Default" as
defined in the  underlying  debt  agreements.  When a default event exists,  the
notes become immediately due and payable. The Company would then be obligated to
pay,  within forty five days of the receipt of any such  notice,  the sum of (a)
130% of the then outstanding  principal  amount,  (b) additional  interest at an
annual  rate of 15%  (commencing  on the  forty-sixth  day after  receipt of the
notice),  (c) any unpaid liquidated damages for failure to meet the registration
statement  deadline,  and  (d)  certain  other  penalties  if  the  Company  had
previously  been unable to timely  deliver the common stock required to effect a
partial or complete conversion of any of the notes payable.

Proposed Strategic Financing Transaction
----------------------------------------


        The Company is presently negotiating a debt/equity financing transaction
with a U.S.-based entity.  Under the proposed terms, Astrata Group, Inc. ("AGI")
would issue a maximum of $20 million of junior  convertible  notes payable which
would mature in five years. In addition, a to-be-formed  indirectly wholly-owned
South African subsidiary of AGI (the  "Subsidiary")  would issue $5.5 million of
notes  payable,  which would be guaranteed by AGI and which would mature in four
years.  These  proposed  notes payable would be secured by all the assets of the
Company and the Subsidiary,  and would require monthly  payments of interest (at
14%) and principal.  Management  anticipates  that a fixed  conversion price per
share for the convertible  notes would be negotiated  prior to consummating  the
proposed transaction, if at all.

        Under the proposed terms, AGI would also issue detachable  warrants (the
"AGI warrants") to purchase 28% of its  fully-diluted  outstanding  common stock
(to be defined in the  transaction  documents) at an exercise price of $2.00 per
share.  Management  expects that the holder of the AGI warrants would be granted
certain  demand  registration  rights  for  the  common  stock  underlying  such
warrants.  As of November 30, 2005,  management  estimates that the AGI warrants
would be exercisable into  approximately 5.7 million shares of its common stock.
The  Subsidiary  would also issue  warrants to acquire 30% of its  fully-diluted
common stock (to be defined in the transaction  documents).  If this transaction
is  consummated  under the terms  described  above,  management is considering a
"re-set"  to $2.00  per  share of (i) the  exercise  price  for all  outstanding
warrants  and options  whose  current  exercise  price is greater than $2.00 per
share, and (ii) the conversion price for all outstanding  convertible debt whose
current  conversion  price is greater  than $2.00 per share;  all other terms of
such equity  instruments and debt agreements  would remain  unchanged.  However,
since a definitive  agreement  has not been  executed,  and because  there is no
assurance that this proposed  transaction  will be  consummated  under the terms
described  above  (if at  all),  management  has not  made  any  final  decision
regarding the proposed  "re-set" of the exercise and conversion prices described
in the preceding sentence.

Off Balance Sheet Arrangements
------------------------------

        As of November 30, 2005,  there were no off balance sheet  arrangements.
Please refer to the  Commitments  and  Contingencies  footnote to the  Company's
condensed consolidated financial statements included elsewhere herein.

Inflation
---------

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

Foreign Currency Exchange Rate Risk
-----------------------------------

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

        The principal  foreign currency  involved is the South African Rand. The
Company  translates all assets and liabilities at period-end  exchange rates and
income and expense accounts at average rates during the period.  The U.S. dollar
strengthened  against the Rand by approximately 12% during the nine months ended
November 30, 2005; and the U.S.  dollar weakened by  approximately  10.5% during
the  nine  months  ended  November  30,  2004.  The  average  U.S.  dollar  rate
strengthened  against the Rand by  approximately  .1% for the nine months  ended
November  30, 2005  compared to the nine months ended  November  30, 2004.  This
increases both our revenue and costs as compared to previous periods. During the
nine  months  ended  November  30,  2005,  the  Company  also  had  transactions
denominated in the British Pound, the Singapore dollar,  the Malaysian  Ringgit,
the Brunei dollar, and the New Zealand dollar.

Interest Rate Risk
------------------

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

                                       11
<PAGE>

ITEM 3:  CONTROLS AND PROCEDURES

        We carried  out an  evaluation  of the  effectiveness  of the design and
operation of our disclosure  controls and procedures (as defined in Exchange Act
Rules  13a-15(e) and  15d-15(e)) as of November 30, 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
November 30, 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  November  30,  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.

                                       12
<PAGE>


                          PART II - OTHER INFORMATION

ITEM 1:  LEGAL PROCEEDINGS

        From time to time,  we 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.
We are not currently a party to any material legal proceedings.

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

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

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

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

        In October 2005,  the Company  completed a private  placement  financing
transaction and agreed to issue secured  convertible notes payable to a group of
accredited  investors in the total amount of  $2,170,000.  The Company  received
$700,000 in cash on October 7, 2005,  and  $500,000 on November  22,  2005.  The
remaining  $550,000 of net  proceeds  have been placed in an escrow  account and
will be released when the related  registration  statement is declared effective
by the SEC.  These notes payable,  which are due October 2008,  are  convertible
into shares of the Company's  common stock at any time at the holder's option at
a fixed price of $0.78 per share.  The  transaction  described in this paragraph
constituted  an exempt  offering  under Rule 506 of  Regulation D to  accredited
investors or under Regulation S for non U.S. persons.


ITEM 3:  DEFAULTS UPON SENIOR SECURITIES

        None

ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None

ITEM 5:  OTHER INFORMATION

        None

                                       13
<PAGE>

ITEM 6:  EXHIBITS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


                                       14
<PAGE>

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.

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.

                                       15
<PAGE>

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

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

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

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

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

Exhibit 10.30   Form  of  Callable  Secured  Convertible  Note  incorporated  by
                reference to Exhibit  10.30 to the Company's  amended
                registration statement on Form SB-2 filed on December 16, 2005.

Exhibit 10.31   Registration Rights Agreement dated as of October 7, 2005 by and
                among Astrata Group  Incorporated and the investors set forth on
                the signature pages thereto incorporated by reference to Exhibit
                10.31 to the  Company's  amended registration statement on Form
                SB-2 filed  on December 16, 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*     Certification  of Chief  Executive  Officer and Chief  Financial
                Officer pursuant to Section 906 of the Sarbanes-Oxley Act.

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

                                       16
<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: January 23, 2006
        ------------------------------------------
        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      Certification  of Chief  Executive  Officer and Chief  Financial
                Officer pursuant to Section 906 of the Sarbanes-Oxley Act.