SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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


                                    FORM 10-K


          [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
               EXCHANGE ACT OF 1934
               For the fiscal year ended December 31, 1999

          [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
               For transition period from          to


                                    333-35021
                             Commission file number

                                 TELETRAC, INC.
            (Exact Name of Registrant as Specified in Its Charter)


           Delaware                                      48-1172403
(State or Other Jurisdiction of                     (I.R.S. Employer
 Incorporation or Organization)                     Identification No.)

3220 Executive Ridge Dr. #100
      Vista, CA                                          92083
 (Address of Principal                                 (Zip Code)
   Executive Offices)

Registrant's telephone number, including area code: 760-597-0510

Securities registered pursuant to Section 12(b) of the Act:

                                                       Name of Each Exchange
         Title of Each Class                           On Which Registered
         -------------------                           ---------------------

               None                                            None


Securities registered pursuant to Section 12(g) of the Act:

                                      None
                                (Title of Class)


<PAGE>



          Indicate by check mark whether the registrant (1) has filed all
reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |_|

          The Registrant has no publicly traded equity securities. As of
December 31, 1999, Teletrac, Inc. had outstanding 10,000,000 shares of Common
Stock, par value $0.01 per share.

          Documents Incorporated By Reference: None

<PAGE>

                                     PART I

Item 1.   BUSINESS

General

          As used in this Report, unless the context otherwise requires, the
term "Company" refers to Teletrac, Inc. ("Teletrac").

          This Report contains certain forward-looking statements covering the
Company's objectives, planned or expected activities and anticipated financial
performance. These forward-looking statements may generally be identified by
words such as "expects", "anticipates", "believes", "plans", "should", "will",
"may", "projects" (or variants of these words or phrases), or similar language
indicating the expression of an opinion or view concerning the future with
respect to the Company's financial position, results of operations, prospects or
business. Investors are cautioned that any such forward-looking statements are
not guarantees of future performance and involve risks and uncertainties, and
that actual results may differ materially from those projected in the
forward-looking statements as a result of various factors discussed herein and
those factors discussed in detail in the Company's filings with the Securities
and Exchange Commission, including the "Risk Factors" section of the Company's
Registration Statement on Form S-1 (Registration Number 333-35017), as declared
effective by the Securities and Exchange Commission on November 5, 1997 (the
"Form S-1").

          The Company is a leading provider of vehicle location and wireless
data solutions to commercial fleet operators. The Company has developed an
information services platform that enables customers to better manage their
mobile workforce, provide security for their property and personnel and
communicate more effectively with mobile workers. The Company utilizes various
wireless data networks to provide vehicle location and data communications. The
majority of the location and data traffic today for the Company is carried via
the Company-developed proprietary land-based location and data communications
technology. In addition, the Company has multiple customers utilizing the
cellular digital packet data network (or "CDPD") coupled with global positioning
(or "GPS") for location determination. The Company is also in the process of
evaluating other data networks combined with GPS for other applications for
commercial fleet operators.

          As of December 31, 1999, the Company maintained operations in 12
metropolitan markets: Los Angeles, Chicago, Detroit, Dallas, Miami, Houston,
Orlando, San Francisco, San Diego, Sacramento, Washington, D.C./Baltimore and
New York. As of December 31, 1999, the Company served over 3000 commercial fleet
accounts, more than any other provider of fleet vehicle location services, and
had approximately 56,559 vehicle applications with commercial customers. In its
Miami and Los Angeles markets, the Company also uses its proprietary location
systems to provide vehicle location and stolen vehicle recovery services to
consumers. As of December 31, 1999, the Company had approximately 6,792 consumer
units in service.



                                       2
<PAGE>

          The Company believes that there is substantial demand for
cost-effective information services that offer both reliable location tracking
and data communications in metropolitan areas. The Company's products can be
used either alone or in conjunction with other communications technologies. The
Company believes that the majority of its target customers' vehicles are
currently equipped with wireless communications devices that do not provide
automatic location features, such as two-way radio, specialized mobile radio
("SMR"), pagers and cellular devices. The Company's products and services allow
commercial fleet operators to (i) increase driver productivity and fleet
efficiency, (ii) improve customer service, (iii) limit unauthorized vehicle use,
and (iv) reduce driver overtime. The Company's customers include metropolitan
commercial fleets (such as trade service providers, delivery services, bus and
taxi fleets, ambulance companies, telecommunications companies, utility
companies, municipal government vehicles and law enforcement agencies) and
long-haul trucking fleets when operating within metropolitan markets.

          The Company offers a range of fleet management solutions, depending on
the customer's budget and location and messaging needs. All of these solutions
involve the installation in each vehicle of a vehicle location unit ("VLU") or a
"VLU+" in the case of a CDPD/GPS application. The VLU is a radio transceiver
that receives and transmits signals used to determine a vehicle's location. In
addition to the VLU, commercial fleet customers generally purchase software or
location services from the Company. The Company's primary product for commercial
fleets is Fleet Director Enterprise Edition(R), a proprietary software
application that permits simultaneous location of all fleet vehicles on a
real-time 24-hour-a-day basis through a digitized map displayed on the
customer's dedicated personal computer or network server, which is connected to
the Company's Network Control Center. Fleet Director Enterprise Edition (R) can
be complemented with the Company's data communication units, which allow two-way
messaging between the fleet dispatcher and drivers directly from the Fleet
Director Enterprise Edition(R) screen.

          In its Miami and Los Angeles markets, the Company also uses its
proprietary location systems to provide vehicle location and stolen vehicle
recovery services to consumers. The Company's service locates and tracks stolen
vehicles in real time and its equipment can be integrated with a vehicle's alarm
system and/or ignition so that it is automatically activated if the vehicle is
stolen. The Company's service also allows a subscriber to initiate vehicle
location in other emergency or roadside assistance situations. The Company has
continued providing consumer service as a legacy of the business acquired from
AirTouch Teletrac but has not launched and does not intend to launch any new
marketing efforts with respect to this service.

Recent Developments

          On June 9, 1999 the Company filed for voluntary protection under
Chapter 11 of the U.S. Bankruptcy Code. On September 15, 1999, the Company's
Plan of Reorganization was confirmed by the United States Bankruptcy Court and
it was effective on September 29, 1999 (the "Reorganization"). Pursuant to the
Reorganization, certain indebtedness of the Company was discharged in exchange
for cash, and/or new indebtedness, and/or new equity interests, certain
indebtedness was reinstated, certain claims were settled, executory contracts
and unexpired leases were assumed or rejected, certain prepetition claims were
discharged, and the new members of the new Board of Directors of the Company


                                       3
<PAGE>

were designated. The Company distributed to creditors approximately $21.7
million in restricted cash, $0.2 million in unrestricted cash, $15.0 million 9%
Senior Notes due September 30, 2004 (the "Senior Notes"), equity securities
consisting of 10 million shares of new common stock and 800,000 warrants, each
of which is convertible into one share of new common stock at an exercise price
of $7.40 per share.

          In order to fund operations of the Company post Reorganization, the
Company issued an aggregate of $3.0 million principal amount of 10% Senior
Secured Notes due September 30, 2000 (the "Senior Secured Notes"). The Senior
Secured Notes have quarterly interest payments and also have 3,000,000
detachable warrants, each of which is convertible into one share of new common
stock at an exercise price of $0.05 per share.

Commercial Fleet Management

          Target Markets

          The Company's commercial fleet services provide reliable,
cost-effective location information, data communications and fleet management
services in real time. The Company markets its fleet management products both to
metropolitan fleets and long-haul trucking fleets, which may desire to optimize
driver efficiency in metropolitan areas because of the impact on customer
service and overall fleet productivity. The Company believes that metropolitan
commercial fleets represent the largest market for its existing products.

          Many metropolitan commercial fleet operators have not employed
location information or data communications because of the lack of
cost-effective and reliable alternatives. Two-way voice services (such as
cellular, SMR and two-way radio) cost significantly more to provide a similar
level of location services and rely on the driver to report vehicle location.
A significant number of metropolitan fleet vehicles utilize lower-cost one-way
paging services, but such services lack both location tracking and two-way data
communications. Management believes the Company's commercial fleet service
generates demonstrable cost benefits and efficiency gains for metropolitan fleet
customers.

          Due to the diversity of metropolitan commercial fleets, the Company's
customer base ranges from independent plumbers with five or six vehicles to
large municipal bus and ambulance fleets and national delivery companies. The
Company's range of products allows it to provide a fleet management solution to
meet each segment of this market. The Company primarily focuses it sales efforts
at fleets of at least five vehicles, which it believes can be serviced
more cost-effectively than smaller fleets. The Company believes that by
utilizing alternative wireless data networks like CDPD, the Company will be able
to attract nationwide customers with fleet operations in a number of
metropolitan markets. Among the Company's current customers are Emery Air
Freight, Inc., Brinks Incorporated (security transportation), Roto Rooter Corp.,
AT&T Cable Services., and department stores such as Target.

          Products and Services

          The Company offers its customers a range of fleet management,
communications and security products. The Company relies on the installation of
a VLU or VLU+ in each customer vehicle in order to provide vehicle location and
data communication services.



                                       4
<PAGE>

          Fleet Management. The Company's fleet management software products and
services are designed to address the needs of key vertical markets within the
metropolitan fleet marketplace. The vertical markets that the Company is focused
on today include municipals, utilities, distribution, services, and on-demand
transportation. These vertical markets share common characteristics and
represent the best fit for the Company's current products and services. The
Company emphasizes a solution approach with these vertical markets emphasizing
integration where necessary to the customer's existing back office systems.

          Fleet Director Enterprise Edition(R) is a proprietary software
application that provides fleet customers accurate fleet vehicle location
through the customer's detailed digitized map of a metropolitan area displayed
on the customer's dedicated personal computer or network server, which is
connected to the Company's networks. Fleet Director Enterprise Edition(R)
displays the position of all VLU-equipped vehicles at periodic intervals
determined by the customer (typically every 15 minutes), at the time of each
communication with a vehicle and otherwise as specified by the customer.
Customers can adjust the level of map detail through a zoom in/zoom out feature,
allowing a customer to simultaneously view the location of all fleet vehicles or
to focus in on a single vehicle. Fleet operators can establish "zones of
compliance" around their customers' locations, their drivers' homes, or other
locations to detect whether vehicles enter or leave specific areas. Fleet
Director Enterprise Edition(R) also produces reports that detail a driver's
route and the time of each stop and provides documentation for customers who
require verification of deliveries. Real-time location reports can also be saved
on the customer's computer to be retrieved and reviewed on-screen or printed at
a later time.

          Fleet Director Enterprise Edition(R) can also act as a platform from
which the customer can use the Company's two-way communications products
(discussed below) to send and receive messages to and from drivers. Customers
can type messages directly to drivers from the computer on which Fleet Director
Enterprise Edition(R) operates and send the messages to a single vehicle,
several vehicles or the entire fleet.

          Communications. The Company offers two communication systems to its
Fleet Director(R) customers. The Mobile Data Terminal ("MDT") is the Company's
more advanced two-way messaging system. It allows for alphanumeric
communications from the fleet operator to its drivers and up to thirty-five
pre-programmed messages from the drivers to the fleet operator. The Status
Messaging Terminal ("SMT") is a low-cost alternative to the MDT. The SMT allows
for four pre-programmed messages which may be sent from the customer to the
drivers and eight pre-programmed messages which may be sent from the drivers to
the customer. The MDT and the SMT are both small terminals typically mounted on
the fleet vehicle's dashboard and are connected to the VLU or VLU+.



                                       5
<PAGE>

          Both the MDT and the SMT automatically provide customers with an
electronic "receipt" when the message is received and therefore do not rely on
drivers for vehicle locations or message delivery. As a result, the Company's
system provides more reliable location information and messages than many
competing technologies. The Company's communication applications generally have
lower service costs than conventional real-time, two-way communication services,
such as cellular, SMR and Enhanced Specialized Mobile Radio ("ESMR") services.

          Security Services. The Company offers its commercial fleet customers
several vehicle security and driver safety options that operate through the
Company's location networks. A VLU can be connected directly to a vehicle's
alarm system, triggering the Company's security system when the alarm is set
off, or connected to an alarm button either located in the vehicle or carried
remotely by the driver. Customers with Fleet Director Enterprise Edition(R) may
also establish a "zone of compliance" that activates the Company's security
system when vehicles leave the zone. When the security system is activated, a
signal is sent by the VLU to the Company's local network system which
automatically alerts the customer through Fleet Director Enterprise Edition(R).
If the customer does not respond, the Company will telephone the customer
directly. If the customer believes that the vehicle has been stolen or a driver
is in danger, the Company will work directly with the local law enforcement
authorities to track the location of the vehicle in real-time. Many customers
also attach VLUs directly to valuable cargo or to expensive equipment such as
construction equipment. The Company believes it has developed excellent
relations with local law enforcement officials due to the past performance of
the Company's location system, and that such relations contribute to its ability
to quickly recover stolen vehicles and equipment.

          Sales and Marketing; Customer Service

          The Company uses a direct sales force to sell its commercial vehicle
location and fleet management services, and has a sales force located in each
market where it operates. The Company's sales efforts rely on sales managers who
supervise the sales activities of sales representatives, contact and negotiate
with larger potential customers, and have authority to negotiate prices within
defined parameters. Sales commissions generally are directly linked to the
number of units a sales person sells. As of December 31, 1999, the Company's
direct sales force consisted of approximately 40 employees.

          The Company's advertising and marketing efforts are generally directed
to local and regional markets and its strategy has focused on print advertising
in industry journals, direct mail, videos, telemarketing, industry trade shows
and on-site marketing promotions and demonstrations.

Consumer Vehicle Services

          The Company is currently focusing on its core business of commercial
fleet management. As a legacy of the business acquired from AirTouch Teletrac in
January 1996 (the "Acquisition"), the Company has continued to provide consumer
service (now sold under the name Teletracer(TM)) and has allowed dealer
arrangements in place at the time of the Acquisition to continue, but has not
launched any new marketing efforts.



                                       6
<PAGE>

          Target Market

          The demand for vehicle security products and services has grown as
consumers have become increasingly concerned with vehicle theft. The consumer
vehicle security industry encompasses a number of security products and
services, including mechanical theft-prevention devices such as The Club(R),
installed automated vehicle alarms and vehicle recovery services such as
LoJack(R).

          The vehicle security industry has developed rapidly since the late
1970s, as motor vehicle theft increased dramatically. According to industry
sources, in 1994, an estimated 22% of all new automobiles (or approximately 2.26
million new automobiles) and 62% of luxury vehicles purchased in the United
States were equipped with an electronic car alarm. Vehicle theft and the demand
for vehicle security are particularly high in the metropolitan centers and
surrounding suburbs serviced by the Company.

          Products and Services

          The Company's proprietary location technology and VLU equipment can be
used for consumer applications without modification. A VLU is installed in a
consumer's vehicle and is generally connected to a security alarm and/or
integrated with the vehicle's internal ignition system. By connecting the unit
to a vehicle security alarm, vehicle recovery service can be initiated
automatically. If the vehicle alarm is triggered, the unit emits an emergency
locate signal, notifying the Company's regional control center of a potential
vehicle theft. Each regional control center is staffed twenty-four hours a day,
seven days a week with Company employees who contact local law enforcement
authorities and direct them to the location of the stolen vehicle. The Company
currently distributes its consumer product and services through auto dealers,
electronic retailers and other distributors.

          The Company's ability to offer automated, reliable and real-time
service differentiates its stolen vehicle recovery service from other available
services. The VLU provides automatic vehicle tracking at the time of theft. This
is in contrast to other vehicle recovery services, such as LoJack(R), that
require a subscriber to report a vehicle stolen in order to begin the tracking
process.



                                       7
<PAGE>

          The Company also offers a proprietary telephone-operated mobile
information service called OZZ(R). This service allows its subscribers telephone
access to a computer that will locate a subscriber's vehicle in real-time and
report its location for compliance, security and convenience purposes. The
subscriber calls the Teletrac OZZ(R) telephone number, enters a personal
identification number for the vehicle to be located and within seconds receives
an automated voice response indicating the location of the vehicle at that time.
In addition to providing the customer with the location of the vehicle, OZZ(R)
is a "mobile yellow pages" that provides the customer the location of nearby
prominent businesses or landmarks from a menu of choices. The customer can call
OZZ(R) and obtain information such as the location of the nearest fast food
restaurant, automatic teller machine, gas station, hospital, police station, or
interstate on-ramp. Teletrac offers OZZ(R) to both consumer and commercial
customers. The OZZ(R) service can also be used to remotely instruct the VLU to
lock/unlock the doors of the vehicle. The firm that has contracted to provide
roadside assistance service for the Company estimates that 25% of roadside
assistance calls are for keys locked in the vehicle.

          All of the Company's consumer customers can also telephone the
Company's call-in Roadside Assistance Program, through which the Company will
have a tow truck sent to the caller's location. Under its Automated Roadside
Assistance Program, offered to its customers at a higher monthly fee, the
Company can direct a tow truck directly to a subscribing customer's location
when the customer presses a roadside assistance button installed in his or her
vehicle.

Technology

          The Company utilizes various wireless data networks to provide vehicle
location and data communications. The majority of the location and data traffic
today for the Company is carried via the Company-developed proprietary
land-based location and data communications technology. In addition, the Company
has multiple customers utilizing CDPD coupled with GPS for location
determination. The Company is also in the process of evaluating other data
networks combined with GPS for other applications for commercial fleet
operators.

          The Company has developed a proprietary, accurate and reliable spread
spectrum-based wireless network architecture that provides for both location
determination and two-way messaging. The Company's low-cost wireless network
architecture permits cost-effective and accurate location and messaging services
in metropolitan areas. The Company's networks use multilateration-based
techniques and land-based receivers for position determination, avoiding the
"line-of-sight" problems that may arise for satellite-based systems in urban
areas where tall buildings can block a satellite's view of a vehicle. The
Company believes that its land-based multilateration techniques are uniquely
appropriate for precise location determination in urban settings and that it can
accurately locate a vehicle equipped with its equipment in real-time within a
range of less than one-half of an average city block (approximately 150 feet).



                                       8
<PAGE>

          In order to locate a subscriber vehicle, the Company's local network
broadcasts a "paging" transmission (the "Forward Link") simultaneously from each
transmitter on the network. The Forward Link is used to transmit both location
commands and alphanumeric messages to the VLU. Each subscriber's vehicle is
equipped with a VLU, a videocassette-sized "transceiver" unit which responds to
the location command of the Forward Link by emitting a response signal (the
"Reverse Link"). The Reverse Link is received by at least four nearby base
station units ("BSUs") which calculate both the time of transmission of the
Forward Link and the time of arrival of the Reverse Link and relay this data,
via wireline telephone networks, to the Network Control Center ("NCC"), the
local network's data processing center. The NCC uses the Company's proprietary
network software to calculate the location of the VLU from the information
received by the BSUs. The NCC consists of the Company's radio-frequency control
equipment, telecommunication access connection computers, proprietary software
and the Company's customer database. The NCC instantaneously relays the location
information to a subscriber's Fleet Director(R) software application or OZZ(R)
call-in request (via automated response).

          The Company's customers can also use the Forward Link to transmit
alphanumeric messages from their centralized dispatch office to their fleet
vehicles and the Reverse Link to transmit more limited messages from vehicles to
the centralized dispatch office. The network system can transmit alphanumeric
messages at a transmission speed of 2,400 bits per second.

          At December 31, 1999, the Company maintained and operated its
proprietary network in eight metropolitan markets: Los Angeles, Miami, Chicago,
Detroit, Dallas, Houston, Orlando and San Diego. In New York and Washington,
D.C./Baltimore, Ituran USA owns, operates and maintains the proprietary network
and the Company pays Ituran USA a monthly fee for usage on their network for the
Company's subscribers in those markets. At December 31, 1999, Ituran USA also
notified the Company of its intention to elect its option to purchase the Miami
and Orlando networks. In the same way as the New York and Washington
transactions, the Company will pay Ituran USA a monthly fee for usage on those
networks for the Company's subscribers.


                                       9
<PAGE>

          In a number of customer vehicle applications, the Company utilizes
CDPD coupled with GPS for location determination. The vehicle is
equipped with a subscriber unit (the VLU+) that includes both a CDPD wireless
data modem and a GPS receiver. The CDPD services are provided by certain
cellular carriers who have built packet data capabilities onto their existing
cellular networks. The Company currently has a nationwide reseller agreement
with AT&T for CDPD services. The CDPD services are available in over 1000 cities
and towns across the U.S. The Company also uses differential correction to
enhance the accuracy of the location determination of the GPS receiver. For the
VLU+ service offering, the Company also provides wireless data or messaging
communications by combining SMT or MDT terminals with the VLU+. The messaging
information is transmitted over the CDPD network and delivered to the customer
in a similar fashion as with the Company's proprietary network.


Network and Subscriber Equipment

          The Company terminated its agreements with Tadiran, its former
supplier of VLUs in December 1998. The Company does not expect to purchase
additional VLUs because inventory is expected to be sufficient to cover
projected sales. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition." The Company has contracted with a San
Diego-based manufacturer for VLU+s. The components of the VLU+ are generally
off-the-shelf wireless components that are available commercially from a number
of different manufacturers.

          The Company's network also includes a number of components that are
used in the wireless messaging industry. The Company purchases standard
transmitters from Glenayre Technologies, Inc. and Motorola, Inc. The
transmitters, which are similar to transmitters used in one-way paging networks,
transmit the Forward Link in a manner similar to a paging network. Much of the
Company's communications equipment, its antennas and many other components of
its networks are also available through a number of existing suppliers of
wireless messaging equipment.


                                       10
<PAGE>

Competition

          The Company currently faces competition for each type of service it
offers. The Company expects that in the future it will face competition from new
technologies as well as from existing products. Certain of the Company's
competitors are larger and have substantially greater financial and research and
development resources and more extensive marketing and selling organizations
than the Company. There can be no assurance that additional competitors will not
enter markets that the Company already serves or plans to serve or that the
Company will be able to withstand such competition. Moreover, changes in
technology could lower the cost of competitive services to a level where the
Company's services would become less competitive or where the Company would need
to reduce its service prices in order to remain competitive, which could have a
material adverse effect on the Company's business.

          Commercial Vehicle Market

          The Company knows of three basic classes of products that offer
commercial location and messaging capabilities competitive with the Company's
products: (i) GPS, private satellite and Loran-C systems, (ii) LMS systems and
(iii) traditional wireless communication.

          GPS, Private Satellite and Loran-C Systems. GPS, certain private
satellite networks and Loran-C can provide location information, and when paired
with a communications system, may provide a system competitive with the
Company's products. GPS systems receive signals from NAVSTAR satellites, U.S.
government-funded satellites used for position location. GPS systems and certain
private satellite systems use satellite ranging techniques to measure a GPS
device's distance relative to a group of satellites in space. Typically, a GPS
device must be in "sight" of several satellites to receive adequate transmission
data for the determination of relative location on earth. The Loran-C system
uses land-based transmitting stations to send a low-frequency radio signal which
is used by a vehicle to calculate its position relative to the location of other
Loran-C transmitters. Satellite and Loran-C systems are generally not as
effective as LMS networks such as the Company's in metropolitan areas. Because
GPS and other satellite services require "line of sight" to the orbiting
satellite, dense metropolitan areas, parking garages, tunnels or other covered
areas can impact the system's effectiveness and reliability. Loran-C systems
also frequently have difficulty penetrating "metropolitan canyons" and therefore
may provide inaccurate position readings in urban areas.

          In most GPS, private satellite and Loran-C vehicle location systems,
vehicle-mounted equipment gathers location data and transmits it by a wireless
communication system to a dispatch center. There are a number of wireless
systems that can be linked to a satellite system or a Loran-C system to transmit
location information to a dispatch center:


                                       11
<PAGE>


     o    Cellular and PCS Communication Systems- Cellular and PCS systems can
          provide local or nationwide networks to transmit location information
          to a dispatcher. However, cellular and PCS operators generally price
          their airtime at price levels that do not allow for frequent location
          information transmittals by vehicles equipped with GPS, private
          satellite or Loran-C systems to dispatchers on a cost-basis
          competitive with the Company. Most vehicle location systems that link
          a satellite or Loran-C location system with a cellular or PCS
          communication system, such as HighwayMaster, are best-suited for
          long-haul trucking fleets. In addition, in certain U.S. markets, some
          cellular operators have added a data service over their existing
          cellular infrastructure that can improve the cost and delivery of
          location information over existing cellular networks. The data
          service, called CDPD, is an overlay of a packet switched data service
          on a traditional cellular system. CDPD is available in approximately
          80 metropolitan markets throughout the U.S., including all the
          markets, other than Los Angeles, in which the Company is currently
          operating or plans to operate. One company that is currently utilizing
          CDPD coupled with GPS to the metropolitan fleet market is @Road, a
          privately-held corporation based in Fremont, California. At year-end
          1999, @Road had approximately 7,000 units installed.

     o    SMR/ESMR- SMR has traditionally been used to serve the needs of local
          dispatch services, such as taxis and couriers, which typically
          broadcast short messages to a large number of units. Several SMR
          operators are constructing ESMR digital systems that offer mobile
          telephone services. Some SMR and ESMR providers are beginning to
          integrate GPS with their systems to determine location and transmit
          the location information back to the subscriber via the SMR or ESMR
          communications network.

     o    Satellite-based Communications- Satellite-based communication is
          accomplished through transmission of a signal from a vehicle-based
          transmitter to a satellite, which automatically retransmits the signal
          to a dispatcher. Such systems provide seamless nationwide service for
          transmitting location information, but do not currently transmit
          location data at a cost competitive with the Company's system. Vehicle
          location products with satellite-based communications are currently
          offered by Orbcomm Global, L.P. and Qualcomm, Inc.

     o    Dedicated Wireless Networks- ARDIS and RAM are dedicated wireless
          two-way data networks that also can be used to transmit location
          information through integration with GPS. ARDIS is owned by American
          Mobile Satellite Corporation and RAM is owned by a joint venture
          between RAM Broadcasting Corp. and BellSouth. Both wireless providers
          cover primarily metropolitan markets. ARDIS covers approximately the
          top 400 markets in the United States, and RAM reports coverage in
          approximately the top 100 markets (in both cases, including all the
          markets in which the Company currently operates or plans to operate).



                                       12
<PAGE>

          LMS Systems. The Company knows of other companies that are developing
competitive LMS location and messaging systems. Pinpoint Communications Inc.,
METS Inc./MobileVision, L.P. and Comtrak Inc. each have developed technologies
that use LMS spectrum to provide both location information and messaging. Such
alternative LMS systems are also land-based wireless systems suited for
providing accurate and cost-effective service in metropolitan areas. Current LMS
operators and prospective LMS operators may also benefit from an FCC auction of
three frequency bands, including the band on which the Company's system
operates, for LMS purposes. The Company believes that to date it is the only
company that has established a commercially operational LMS network in the U.S.

          Traditional Wireless Communication. Many fleet managers use existing
SMR, ESMR, two-way radio, cellular or paging systems to communicate with
vehicles and obtain their location. Such systems are less reliable than the
Company's products, however, because they rely exclusively on drivers to
accurately identify their location.

          Consumer Vehicle Market

          LoJack(R). The Company's principal competitor to date in the consumer
vehicle market has been LoJack(R). The LoJack(R) system is based on a VHF
transponder (essentially a homing device) with a range of approximately two
miles. The LoJack(R) vehicle recovery system requires a customer to report a
stolen vehicle to LoJack(R) in order to initiate the location process. Once a
stolen vehicle report is received, LoJack(R) personnel activate the transponder
unit located in the stolen vehicle by transmitting a signal across the area in
which the vehicle was stolen. Police equipped with LoJack(R) equipment track the
signal from the stolen vehicle by the strength of the signal. The LoJack(R)
system is not an automatic, real-time, screen-based tracking system, and it does
not provide the service features of the Company's OZZ(R) and roadside assistance
products.

          GPS/Cellular Systems. Several companies have begun to link GPS
location technology with cellular communications to create emergency location
systems for consumer vehicles. Carcop(R), Onstar(TM) and Lincoln Rescu(TM) all
rely on this technology to provide emergency roadside assistance and/or stolen
car recovery. Such systems, because they are based on GPS locating technology,
can be less effective in metropolitan areas where most auto thefts occur.

          Theft Deterrents. A number of products are currently sold for vehicle
theft deterrence. Consumer products range from The Club(R) to automatic alarm
systems. While such systems do not provide the location information or range of
services of the Company's consumer products, they are often available at a
significantly lower cost.



                                       13
<PAGE>

Product Protection

          The Company currently has no material patents and generally seeks to
protect its proprietary network software, software products and trade secrets by
requiring that its consultants, employees and others with access to such
software and trade secrets sign nondisclosure and confidentiality agreements.
Management believes that these actions provide appropriate legal protection for
the Company's intellectual property rights in its software and products.
Furthermore, management believes that the competitive position of the Company
depends primarily on the technical competence and creative ability of its
personnel and that its business is not materially dependent on patents,
copyright protection or trademarks.

Regulation

          The construction, operation and acquisition of radio-based systems in
the LMS industry in the U.S. are subject to regulation by the FCC under the
Communications Act. Multilateration LMS is a service operating under new FCC
rules. As such, the LMS rules have not been subject to any significant
interpretation by the FCC in written decisions.

          As a pioneer in this new service, the Company may operate under rules
with significant ambiguities. The application of largely uninterpreted rules in
situations that the Company may encounter will present matters of first
impression to the FCC's staff. The Company cannot predict how changes to or
interpretations of these rules may affect its operations or its business plans.

          Construction and Operation of Grandfathered Systems

          The FCC adopted its initial rules for the LMS service in 1995. The
FCC's LMS rules provide for the "grandfathering" of LMS systems, such as those
of the Company, that were in operation or authorized as of February 3, 1995. LMS
licenses granted prior to the 1995 rules, including those under which the
Company operates its system, were granted for individual transmitter sites. The
FCC's rules provide that future LMS licenses will be granted on a geographic
basis and awarded through auctions. The FCC stopped accepting applications for
new LMS facilities in 1995, pending its development of rules and procedures for
auctioning the LMS spectrum.

          To maintain grandfathered status for its existing licenses, the
Company was required, among other things, to complete its construction of
licensed transmitter sites by January 1, 1997, to a level where each system
would be capable of locating a vehicle. By December 31, 1996, the Company had
constructed LMS systems capable of locating a vehicle in 26 markets, including
the six markets in which the Company had systems that were in operation prior to
1995. The grandfathered authorizations issued to the Company allow the operation
of multilateration LMS base stations at particular sites specified in the
authorization, subject to a requirement that base stations may not be relocated
to a site more than two kilometers from an initially authorized site. In a few
instances, the Company has obtained waivers from the FCC to permit location of a
transmitter site to a location more than two kilometers from the original site.
In December 1998, the Company requested that the FCC cancel licenses in three
markets.

          Current FCC rules do not provide for grandfathered LMS licensees like
the Company to construct "fill-in" transmitters to service gaps in the service
coverage area due to terrain obstructions. On December 18, 1997, however, the
FCC granted the Company, at the Company's request, a waiver that permits the
Company to obtain authorizations for new "fill-in" transmitters within the
coverage area of its facilities. The Commission granted the Company's
applications for "fill-in" transmitters in several markets. Under the terms of
the waiver order, the Company may no longer submit applications for "fill-in"
transmitters.


                                       14
<PAGE>

          In July, 1998, the FCC adopted auction rules for the multilateration
LMS service, and the auction began in February 1999, for 528 licenses
representing three frequency blocks in 176 geographic LMS license areas which,
in the aggregate, encompassed all of the United States. In the auction, four
bidders acquired 289 of the licenses. No minimum bid was placed on the remaining
licenses and they reamin unassigned. The Company did not bid for spectrum in the
LMS auction. The Company understands that the FCC will expect cooperative
arrangements for sharing between grandfathered licensees and the EA licensees
resulting from the auction. The Company will be permitted to continue operating
its grandfathered facilities in that EA, but it will be precluded from expanding
its coverage area within such EA.

          Permissible Use Restrictions and Interconnection

          The FCC's rules do not contemplate that LMS be used for "general
messaging purposes," but LMS systems may transmit status and instructional
messages, either voice or non-voice, so long as they are related to the location
or monitoring functions of the system. This restriction precludes an LMS
licensee from offering messaging services other than as part of its location and
monitoring services. Under the FCC's rules, LMS service may include location of
non-vehicular traffic, so long as the primary operations involve location of
vehicles.

          In addition, the FCC order requires that interconnection to the public
switched telephone network be on a "store and forward" basis. This requirement
limits the Company's ability to offer real-time voice communications services,
except with respect to emergency communications. LMS customers may engage in
delayed voice or data messaging over the telephone system. The FCC set a
thirty-second delay as the "safe harbor" for store and forward interconnection
but acknowledged that other approaches may also be acceptable depending upon the
configuration of the system.

          Foreign Ownership

          The FCC has not declared whether multilateration LMS will be
classified as a private mobile radio service (PMRS) or as a commercial mobile
radio service (CMRS), but has proposed to classify LMS providers on a
case-by-case basis.




                                       15
<PAGE>

          If the Company's services were reclassified as CMRS rather than as
PMRS, the Company, which holds its FCC authorizations through a wholly-owned
subsidiary, Teletrac License, Inc., would be subject to the foreign ownership
restrictions under the Communications Act that apply to the parent corporations
of CMRS licensees. Under this restriction, non-U.S. persons would not be
permitted to hold, directly or indirectly, in the aggregate, more than 25% of
the ownership or 25% of the voting rights in the Company, absent a waiver or
determination by the FCC that a higher level of foreign ownership would be in
the public interest.

          Although the Company is controlled by U.S. citizens, non-U.S. persons
currently hold slightly more than 25% of the ownership of the Company. If the
FCC were to reclassify its multilateration LMS as CMRS at a time when the
Company's level of foreign ownership or foreign voting rights exceeded 25%, the
Company would be required to obtain a public interest determination from the FCC
approving its level of foreign ownership or to restructure its ownership to meet
the 25% benchmark. World Trade Organization ("WTO") agreements and the FCC's
implementing rules are intended to open additional opportunities for foreign
investments by WTO member countries in U.S. entities that control CMRS licenses.
The FCC's implementation of the WTO agreements would require the Company, if its
services were classified as CMRS and its foreign ownership exceeded the
benchmark to obtain a public interest determination from the FCC.

          Technical Requirements

          Multilateration LMS systems must use equipment that is "type-accepted"
by the FCC. Under the type-acceptance procedure, the FCC confirms that the model
of equipment proposed for use in a particular radio service conforms to the
technical requirements for the service as specified in the FCC's rules. All
equipment used by the Company that is required to be type-accepted has been
type-accepted.

          Multilateration LMS systems operate on frequencies that have been
allocated to LMS by the FCC on a secondary basis. This means that LMS operations
cannot cause interference to, and may be required to accept interference from,
users of those same or adjacent frequencies in the industrial, scientific, and
medical radio service and in the Federal government's radio location service. In
addition, under Part 15 of the FCC's rules, certain unlicensed radio devices
(such as spread spectrum devices used for local area networks) operate on the
same or adjacent frequencies as LMS systems. Although multilateration LMS
systems generally have priority in the use of their frequencies over such Part
15 devices, the FCC's rules provide a "safe harbor" for the operation of Part 15
devices in LMS spectrum. If a Part 15 device is operated in a manner that
satisfies those safe harbor requirements (which were designed to avoid or
minimize the risk of interference to LMS services), an LMS system that


                                       16
<PAGE>

nonetheless suffers interference from such a Part 15 device may have no recourse
other than to negotiate with the Part 15 user on methods for eliminating or
reducing the interference. In addition, as a condition of the LMS license, the
FCC has stated that operators of new LMS systems must perform testing to
demonstrate that the system does not cause unacceptable interference to Part 15
devices. To date, the FCC has specifically declined to specify the nature of
such testing and how they might be used to determine whether the multilateration
LMS system is causing unacceptable interference to Part 15 devices. The FCC has
indicated that the purpose of the testing is to ensure that multilateration LMS
licensees take efforts to minimize interference to existing Part 15 devices when
designing and constructing their systems; Part 15 devices remain secondary to
multilateration LMS operations.

          Current FCC Applications and Proceedings

          The Company may have various site-specific applications pending before
the FCC from time to time in the ordinary course of business and in connection
with the sale of its Miami and Orlando networks and associated FCC licenses to
Ituran USA.

          Other Proceedings. Other proceedings pending from time to time at the
FCC may affect the business and operations of the Company, including but not
limited to, (i) changes in spectrum allotments and usage restrictions that may
permit the operation of terrestrial location-related services in other bands;
(ii) changes in FCC rules and policies governing interconnection with the
switched telephone network; (iii) rule making proceedings to develop the rules
and policies that will govern the auction of the LMS spectrum; (iv) changes in
the general licensing rules and policies of the FCC affecting LMS applications;
and (v) changes in FCC regulatory policies generally governing the land mobile
communication services.

          The Company cannot predict when the FCC will act on any of these
matters or what effect such action may have on its business.


Employees

          At December 31, 1999, the Company had approximately 230 employees.
Substantially all of the Company's employees are full-time. The Company's
employees are not unionized and the Company believes that its relations with its
employees are good.


Item 2.   DESCRIPTION OF PROPERTIES

          As of December 31, 1999, the Company had approximately 295 site and
tower leases for the operation of its transmitters and other equipment on
commercial broadcast towers and at other fixed sites. The Company believes that
in general the terms of its leases are competitive based on market conditions.
The Company believes its facilities are suitable and adequate for its purposes.
The Company relocates its transmission and receiver sites from time to time and
does not anticipate any material problems in obtaining and retaining site and
tower leases in the future.


                                       17
<PAGE>

Item 3.   LEGAL PROCEEDINGS

          Prior to the acquisition of AirTouch Teletrac, PacTel Teletrac
(predecessor to AirTouch Teletrac) brought an action before the United States
Patent and Trademark Trial and Appeal Board against T.A.B. Systems ("TAB")
opposing TAB's registration of the mark "Teletrak." The Trademark Trial and
Appeal Board granted PacTel Teletrac's motion for summary judgment, but summary
judgment was reversed by the U.S. Court of Appeals for the Federal Circuit. TAB
then filed an infringement action against PacTel Teletrac, the Company and other
parties in the U.S. District Court for the Central District of California. On
December 22, 1997, the District Court granted summary judgment in favor of the
Company. This decision has been appealed by TAB to the U.S. Court of Appeals for
the Ninth Circuit. Such an appeal was pending as of the date the Company filed
its bankruptcy petition. The Bankruptcy Court has issued an order permitting the
Ninth Circuit appeal to proceed. Under the terms of the Asset Purchase Agreement
between AirTouch Teletrac and the Company, AirTouch Teletrac must pay the costs
of any litigation relating to this matter and must indemnify the Company against
any losses relating thereto. AirTouch Teletrac has notified the Company that it
intends to continue to litigate this matter on its own behalf as well as on
behalf of the Company, and that it will bear the cost of such litigation. There
can be no assurance that AirTouch Teletrac will be successful in such litigation
or that AirTouch Teletrac will honor its indemnification obligations (including
any costs or losses relating to a change of name, if required as a result of the
litigation).

          The Company is engaged in litigation in Bankruptcy Court with Milgo
Solutions f/k/a Raycal-Datacom, Inc. ("Milgo") and Newcourt Leasing, Inc.
("Newcourt"), regarding certain telecommunications equipment which the Company
believes it purchased from Milgo. Milgo and Newcourt have asserted that the
Company did not purchase this equipment, and allege that the Company holds same
pursuant to one or more leases. In the event Milgo and Newcourt prevail in this
litigation, the Company may be obligated for the full, remaining amounts due on
account of these purported leases, which are asserted to exceed $2.1 million,
rather than for the amounts payable to these parties under the Company's
confirmed Plan of Reorganization. Discovery has commenced with respect to this
matter, but has not yet been concluded.

          The Company is also a defendant in an American Arbitration Association
proceeding brought by Star Trac, Inc. ("Star Trac") on or about February 23,
2000. Star Trac asserts that the Company breached the dealer agreement between
the parties and seeks actual and puntive damages. The Company denies the claims
asserted by Star Trac and believes that these claims were discharged by the
bankruptcy proceeding and are therefore without merit. The Company intends to
defend vigorously against these claims.

          The Company is from time to time subject to claims and suits arising
in the ordinary course of business. The Company is not currently a party to any
proceeding which, in management's opinion, is likely to have a material adverse
effect on the Company's business.

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          None.


                                       18
<PAGE>

                                     PART II

Item 5.   MARKET FOR THE COMPANY'S COMMON EQUITY
          AND RELATED SECURITY HOLDER MATTERS

          There is no established trading market for the Company's Common Stock.

          The Company has not paid any cash dividends to the holders of its
equity securities. The ability of the Company to pay dividends is restricted by
the Indenture dated September 29, 1999 between the Company and HSBC Bank USA, as
Trustee, which governs the 9% Senior Notes due September 30, 2004.

Item 6.   SELECTED FINANCIAL DATA

          Set forth below are selected historical financial data of the Company
and its predecessors. Certain of such historical financial and operating data
have been derived from the audited consolidated financial statements of the
Company and its predecessors as of and for the periods noted. The data contained
in the following table should be read in conjunction with "Management's
Discussion and Analysis of Results of Operations and Financial Condition" and
the Company's and its predecessors' audited consolidated financial statements
and the notes thereto included elsewhere in this Annual Report.

          On September 29, 1999, the Company's Plan of Reorganization was
declared effective (the "Reorganization"). For the three months ended December
31, 1999, the Company has adopted Fresh Start Accounting in accordance with the
AICPA's Statement of Position No. 90-7 ("SOP 90-7"). As a result all financial
statements presented for periods prior to September 29, 1999 are reflected as
those of the predecesor company. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition" and "Consolidated Financial
Statements".



                                       19
<PAGE>
<TABLE>
<CAPTION>
                                                             Predecessor                              The Company
                                     -----------------------------------------------------------      -----------
                                                                                       Nine              Three
                                                                                       Months            Months
                                                   Twelve Months Ended                 Ended             Ended
                                     -----------------------------------------------------------      -----------
                                     12/31/95(1) 12/31/96(2)  12/31/97    12/31/98     9/30/99          12/31/99
                                                       (In thousands)                                (In thousands)
<S>                                    <C>         <C>         <C>         <C>           <C>               <C>
Statement of Operations Data:
Revenues ......................      $ 13,244    $ 15,957    $ 24,821    $ 28,615    $  25,337         $  7,570
Operating Expenses:
  Cost of revenues ............         4,323       7,031      11,660      13,469        7,186            2,162
  Selling, general and
  administrative ..............        23,674      20,186      35,373      40,842       21,690            5,813
  Refrequencing costs(3) ......         5,936       1,340       1,110         390           --               --
  Restructuring charge ........            --          --          --      19,668           --               --
  Depreciation and amortization         4,458       1,254       2,679       5,781        4,341              328
Asset impairment(4) .........          10,967          --          --          --           --               --
                                     --------    --------    --------     -------     --------         --------

Total operating expenses ......        49,358      29,811      50,822      80,150       33,217            8,303
                                     --------    --------    --------    --------     --------         --------

Operating Loss ................       (36,114)    (13,854)    (26,001)    (51,535)      (7,880)            (733)

  Interest Expense ............       (21,239)       (109)     (6,374)    (14,501)      (7,735)            (900)
  Other .......................           (27)        171       2,620       2,616          913               27
  Reorganization Costs(5)                  --          --          --          --       (1,322)              --
  Gain on Debt Discharge/Reorg.(5)         --          --          --          --      123,775               --
                                     --------    --------    --------     -------     --------         --------

Net Income (Loss)..............      $(57,380)   $(13,792)   $(29,755)   $(63,420)   $ 107,751         $ (1,606)
                                     ========    ========    ========    ========     ========         ========


                                                         Predecessor                                   The Company
                            ---------------------------------------------------------------------      ------------
                            December 31,  December 31,  December 31,  December 31,  September 30,      December 31,
                                1995          1996          1997          1998           1999              1999
                                                       (In thousands)                                 (In thousands)
<S>                              <C>           <C>           <C>           <C>            <C>               <C>
Balance Sheet Data:

Cash and cash equiva-
lents .............         $      --     $  27,639     $   41,481    $   5,954      $   3,119           $  1,270
Restricted cash and
investments ........               --         1,256         36,692       22,023             --                 --
Total assets .......           11,137        53,713        132,362       77,397         24,899             22,873
Long-term debt .....          226,101         1,615        100,326      101,215         15,426             15,426
Preferred
stock ..............               --        33,340         38,920       54,068             --                 --
Stockholders'
equity (deficit) ...        $(241,418)    $   7,111     $  (20,556)   $ (89,932)     $   2,363           $    757
</TABLE>

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

(1)  Represents financial and operating data of AirTouch Teletrac for the period
     January 1, 1995 through December 28, 1995, the date on which AirTouch
     Teletrac was dissolved.

(2)  The Company acquired the assets of AirTouch Teletrac on January 17, 1996,
     the effective date of the Acquisition. From December 29, 1995 to January
     16, 1996, the business was operated by AirTouch Services, successor to
     AirTouch Teletrac. The results of operations of AirTouch Services for such
     period were not material and are not included herein.



                                       20
<PAGE>

(3)  Refrequencing costs are certain costs accrued in connection with the
     conversion of vehicle location units to a new frequency band plan mandated
     by the FCC. See "Management's Discussion and Analysis of Results of
     Operations and Financial Condition" and "Business-Regulation-Frequency
     Conversion."

(4)  Asset impairment for 1995 resulted from the Acquisition, in which the
     assets of AirTouch Teletrac were sold for approximately $11.0 million less
     than the historical book value of such assets recorded by AirTouch
     Teletrac. See "Management's Discussion and Analysis of Results of
     Operations and Financial Condition."

(5)  Pursuant to the Reorganization, certain indebtedness of the Company was
     discharged in exchange for cash, and/or new indebtedness, and/or new equity
     interests and certain indebtedness was reinstated. See Note 3 to the
     Consolidated Financial Statements for further discussion of the
     Reorganization.


Item 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
          FINANCIAL CONDITION

OVERVIEW

          The Company is a leading national provider of vehicle location and
fleet management services in metropolitan areas. The Company currently groups
its operations primarily into two divisions: commercial fleet management and
consumer vehicle services. The commercial fleet management division provides
products and services that allow fleet operators to increase driver
productivity, improve customer service, limit unauthorized vehicle use, and
reduce driver overtime. The consumer vehicle services division provides
real-time stolen vehicle recovery, vehicle location, and roadside assistance.
Management's Discussion and Analysis of Financial Condition and Results of
Operations contain statements regarding matters that are not historical facts,
but rather are forward-looking statements. These statements are based on current
financial and economic conditions and current expectations and involve risk and
uncertainties. The Company's actual results may differ materially from the
results discussed in forward-looking statements. There can be no assurance that
the Company's future operations will generate operating or net income. Factors
that might cause such a difference include, but are not limited to, the "Risk
Factors" set forth in the Company's Registration Statement on Form S-1.

          On September 15, 1999, the Company's Plan of Reorganization was
confirmed by the United States Bankruptcy Court and it was effective on
September 29, 1999 (the "Reorganization"). As a result of the Reorganization,
the recording of the restructuring transaction and the implementation of Fresh
Start Accounting, the Company's results of operations after September 30, 1999
(the cutoff date used for financial reporting purposes) are not comparable to
results reported in prior periods.

          The twelve-month information provided below for the year 1999 does not
comply with SOP 90-7 requirements for companies upon emergence from bankruptcy,
which requirements call for separate reporting for the newly reorganized company
and the predecessor company. To facilitate a meaningful comparison of the
Company's year-to-date operating performance in fiscal years 1999 and 1998, the
following discussion of results of operations on a consolidated basis is
presented on a traditional comparative basis for all periods.




                                       21
<PAGE>

                                                  TWELVE MONTHS ENDED
                                       12/31/99       12/31/98      12/31/97
                                       Proforma

OPERATING REVENUES:
Service revenue                        $21,296,671   $ 18,028,832   $12,924,261
Equipment revenue                        8,531,404     10,585,835    11,896,861
Other revenue                            3,078,667              -             -
                                        ----------   ------------   -----------
     Total operating revenues           32,906,742     28,614,667    24,821,122

OPERATING EXPENSES:
  Cost of service revenue                3,208,951      4,206,939     2,839,292
  Cost of equipment revenue              6,138,824      9,261,564     8,820,791
  Selling, general and
   administrative                       21,480,659     30,217,327    24,630,448
  Engineering                            6,013,065      9,105,332     7,367,702
  Research & development costs               9,574      1,519,613     3,374,247
  Refrequency costs                              -        390,000     1,110,166
  Restructuring charge & other                   -     19,667,557             -
  Depreciation and amortization          4,668,644      5,781,103     2,679,243
                                       -----------   ------------  ------------

LOSS FROM OPERATIONS                    (8,612,975)   (51,534,768)  (26,000,767)

OTHER EXPENSE (INCOME):
Interest expense                         8,635,018     14,501,454     6,373,706
Interest and other income                 (939,838)    (2,616,394)   (2,619,409)
                                       -----------   ------------   ------------

LOSS BEFORE REORGANIZATION             (16,308,155)   (63,419,828)  (29,755,064)
REORGANIZATION COSTS                     1,321,746              -             -

GAIN ON DEBT
DISCHARGE/REORGANIZATION               123,774,589              -             -
                                       -----------   ------------  ------------

NET INCOME (LOSS) BEFORE
INCOME TAXES                           106,144,688    (63,419,828)  (29,755,064)

PROVISION FOR INCOME TAXES                      -        -              -
                                       -----------   ------------  ------------


NET INCOME (LOSS)                     $106,144,688   $(63,419,828) $(29,755,064)
                                       ===========   ============   ===========

PREFERRED DIVIDENDS                   $  4,145,596   $  5,839,674  $  4,950,000
                                       -----------   ------------   ------------

NET INCOME (LOSS) APPLICABLE TO
     COMMON STOCK                     $101,999,092   $(69,259,502) $(34,705,064)
                                      ============  =============  ============




                                       22
<PAGE>

RESULTS OF OPERATIONS

          In 1999, the Company elected to change the recording of "units" which
represented a separate count for a VLU and a messaging unit to "vehicle
applications" which combines any messaging units and the VLU. As such,
comparisons to 1999 are reflected using vehicle applications. This change did
not impact the Company's financial accounting.


Year Ended December 31, 1999 Compared to Year Ended December 31, 1998.

          OPERATING REVENUES. Total operating revenues for 1999 were $32.9
million, compared to $28.6 million in 1998, an increase of 15%.

          Service revenues, which include revenues from both sold units and
rental units, increased to $21.3 million in 1999 from $18.0 million in 1998, an
increase of 18%. The average commercial service revenue per vehicle application
increased to $30.95 in December 1999 from $24.99 in December 1998 as a result of
an increase in both ancillary services and monthly airtime rates.

          Equipment revenues decreased to $8.5 million for the year ended
December 31, 1999 from $10.6 million for the year ended December 31, 1998,
principally due to lower gross sales over the period. Gross commercial sales
(installations) decreased to 13,561 vehicle applications for the year ended
December 31, 1999 from 20,600 vehicle applications for year ended December 31,
1998 due to fewer sales personnel. Average equipment revenue per vehicle
application increased to $629.11 for 1999 from $513.88 for 1998 mostly due to a
reduction in discounting.

          Equipment rental revenues, which are included in total equipment
revenues, increased to approximately $826,000 for the twelve months ended
December 31, 1999 from $573,000 for the twelve months ended December 31, 1998.

          COST OF SERVICE REVENUES. Cost of service revenues includes the direct
cost of providing service (network telephone, billing, roadside assistance and
bad debt expense). Cost of service revenues decreased to $3.2 million for the
twelve months ended December 31, 1999 from $4.2 million for the twelve months
ended December 31, 1998. The reduction is a reflection of the sale of the New
York and Washington D.C./Baltimore networks to Ituran USA and the shutting down
of the San Francisco/Sacramento network.

          COST OF EQUIPMENT REVENUES. Cost of equipment revenues includes the
direct cost of equipment provided to customers, installation and other direct
ancillary equipment. Cost of equipment revenues decreased to $6.1 million for
the twelve months ended December 31, 1999 from $9.3 million for the twelve
months ended December 31, 1998. Cost of equipment revenues includes a one-time
charge to write down inventory by approximately $1.1 million at the end of 1998.

          SELLING, GENERAL AND ADMINISTRATIVE, ENGINEERING, AND RESEARCH AND
DEVELOPMENT EXPENSES. Selling, general and administrative, engineering, and
research and development expenses decreased by $13.3 million, from $40.8 million
for the twelve months ended December 31, 1998 to $27.5 million for the twelve
months ended December 31, 1999. The Company reduced expenses through significant
reductions in personnel along with the shutting down of the San
Francisco/Sacramento network and sale of the New York and Washington
D.C./Baltimore networks. The Company had virtually no research and development
expense in 1999, compared with $1.5 million in 1998.



                                       23
<PAGE>

          REFREQUENCY COSTS. Refrequency costs accrued for the twelve months
ended December 31, 1998 was $0.4 million. The accrual reflects a change in
estimate for the total refrequency liability.

          RESTRUCTURING CHARGE AND OTHER. The Company charged $19.7 million for
the twelve months ended December 31, 1998. The charge was the result of
management and organizational changes designed to improve profitability,
increase customer focus, and decrease customer cancellations by becoming
technologically neutral. The Company no longer plans to open new markets using
its proprietary RF networks and has written-down assets and the costs of
deinstalling those assets amounting to $17.3 million. The Company has terminated
its agreement with its VLU supplier and was subject to a penalty and write-off
totaling $1.4 million of VLU's that are not on the correct frequency. The
Company cancelled its revolving credit agreement and expensed the deferred costs
of $0.8 million. The Company also expensed deferred costs of $0.2 million for
certain RF related projects.

          DEPRECIATION AND AMORTIZATION. Depreciation and amortization decreased
for the twelve months ended December 31, 1999 to $4.7 million from $5.8 million
for the twelve months ended December 31, 1998, primarily due to depreciation on
fewer assets due to the sale of the New York and Washington D.C. networks to
Ituran USA and the shutting down of the San Francisco/Sacramento network as well
as lower costs bases resulting from Fresh Start Accounting beginning on October
1, 1999.

          OPERATING LOSSES. Operating losses incurred by the Company were $8.6
million for the twelve months ended December 31, 1999, as compared to $51.5
million for the twelve months ended December 31, 1998, for the reasons discussed
above.

          INTEREST EXPENSE. Interest expense was $8.6 million for the twelve
months ended December 31, 1999, compared to $14.5 million for the twelve months
ended December 31, 1998. The decrease relates to the cancellation of the
Predecessor Company's old senior note as part of the Reorganization as well as
reduced interest expense on the new debt instruments.

          REORGANIZATION COSTS. Reorganization costs were $1.3 million for the
twelve months ended December 31, 1999. These costs are mainly professional fees
paid to effect the Reorganization.

          GAIN ON DEBT DISCHARGE/REORGANIZATION. The gain on debt discharge and
reorganization was $123.8 million for the twelve months ended December 31, 1999.
See Note 3 to the Consolidated Financial Statements for a description of the
gain.

          NET INCOME (LOSS). For the reasons discussed above there was net
income of $105.6 million for the twelve months ended December 31, 1999,
compared to a net loss of $63.4 million for twelve months ended December 31,
1998.

          TAX BENEFIT. No tax benefit has been recognized for any period due to
the uncertainty of net operating loss carry-forward utilization.




                                       24
<PAGE>

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997.

          OPERATING REVENUES. Total operating revenues for 1998 were $28.6
million, compared to $24.8 million in 1997, an increase of 15%.

          Service revenues, which include revenues from both sold units and
rental units, increased to $18.0 million in 1998 from $12.9 million in 1997, an
increase of 40%, primarily due to an increase in the number of commercial units
in service, to 88,652 at December 31, 1998 from 65,930 at December 31, 1997.
Also, the average commercial service revenue per unit increased to $17.56 in
December 1998 from $17.26 in December 1997 as a result of an increase in both
ancillary services and monthly airtime rates.

          Equipment revenues decreased to $10.6 million for the year ended
December 31, 1998 from $11.9 million for the year ended December 31, 1997,
principally due to the introduction of the Company's rental program in the first
quarter of 1998. Gross commercial sales (installations) increased to 36,010
units for the year ended December 31, 1998 from 30,579 units for year ended
December 31, 1997.

          COST OF SERVICE REVENUES. Cost of service revenues includes the direct
cost of providing service (network telephone, billing, roadside assistance and
bad debt expense). Cost of service revenues increased to $4.2 million for the
twelve months ended December 31, 1998 from $2.8 million for the twelve months
ended December 31, 1997. Cost of service revenues increased primarily in network
telephone costs from new market build-out.

          COST OF EQUIPMENT REVENUES. Cost of equipment revenues includes the
direct cost of equipment provided to customers, installation and other direct
ancillary equipment. Cost of equipment revenues increased to $9.3 million for
the twelve months ended December 31, 1998 from $8.8 million for the twelve
months ended December 31, 1997. Cost of equipment revenues decreased primarily
as a result of the Company's rental program and a one-time charge to write down
inventory by approximately $1.1 million at the end of 1998.

          SELLING, GENERAL AND ADMINISTRATIVE, ENGINEERING, AND RESEARCH AND
DEVELOPMENT EXPENSES. Selling, general and administrative, engineering, and
research and development expenses increased by $5.4 million, to $40.8 million
for the twelve months ended December 31, 1998 from $35.4 million for the twelve
months ended December 31, 1997 related to the Company's expansion. The Company
expensed $1.5 million in the twelve months ended December 31, 1998 relating to
research and development, compared with $3.4 million in 1997.



                                       25
<PAGE>

          REFREQUENCY COSTS. Refrequency costs accrued for the twelve months
ended December 31, 1998 was $0.4 million, compared to $1.1 million in 1997. The
accrual, reflects a change in estimate for the total refrequency liability.

          RESTRUCTURING CHARGE AND OTHER. The Company charged $19.7 million for
the twelve months ended December 31, 1998. The charge was the result of
management and organizational changes designed to improve profitability,
increase customer focus, and decrease customer cancellations by becoming
technologically neutral. The Company no longer plans to open new markets using
its proprietary RF networks and has written-down assets and the costs of
deinstalling those assets amounting to $17.3 million. The Company has terminated
its agreement with its VLU supplier and was subject to a penalty and write-off
of VLU's that are not on the correct frequency totaling $1.4 million. The
Company cancelled its revolving credit agreement and expensed the deferred costs
of $0.8 million. The Company also expensed deferred costs of $0.2 million for
certain RF related projects.

          DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
for the twelve months ended December 31, 1998 to $5.8 million from $2.7 million
for the twelve months ended December 31, 1997, primarily due to depreciation on
additional assets related to the new market build-out and additional
infrastructure in existing markets.

          OPERATING LOSSES. Operating losses incurred by the Company were $51.5
million for the twelve months ended December 31, 1998, as compared to $26.0
million for the twelve months ended December 31, 1997, for the reasons discussed
above.

          INTEREST EXPENSE. Interest expense was $14.5 million for the twelve
months ended December 31, 1998 compared to $6.4 million for the twelve months
ended December 31, 1997, and primarily relates to the senior notes.

          NET LOSS. For the reasons discussed above net loss increased to $63.4
million for twelve months ended December 31, 1998 from $29.8 million for twelve
months ended December 31, 1997.

          TAX BENEFIT. No tax benefit has been recognized for any period due to
the uncertainty of net operating loss carry-forward utilization.


LIQUIDITY AND CAPITAL RESOURCES

          Capital expenditures were $2.2 million for the twelve months ended
December 31, 1999, primarily for the development of the Company's internal
software and database platforms. The Company currently expects that its
aggregate capital expenditures will be less than $2.0 million for 2000. These
capital expenditures will consist primarily of costs associated with internal
software development, the maintenance of existing markets, and other capital
improvements.

          The Company, as part of the Reorganization, granted an option to
Ituran USA to purchase the networks in Miami and Orlando. The option was
exercised by Ituran USA and that transaction is expected to close in April 2000.
The proceeds from the sale will be approximately $4.0 million.



                                       26
<PAGE>

          As a result of the Reorganization, the Company has outstanding an
aggregate of $15,000,000 Senior Notes with a 9% interest rate due September 30,
2004 (the "Senior Notes"). The Senior Notes have a deferred interest election
provision whereby the Company may elect to pay interest by the issuance of
Deferred Interest Notes with a 12% interest rate due September 30, 2004. The
Company has also issued an aggregate of $3,000,000 Senior Secured Notes with a
10% interest rate due September 30, 2000 (the "Senior Secured Notes"). The
Company plans to repay the Senior Secured Notes with the proceeds of the sale of
the Miami and Orlando networks to Ituran USA.

          The Company believes, based on its business plan, that it has
sufficient capital in both the short and long-term to meet its business
objectives, using both the available cash and the Company's positive working
capital position. However, there is no assurance that the Company will not need
additional capital in the future.


YEAR 2000 COMPLIANCE AND EXPENDITURES

          The Company's program to address the Year 2000 issue consisted of
assessing, testing and implementing any changes as necessary. The Company did
not suffer any system or Year 2000 problems, nor has the Company been affected
to date by any third party relationships. The Company did not incur any
significant changes to its results of operations from increased costs. The
Company was not effected by any significant changes in the Company's customers
buying patterns and has not seen an increase in returns in year 2000.

          We can provide no assurance that all supplier and customer Year 2000
compliance plans were successfully completed. We are not aware of any problems
with any of our suppliers, customers or third-party providers that would
negatively impact our operations or adversely affect our business.


INFLATION

          The Company believes that to date inflation has not had a material
effect on its results of operations. Although inflation may in the future effect
the cost of VLU and messaging units sold by the Company, the Company expects
that technology and engineering improvements are likely to offset any
foreseeable cost increases.



                                       27
<PAGE>

FASB PRONOUNCEMENTS

          See "Recent Accounting Pronouncements" in Note 2 to the Consolidated
Financial Statements.


Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

          The Company does not hold any market risk sensitive instruments for
trading or other purposes.

Item 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          See the Financial Statements listed in the accompanying Index to
Consolidated Financial Statements which appear elsewhere in this Annual Report.
Information required by the schedules called for under Regulation S-X is either
not applicable or is included in the consolidated financial statements or notes
thereto.

Item 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

            Not applicable.


                                       28
<PAGE>

                          TELETRAC, INC. AND SUBSIDIARY

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Report of Independent Public Accountants.....................................30
Consolidated Balance Sheets as of December 31, 1999
 and 1998....................................................................31
Consolidated Statements of Operations for the three months ended
  December 31, 1999, nine months ended September 30, 1999
  and the years ended December 31, 1998 and 1997.............................33
Consolidated Statements of Stockholders' Equity (Deficit) for the three
  months ended December 31, 1999, nine months ended September 30, 1999
  and the years ended December 31, 1998 and 1997.............................34
Consolidated Statements of Cash Flows for the three months ended
  December 31, 1999, nine months ended September 30, 1999
  and the years ended December 31, 1998 and 1997.............................35
Notes to Consolidated Financial Statements...................................36



                                       29
<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Teletrac, Inc.:


We have audited the accompanying consolidated balance sheets of Teletrac, Inc.
and Subsidiary as of December 31, 1999 and 1998, and the related consolidated
statements of operations, stockholders' equity (deficit) and cash flows for the
three months ended December 31, 1999, the nine months ended September 30, 1999,
and the years ended December 31, 1998 and 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

As more fully described in Note 3 to the consolidated financial statements,
effective September 29, 1999, the Company emerged from protection under Chapter
11 of the U.S. Bankruptcy Code pursuant to a Reorganization Plan which was
confirmed by the Bankruptcy Court on September 15, 1999. In accordance with
AICPA Statement of Position 90-7, the Company adopted Fresh Start Accounting
whereby its assets, liabilities and new capital structure were adjusted to
reflect estimated fair values as of September 30, 1999. As a result, the
consolidated financial statements for the periods subsequent to September 30,
1999 reflect the Successor Company's new basis of accounting and are not
comparable to the Predecessor Company's pre-reorganization consolidated
financial statements.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Teletrac, Inc. and Subsidiary
as of December 31, 1999 and 1998, and the results of their operations and their
cash flows for the three months ended December 31, 1999, the nine months ended
September 30, 1999, and the years ended December 31, 1998 and 1997, in
conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP
San Diego, California
March 20, 2000


                                       30
<PAGE>


                          TELETRAC, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                           NEW COMPANY          PREDECESSOR

                                                                           DECEMBER 31,         DECEMBER 31,
ASSETS                                                                        1999                 1998
                                                                          --------------      ---------------

<S>                                                                            <C>                  <C>
CURRENT ASSETS:
Cash and cash equivalents                                                  $  1,270,065         $  5,953,505
Accounts receivable, less allowances of $1,874,717 and $983,154               2,752,173            4,608,619
    at 1999 and 1998, respectively
Inventories                                                                   4,411,507            8,319,016
Prepaid expenses and other                                                      936,691            1,483,843
Short-term portion of restricted investments                                          -            6,125,000
                                                                          --------------      ---------------

       Total current assets                                                   9,370,436           26,489,983
                                                                          --------------      ---------------

RESTRICTED INVESTMENTS, HELD TO MATURITY                                              -           22,023,208
PROPERTY AND EQUIPMENT, net                                                   7,740,758           19,135,386
INVENTORIES, LONG-TERM                                                        2,977,650            3,435,700
LICENSES AND OTHER, net of accumulated amortization of
    $4,830 and $468,141 at 1999 and 1998, respectively                          380,190            6,312,294
ACCOUNTS RECEIVABLE-EQUIPMENT LEASING                                         2,404,249                    -
                                                                         --------------       ---------------

       Total assets                                                        $ 22,873,283         $ 77,396,571
                                                                         ==============       ===============


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
   Accounts payable - trade                                                  $1,009,529           $1,505,499
   Accrued expenses                                                           2,562,014            3,103,998
   Current portion of long-term obligations                                   3,118,733            1,246,999
   Accrued interest                                                                   -            6,125,000
   Refrequency liability                                                              -               64,469
                                                                          --------------      ----------------

       Total current liabilities                                            $ 6,690,276         $ 12,045,965

LONG-TERM OBLIGATIONS                                                        15,425,695          101,215,414
                                                                          --------------      ----------------

       Total liabilities                                                     22,115,971          113,261,379
                                                                          --------------      ----------------



                                       31
<PAGE>

REDEEMABLE PREFERRED STOCK:
Preferred Stock, Series A redeemable cumulative, 15% dividend, 190,477
  shares authorized and 190,476.19 shares issued and outstanding                      -           44,033,500
Preferred Stock, Series A-1 undesignated, 190,477 shares authorized, none
   issued or outstanding                                                              -                    -
Preferred Stock, Series B redeemable, 400,000 shares authorized and
   132,506 shares issued and outstanding                                              -           10,034,181
                                                                           --------------     ----------------

       Total redeemable preferred stock                                               -           54,067,681
                                                                           --------------     ----------------

STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, Class A, $.01 par value, 507,934 shares authorized and
   249,000 issued and outstanding                                                     -                2,490
Common stock, Class B, $.01 par value, 70,000 shares authorized and
   none issued or outstanding                                                         -                    -
Common stock, $.01 par value, 20,000,000 shares authorized
   and 10,000,000 shares issued and outstanding                                 100,000                    -
Warrants, 3,800,000 warrants to purchase 3,800,000 shares of common stock;      468,000            7,039,954
Additional paid-in capital                                                    1,795,512           10,775,955
Accumulated deficit (from 1999 for the Reorganized Company)                  (1,606,200)        (107,750,888)
                                                                           --------------     ----------------

       Total stockholders' equity (deficit)                                     757,312          (89,932,489)
                                                                           --------------     ----------------

       Total liabilities and stockholders' equity (deficit)                $ 22,873,283         $ 77,396,571
                                                                           ==============     ================



</TABLE>

       The accompanying notes are an integral part of these consolidated
                             financial statements.



                                       32
<PAGE>

                          TELETRAC, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  FOR THE THREE MONTHS ENDED DECEMBER 31, 1999,
                  NINE MONTHS ENDED SEPTEMBER 30, 1999 AND THE
                     YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>

                                                           NEW COMPANY                                PREDECESSOR
                                                         -----------------        -----------------  -------------  --------------
                                                             12/31/99                  9/30/99         12/31/98       12/31/97
                                                         -----------------        -----------------  -------------  --------------
<S>                                                           <C>                        <C>            <C>             <C>
OPERATING REVENUES:
Service revenue                                               $ 5,556,162             $ 15,740,509   $ 18,028,832    $12,924,261
Equipment revenue                                               1,713,900                6,817,504     10,585,835     11,896,861
Other revenue                                                     300,000                2,778,667              -              -
                                                         -----------------        ----------------  -------------  --------------

     Total operating revenues                                   7,570,062               25,336,680     28,614,667     24,821,122

OPERATING EXPENSES:
  Cost of service revenue                                         672,312                2,536,639      4,206,939      2,839,292
  Cost of equipment revenue                                     1,489,765                4,649,059      9,261,564      8,820,791
  Selling, general and administrative                           4,554,442               16,926,217     30,217,327     24,630,448
  Engineering                                                   1,251,785                4,761,280      9,105,332      7,367,702
  Research & development costs                                      7,233                    2,341      1,519,613      3,374,247
  Refrequency costs                                                     -                        -        390,000      1,110,166
  Restructuring charge & other                                          -                        -     19,667,557              -
  Depreciation and amortization                                   327,513                4,341,131      5,781,103      2,679,243
                                                         -----------------        ----------------  -------------  --------------


LOSS FROM OPERATIONS                                             (732,988)              (7,879,987)   (51,534,768)   (26,000,767)

OTHER EXPENSE (INCOME):
Interest expense                                                  900,141                7,734,877     14,501,454      6,373,706
Interest and other income                                         (26,929)                (912,909)    (2,616,394)    (2,619,409)
                                                         -----------------        ----------------  -------------  --------------

LOSS BEFORE REORGANIZATION                                     (1,606,200)             (14,701,955)   (63,419,828)   (29,755,064)

REORGANIZATION COSTS                                                    -                1,321,746              -              -
GAIN ON DEBT DISCHARGE/REORGANIZATION                                   -              123,774,589              -              -
                                                         -----------------        ----------------  -------------  --------------

NET INCOME (LOSS) BEFORE INCOME TAXES                          (1,606,200)             107,750,888    (63,419,828)   (29,755,064)

PROVISION FOR INCOME TAXES                                              -                        -              -              -
                                                         -----------------        ----------------  -------------  --------------

NET INCOME (LOSS)                                             $(1,606,200)            $107,750,888   $(63,419,828)  $(29,755,064)
                                                         =================        ================  =============  ==============

PREFERRED DIVIDENDS                                                     -                4,145,596      5,839,674      4,950,000
                                                         -----------------        ----------------  -------------  --------------

NET INCOME (LOSS) APPLICABLE TO
     COMMON STOCK                                             $(1,606,200)            $103,605,292   $(69,259,502)  $(34,705,064)
                                                         =================        ================  =============  ==============

</TABLE>

       The accompanying notes are an integral part of these consolidated
                             financial statements.



                                       33
<PAGE>



                          TELETRAC, INC. AND SUBSIDIARY
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                  FOR THE THREE MONTHS ENDED DECEMBER 31, 1999,
                  NINE MONTHS ENDED SEPTEMBER 30, 1999 AND THE
                     YEARS ENDED DECEMBER 31, 1998 AND 1997


<TABLE>
<CAPTION>
                                        Common Stock                                  Additional    Retained
                                    Class A      Class B    Par $.01   Warrants    Paid-In Capital  (Deficit)      Total
                                   --------      -------    --------  ---------    --------------- -----------   -----------

<S>                                <C>               <C>        <C>         <C>     <C>          <C>             <C>
BALANCE, December 31, 1996         $ 2,490          $ -         $ -         $-      $ 21,684,094 $ (14,575,996)  $ 7,110,588


Push down of warrant proceeds
related to senior debt                  -             -           -   7,039,954               -            -       7,039,954
Cost of issuance of preferred
stock, Series A                         -             -           -          -            (1,438)          -          (1,438)
Net loss                                -             -           -          -                     (29,755,064)  (29,755,064)
Preferred stock dividends               -             -           -          -        (4,950,000)          -      (4,950,000)
                                  --------      --------    --------  ---------     -------------  ------------   -----------

BALANCE, December 31, 1997           2,490            -           -   7,039,954       16,732,656   (44,331,060)  (20,555,960)

Cost of issuance of preferred
stock, Series B                         -             -           -          -          (117,027)          -        (117,027)
Net loss                                                                                           (63,419,828)  (63,419,828)
Preferred stock dividends               -             -           -          -        (5,839,674)          -      (5,839,674)
                                  --------      --------    --------  ---------     -------------  ------------   -----------

BALANCE, December 31, 1998           2,490            -           -   7,039,954       10,775,955  (107,750,888)  (89,932,489)

Net income                              -             -           -          -                -    107,750,888   107,750,888
Preferred stock dividends                                                             (4,145,596)          -      (4,145,596)
Gain on debt discharge              (2,490)           -           -  (7,039,954)      (6,630,359)          -     (13,672,803)
Issuance of common
     stock $.01 par                     -             -     100,000          -         1,795,512           -       1,895,512
Issuance of warrants                    -             -           -    468,000                -            -         468,000
                                  --------      --------    --------  ---------     -------------  ------------   -----------

BALANCE, September 30, 1999             -             -     100,000    468,000         1,795,512           -       2,363,512

Net loss                                -             -           -          -                -     (1,606,200)   (1,606,200)
                                  --------      --------    --------  ---------     -------------  ------------   -----------

BALANCE, December 31, 1999            $ -           $ -   $ 100,000   $ 468,000      $ 1,795,512  $ (1,606,200)    $ 757,312
                                  ========      ========    ========  =========     =============  ============   ===========

</TABLE>

       The accompanying notes are an integral part of these consolidated
                             financial statements.


                                       34
<PAGE>

                          TELETRAC, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  FOR THE THREE MONTHS ENDED DECEMBER 31, 1999,
              NINE MONTHS ENDED SEPTEMBER 30, 1999 AND THE YEARS ENDED
                           DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
                                                            NEW COMPANY                               PREDECESSOR
                                                        --------------------      -----------------------------------------------
                                                         DECEMBER 31, 1999            9/30/99        12/31/98        12/31/97
                                                        --------------------      -----------------------------------------------
<S>                                                              <C>                     <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Income (Loss)                                            $(1,606,200)         $107,750,888    $(63,419,828)   $(29,755,064)
   Adjustments to reconcile net loss to net cash used in
      operating activities -
     Depreciation and amortization                                  327,513             4,341,131       5,781,103       2,679,243
     Accretion of discount on senior notes                                -               196,853         192,399         293,331
     (Gain)/Loss on assets disposed/sold                                  -                     0         128,699               -
     Accrued interest on warrants                                   468,000                     -               -               -
     Loss on assets from restructuring                                    -                     0      19,667,557               -
     Gain on debt discharge                                               -          (123,774,589)              -               -
     Changes in assets and liabilities                           (1,069,499)            1,580,763      (3,499,728)     (6,525,674)
     Refrequency liability                                                -               (58,184)     (3,012,402)     (4,157,287)
     Accrued interest on senior secured notes                       337,500                     -         204,167       5,920,833
                                                        --------------------      ----------------  --------------  --------------
        Total adjustments                                            63,514         (117,714,026)     19,461,795      (1,789,554)
                                                        --------------------      ----------------  --------------  --------------
        Net cash used in operating activities                    (1,542,686)           (9,963,138)    (43,958,033)    (31,544,618)
                                                        --------------------      ----------------  --------------  --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Proceeds from sale of assets                                     5,254               10,500               -               -
     Acquisition of property and  equipment                        (247,260)           (1,189,983)    (12,013,902)    (11,059,260)
     Acquisition of other intangible assets                               -              (705,596)     (1,095,690)       (175,375)
     Acquisition of Airtouch Teletrac                                     -                     -               -      (1,000,000)
                                                        --------------------      ----------------  --------------  --------------
        Net cash used in investing activities                      (242,006)           (1,885,079)    (13,109,592)    (12,234,635)
                                                        --------------------      ----------------  --------------  --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Issuance of preferred stock, Series B, net                           -                     -       9,820,980               -
     Proceeds from issuance of senior notes                               -             3,000,000               -     100,090,976
     Restricted investments                                               -             6,503,863      12,715,006     (40,856,887)
     Credit facility                                                      -                     -          (2,254)       (962,268)
     Capital lease payments                                         (63,887)             (490,507)       (993,339)       (650,999)
                                                        --------------------      ----------------  --------------  --------------
        Net cash provided by (used in)
          financing activities                                      (63,887)            9,013,356      21,540,393      57,620,822
                                                        --------------------      ----------------  --------------  --------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS             (1,848,579)           (2,834,861)    (35,527,232)     13,841,569

CASH AND CASH EQUIVALENTS, beginning of period                    3,118,644             5,953,505      41,480,737      27,639,168
                                                        --------------------      ----------------  --------------  --------------
CASH AND CASH EQUIVALENTS, end of period                        $ 1,270,065           $ 3,118,644     $ 5,953,505    $ 41,480,737
                                                        ====================      ================  ==============  ==============
SUPPLEMENTAL DISCLOSURE:

     Interest paid                                              $   432,141           $ 6,509,877     $15,070,874    $    229,650
     Capital lease obligations entered into
       for equipment                                            $    74,755           $    21,516     $ 2,210,210    $  1,436,264
</TABLE>
       The accompanying notes are an integral part of these consolidated
                             financial statements.

                                     35
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.  DESCRIPTION OF BUSINESS:

Teletrac, Inc., a Delaware corporation, through its wholly-owned subsidiary,
Teletrac License, Inc. (collectively, the "Company"), controls licenses issued
by the Federal Communications Commission (FCC) to construct and operate radio
location networks for the purpose of locating, tracking and communicating with
commercial fleet and consumer vehicles as a result of its acquisition of
AirTouch Teletrac. As of December 31, 1999, the Company operated in twelve
metropolitan markets: Los Angeles, Chicago, Detroit, Dallas, Miami, Houston,
Orlando, San Francisco, San Diego, Sacramento, Washington D.C./Baltimore and New
York. The Company also uses its proprietary location systems to provide vehicle
location and stolen vehicle recovery services to consumers in its Los Angeles
and Miami markets. The networks consist primarily of antennas, transmission and
receiving equipment, customer-owned vehicle locating units (VLUs) that receive
and transmit signals, and operating centers that interpret and relay the
transmissions.

2.  ACCOUNTING POLICIES:

Principles of Consolidation

The consolidated financial statements include the accounts of the Company. All
significant intercompany accounts and transactions have been eliminated in
consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Revenue Recognition

The Company services the commercial market for use in fleet management and the
consumer market for individual vehicle tracking. The commercial systems include
VLUs, computer hardware, and vehicle tracking software. On January 1, 1997, the
Company changed revenue recognition on sales of commercial systems from
recognition upon shipment of the system to recognition of revenue upon
installation of the system, which more appropriately matches customer acceptance
and payment. The commercial service fee revenues are recognized monthly as the
services are provided. The VLUs for the consumer market are sold along with
monthly service contracts. Service revenues for the consumer market may be paid
in advance and are recognized monthly as earned.

Unearned service fees of approximately $87,000 and $93,000 in 1999 and 1998,
respectively, are recorded as deferred revenue and are included in accrued
expenses in the accompanying consolidated balance sheets.



                                       36
<PAGE>

Cash and Cash Equivalents

The Company considers cash investments, which consist primarily of investments
in commercial paper purchased with a maturity of three months or less to be cash
and cash equivalents.  The carrying amounts approximate fair value due to the
short maturities of these instruments.

Inventories

Inventories consist of VLUs, computer systems and other receiving and
transmitting equipment held for sale. Inventories are stated at the lower of
cost or market using the first-in, first-out method of valuation.

Inventories  consist  of the  following  at  December  31,  1999  and 1998 (in
thousands):

                                                   1999                 1998
                                               New Company          Predecessor
                                               -----------          -----------
   Vehicle location units                         $  5,538             $  8,178
   Messaging units                                     945                1,921
   Computers and software                              328                  208
   Other inventory (net of reserve)                    578                1,448
                                              ------------          -----------
      Total inventory                                7,389               11,755
                                              ------------          -----------
      Less:  long-term inventory                     2,978                3,436
                                              ------------          -----------
      Current Portion                            $   4,411             $  8,319
                                              ============          ===========

In connection with a supply agreement with a vendor, the Company was required to
purchase minimum quantities of VLU's. These purchase requirements resulted in
inventory quantities which exceed the next year's anticipated demand. The
Company does not have plans to alter its technology in its existing markets.
Accordingly, quantities in excess of one year's anticipated demand have been
classified as long-term inventory in the accompanying consolidated balance
sheet.

Property and Equipment

The Company provides for depreciation expense using the straight-line method
over five to seven years for all categories other than leasehold improvements,
which are depreciated over 39 years. Property and equipment are recorded at
cost. In accordance with Fresh Start Accounting, property and equipment were
reflected at fair market values based on the equity valuation of the Company as
of September 30, 1999.

                                                   December 31
                                                  (In thousands)
                                       -----------------------------------
                                          1999                    1998
                                       New Company             Predecessor
                                       -----------             -----------
   System Equipment                     $5,803                   $16,868
   Automobiles                             118                       529
   Furniture & Fixtures                    667                     2,439
   Computer Equipment and Software       1,372                     5,343
   Leasehold Improvements                  101                       244
   Construction in Progress                  3                       839
                                       -----------             -----------
     Total Property & Equipment          8,064                    26,262
       Accumulated Depreciation           (323)                   (7,126)
                                       -----------             -----------
          Net Property & Equipment      $7,741                   $19,136
                                       ===========             ===========

                                       37
<PAGE>

Maintenance and repair expenses are charged to operations as incurred. When
assets are sold or otherwise disposed of, the cost and accumulated depreciation
are removed from the accounts and any resulting gain or loss is included in
operations.

Other Assets

Licenses represent a long-term intangible asset that allows FCC authorization to
broadcast at designated frequencies. They are amortized using the straight-line
method over 15 years. FCC license terms are for 5-year periods with unlimited
options to renew for subsequent 5-year periods. These licences were revalued as
part of Fresh Start Accounting.

Long-Lived Assets

The Company periodically evaluates the recoverability of its long-lived assets
based on expected undiscounted cash flows and recognizes impairments, if any.

Stock-Based Compensation

The Company measures compensation expense for its stock-based employee and
non-employee directors compensation plan using the intrinsic value method and
provides pro forma disclosures of net loss as if the fair value method had been
applied in measuring compensation expense.

Income Taxes

Deferred tax assets or liabilities are computed based on the difference between
the financial statement and income tax basis of assets and liabilities applying
tax regulations existing at the end of the reporting period. The Company has
fully reserved its deferred tax asset, principally the net operating loss
carry-forward generated as of December 31, 1999 and 1998.

Recent Accounting Pronouncements

In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137 ("SFAS No. 137"), an amendment of SFAS
No. 133 "Accounting for Derivative Instruments and Hedging Activities". SFAS No.
133 establishes accounting and reporting standards for derivative instruments
and for hedging activities. SFAS No. 137 is effective for fiscal years beginning
after June 15, 2000. The Company does not believe the adoption of SFAS No. 137
will have a material effect on the Company's consolidated results of operations
or financial condition.

In December 1999, the Securities and Exchange Commission (the "SEC") issued
Staff Accounting Bulletin No. 101, "Revenue Recognition" ("SAB 101"), which
provides guidance on the recognition, presentation and disclosure of revenue in
financial statements. SAB 101 outlines the basic criteria that must be met to
recognize revenue and provides guidance for disclosures related to revenue
recognition policies. Management believes that their revenue recognition
policies comply with the applicable provisions of SAB 101.



                                       38
<PAGE>

Fair Value of Financial Instruments

Statement of Financial Accounting Standards No.107 ("SFAS No. 107"),
"Disclosures about Fair Value of Financial Instruments" requires disclosures of
fair value information about financial instruments, whether or not recognized in
the balance sheet, for which it is practicable to estimate the value. In cases
where quoted market prices are not available, fair values are based on estimates
using present value or other valuation techniques. These techniques are
significantly affected by the assumptions used, including discount rate and
estimates of future cash flows. In that regard, the derived fair value estimates
cannot be substantiated by comparison to independent markets and, in many cases,
could not be realized in immediate settlement of the instrument. SFAS 107
excludes certain financial instruments and all non-financial instruments from
its disclosure requirements. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.

The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments: the carrying amount reported
on the balance sheet approximates the fair value for cash, short-term borrowings
and current maturities of long-term obligations; and the fair value for the
Company's fixed rate long-term obligations is estimated based on the current
rates offered to the Company for obligations of the same remaining maturities.
Based on the above, the amount reported on the balance sheet approximates the
fair value.

Reclassification

Certain amounts previously reported in the 1998 financial statements have been
reclassified to conform with the 1999 presentation.

3.  FINANCIAL REORGANIZATION:

On June 9, 1999 the Company filed for voluntary protection under Chapter 11 of
the U.S. Bankruptcy Code. On September 15, 1999, the Company's Plan of
Reorganization was confirmed by the United States Bankruptcy Court and it was
effective on September 29, 1999 (the "Reorganization"). Pursuant to the
Reorganization, certain indebtedness of the Company was discharged in exchange
for cash, and/or new indebtedness, and/or new equity interests, certain
indebtedness was reinstated, certain claims were settled, executory contracts
and unexpired leases were assumed or rejected, certain prepetition claims were
discharged, and the new members of the new Board of Directors of the Company
were designated. The Company distributed to creditors approximately $21.6
million in restricted cash, $0.2 million in unrestricted cash, $15.0 million
principal amount of its 9% Senior Notes due September 30, 2004 (the "Senior
Notes"), equity securities consisting of 10 million shares of new common stock
and 800,000 warrants, each of which is convertible into one share of new common
stock at an exercise price of $7.40 per share.

In order to fund operations of the Company post Reorganization, the Company
issued an aggregate of $3.0 million principal amount of 10% Senior Secured Notes
due September 30, 2000 (the "Senior Secured Notes"). The Senior Secured Notes
have quarterly interest payments and also have 3,000,000 detachable warrants,
each of which is convertible into one share of new common stock at an exercise
price of $0.05 per share. These warrants have been valued at $468,000 and have
been amortized to interest expense in the accompanying statement of operations.



                                       39
<PAGE>

The Company had completed network construction and expanded coverage from 7 to
12 metropolitan markets and has grown its customer base and the number of units
in service from 54,430 to over 97,000. However, because of a lack of capital,
the Company was unable to fund all of its continuing obligations.

During the course of 1998 the Company's liquidity became increasingly tight. In
October of 1998, some of the Company's existing investors invested an additional
$10.0 million of capital in a second round of preferred equity. The $10.0
million was anticipated to be the first traunche of what was anticipated to be
$20.0 million total financing. This brought the combined total of equity
financing raised by the Company to approximately $68.0 million. The Company
continued to attempt to raise the incremental $20.0 million and retained the
services of Donaldson, Lufkin, Jenrette ("DLJ") to assist in the process. DLJ
and the Company contacted a number of potential new investors including equity
investors, senior debt investors, and potential merger and/or strategic partner
candidates to determine interest in a possible transaction with the Company. DLJ
and the Company were unsuccessful in this process. Consequently, in February of
1999, DLJ and the Company opened discussions with the holders of its $105.0
million in 14% Senior Secured Notes. The Company updated the Senior Note holders
on the progress to date on the financing and solicited dialogue on options
available to the Company and the willingness of the Senior Note holders to
support the Company in those efforts.

The bankruptcy process began June 9, 1999, when the Company filed a
Prenegotiated Plan of Reorganization with the U.S. Bankruptcy Court in Delaware
under Chapter 11 of the U.S. Bankruptcy Code. The Senior Note holders, equity
holders, and Company management participated in drafting the Prenegotiated Plan
of Reorganization. Upon emerging from bankruptcy, the Company's 14% Senior
Secured Notes were cancelled. In addition, the Company's preferred stock, common
stock, warrants, and stock options were cancelled. In connection therewith, the
Company issued new debt and equity securities as mentioned above.

The Company, as part of the Reorganization, granted an option to Ituran USA to
purchase the networks in Miami and Orlando. The option was exercised by Ituran
USA and that transaction is expected to close in April 2000. The proceeds from
the sale will be approximately $4.0 million.

4.  FRESH START ACCOUNTING:

As of September 30, 1999, the Company adopted Fresh Start Accounting in
accordance with AICPA Statement of Position 90-7 ("SOP 90-7"), "Financial
Reporting by Entities in Reorganization under the Bankruptcy Code." Fresh Start
Accounting resulted in material changes to the consolidated balance sheet,
including valuation of assets, intangible assets, and liabilities at fair market
value and valuation of equity based upon the appraised reorganization value of
the ongoing business.

The Company's reorganization equity value of $2.3 million was based on an equity
valuation performed by an independent firm in accordance with standards
established by the American Society of Appraisers and submitted to the court as
part of the Plan of Reorganization. The equity valuation resulted in a lower
value than the historical carrying value of the net assets. As such, the
difference was applied as a reduction to the carrying values of long-term
assets.



                                       40
<PAGE>

The following sets forth the results of Fresh Start Accounting:

<TABLE>
<CAPTION>

                                   Predecessor              Reorganization and Fresh Start            Reorganized
                                     Company                          Adjustments                       Company
                                                            ------------------------------
                                September 30, 1999          Debit                 Credit           September 30, 1999
                                ------------------          -----                 ------           ------------------
ASSETS
<S>                                   <C>                                          <C>                     <C>
Total current assets                 $34,675,005            $      -           $22,344,345  (a)       $12,330,660

Property and equipment (net)          17,510,571                   -             9,598,966  (b)         7,911,605

Long-term receivables                    853,499                   -                     -                853,499

Other assets                           3,965,779                   -               162,129  (c)         3,803,650
                                     -----------         -----------           -----------            -----------
                                     $57,004,854            $      -           $32,105,440            $24,899,414
                                     ===========         ===========           ===========            ===========




LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
     Current portion of
     long-term debt                     $707,862            $600,000  (d)      $         -               $107,862

     Accounts payable & other
     accrued liabilities               6,373,676                   -               628,669  (e)         7,002,345
                                    ------------         -----------           -----------            -----------

Total current liabilities              7,081,538             600,000               628,669              7,110,207

Total noncurrent liabilities         109,484,499         109,058,804  (f)       15,000,000  (g)        15,425,695

Stockholders' equity
(deficit):
     Preferred stock                  58,213,276          58,213,276  (h)                -                      -
     Common stock                          2,490               2,490  (i)          100,000  (j)           100,000
     Warrants                          7,039,954           7,039,954  (i)          468,000  (k)           468,000
     Additional paid-in
     capital                           6,630,360           6,630,360  (l)        1,795,512  (j)         1,795,512
     Retained earnings (deficit)    (131,447,263)         10,382,952  (m)      141,830,215  (n)                 -
                                   -------------        ------------           -----------            -----------

                                     $57,004,854        $191,927,836          $159,822,396            $24,899,414
                                   =============        ============          ============            ===========
</TABLE>


                                       41
<PAGE>


Explanations of the above adjustments are as follows:

a) To remove the restricted cash of $21,644,345 that was paid to the 14% Senior
Secured Note holders and an adjustment of $700,000 to accounts receivable for
realizability due to the Reorganization.

b) To adjust the property and equipment to estimated current fair value and to
decrease the identifiable assets by the reorganization value less the
identifiable assets.

c) To decrease the intangible assets by the amount in excess of the
reorganization value.

d) To reflect the cancellation of debtor-in-possession financing and issuance of
new current obligations.

e) To adjust current liabilities to fair market value.

f) Remove old Senior Note, remove accrued interest on 14% Senior Secured Notes,
remove cancelled debts and remove accrued interest on debtor-in-possession
financing.

g) To reflect the issuance of the 9% Senior Notes.

h) To reflect the cancellation of the Series A, A-1 and B preferred stock.

i) To reflect cancellation of the Class A and B common stock and predecessor
warrants.

j) To reflect the issuance of 10,000,000 shares of new common stock (par value
$0.01) at estimated fair market value.

k) To record new warrants on $3,000,000 10% Senior Secured Notes.

l) To reflect the elimination of stockholders' equity of the Predecessor
Company.

m) Remove positive  accumulated  earnings after posting gain from debt discharge
and reorganization charges

n) Post debt discharge and reorganization gain against retained deficit.


                                       42
<PAGE>

5. REORGANIZATION COSTS:

In accordance with SOP 90-7, expenses of the Predecessor Company resulting from
the Reorganization are reported separately as reorganization items in the
accompanying consolidated statement of operations, and are summarized below:

                                                  Nine Months Ended
                                                  September 30, 1999
                                                  ------------------
     Legal Fees                                        $1,245,029
     Court Fees                                            27,500
     Printing Fees                                         49,217
                                                     ------------
                                                       $1,321,746
                                                     ============

6. LONG-TERM OBLIGATIONS:

Long-term obligations consist of the following as of December 31:

                                                  1999           1998
                                                  ----           ----

9% Senior Notes due to a bank, principal
and interest due September 30, 2004,
secured by Teletrac's Assets                 $15,000,000    $      --

10% Senior Secured Notes due to a bank,
principal due September 30, 2000, quarterly
interest payments of $74,863,
secured by Teletrac's Assets                   3,000,000           --

14% Senior Secured Notes due to a bank,
principal due August 1, 2002,
semiannual interrest due February and August          --      98,445,776

Capital leases                                   544,428       4,016,637
                                             -----------     -----------
                                              18,544,428     102,462,413
     less current portion                      3,118,733       1,246,999
                                             -----------    ------------
                                             $15,425,695    $101,215,414
                                             ===========    ============



                                       43
<PAGE>

The Company holds leases on automobile, furniture, telephone and frequency
receiving and transmitting equipment for periods greater than one year.

Principal maturities of long-term obligations as of December 31, 1999 follows:

               Fiscal year ending
               ------------------
                      2000                             $3,118,733
                      2001                                330,057
                      2002                                 72,939
                      2003                                 22,699
                      2004                             15,000,000
                   Thereafter                                   -
                                                      -----------
                                   TOTAL:             $18,544,428
                                                      ===========

7. STOCKHOLDERS' EQUITY:

Common Stock

The Company's authorized capital stock consists of 20,000,000 shares of common
stock, par value $0.01 per share.

The holders of the common stock are entitled to one vote per share on all
matters on which stockholders are entitled to vote. The holders of common stock
are entitled to receive such dividends as may be declared by the Board of
Directors.

Stock Options

The Company has reserved 1,346,071 shares of common stock for issuance pursuant
to the exercise of nonqualified and incentive stock options under its 1999 Stock
Option and Restricted Stock Purchase Plan (the "Plan"). The Company applies
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," under which no compensation cost has been recognized in 1999.

The exercise price of the options is $0.16 and was determined based on the
equity valuation of the Company during the Reorganization. As of December 31,
1999, options to purchase 1,216,750 shares were granted, and 28,250 forfeited,
leaving options to purchase 1,188,500 shares outstanding.

SFAS No. 123 "Accounting for Stock-Based Compensation" was issued by the FASB in
1995 and, if fully adopted, changes the methods for recognition of cost on plans
similar to those of the Company. Adoption of FASB Statement No. 123 is optional,
however, pro forma disclosures as if the Company had adopted the cost
recognition method are required. Had compensation cost for stock options awarded
under the Plan been determined consistent with FASB Statement No. 123, the
effect to net income and earnings per share would have been immaterial.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. Option valuation models also require the input of highly
subjective assumptions such as expected option life and expected stock price
volatility. Because the Company's employee stock-based compensation plan has
characteristics significantly different from those of traded options and because
changes in the subjective input assumptions can materially affect the fair value
estimate, the Company believes that the existing option valuation models do not
necessarily provide a reliable single measure of the fair value of awards from
those plans.

                                       44
<PAGE>

The fair value at date of grant for options granted during fiscal 1999 were $.04
and were estimated using the Black-Scholes option pricing model with the
following assumptions: (i) weighted average dividend yield of 0.00%, (ii)
weighted average volatility of 1.0% for fiscal year 1999, (iii) expected life of
three to five years and (iv) risk-free interest rate of 5.8%.

Predecessor Company Options

The Predecessor Company reserved 68,457 shares of nonqualified and incentive
stock options under three plans, the 1995 Stock Option Plan (the "1995 Plan"),
the 1996 Stock Option Plan (the "1996 Plan") and the 1998 Stock Option Plan (the
1998 Plan). The Predecessor Company applied Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees," under which no compensation
cost had been recognized in 1998 and 1997. Had compensation cost been recognized
in accordance with Financial Accounting Standards Board Statement No. 123,
"Accounting for Stock Based Compensation," the Predecessor Company's reported
net loss would have increased by approximately $1,400 and $247,000 for the years
ended 1998 and 1997, respectively.

Under each plan, the exercise prices were determined based on the grant date and
were equal to the fair market value of the shares as determined by the board of
directors. The term of the options under each plan were not to exceed ten years
from the grant date. Under each plan, one-third of each grant vested per year
over a three-year period at different pricing tiers. The following represents
the exercise prices over the three-year vesting period of the options under each
plan based on the respective grant period stated:


                                                         Price
                      Grant             ------------------------------------
  Plan                Date                Tier 1       Tier 2       Tier 3
----------   ------------------------   ----------   ----------   ----------

  1995             January 1,             $100.00      $125.00      $150.00
  1995            November 18,             220.00       275.00       330.00

  1996             January 6,              175.00       218.75       262.50
  1996            November 18,             220.00       275.00       330.00

  1998             January 6,              220.00       275.00       330.00

The following table represents the total number of option shares granted and
forfeited under all plans for the twelve months ended December 31, 1998 and
1997:

                                       45
<PAGE>

                                                     Weighted-
                                                      Average
                                                     Exercise
                                        Shares         Price
                                      ---------   -------------

Outstanding at December 31, 1996        43,060         $125
     Granted                             8,251          265
     Forfeited                         (16,046)         126
                                       -------
Outstanding at December 31, 1997        35,265          157
                                        ------
     Granted                            24,428          275
     Forfeited                          (5,626)         244
                                        -------
Outstanding at December 31, 1998        54,067          201
                                        ======

The exercisable options at December 31, 1998, were 21,216, ranging in price from
$100 to $330 and having a weighted average exercise price of $132. The
exercisable options at December 31, 1997, were 13,504, ranging in price from
$100 to $330 and having a weighted average exercise price of $125. Had all
qualified options been excercised at the end of each fiscal year presented, the
gross proceeds would have been approximately $2.8 million and $1.7 million in
1998 and 1997, respectively. The weighted average fair value of the options
granted during 1998 and 1997 was $0 and $200, respectively. The weighted average
contract life was 7 years at December 31, 1998 and 1997.

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions used for the 1998 and 1997 grants:


                                           Options            Options
                                         Granted in          Granted in
                                            1997                1998
                                        --------------     --------------
Volatility                                   -%                 -%
Dividend yield                               -%                 -%
Risk-free interest rate                 5.52 to 5.72%      5.89 to 6.46%
Expected option life                       7 years            7 years

8.  REFREQUENCING LIABILITY:

In 1995 the FCC issued an order which required the Company to relocate its
existing operating frequency from a portion of the 925 MHz band to a portion of
the 927 MHz band. As a result, the Company has recorded a liability, including
$5,936,000 assumed in the Acquisition, for the cost of implementing the order so
that the Company can continue to deliver its contractual service obligation to
its customers. The Company revised its estimate and recorded approximately an
additional $0.4 million and $1.1 million liability in 1998 and 1997,
respectively.


                                       46
<PAGE>

9.  EMPLOYEE BENEFIT PLANS:

The Company sponsors a defined-contribution profit sharing 401(k) plan (the
"401(k) Plan") which covers all full-time employees. The benefits of the 401(k)
Plan are based on years of service, the employee's compensation, employee
contributions and earnings of plan assets. The Company's funding policy is to
contribute an amount equal to $0.50 for every dollar contributed by the
employees up to $1,000 annually. The Company has accrued approximately $164,536
and $207,000 during 1999 and 1998, respectively.

10.  INCOME TAXES:

Deferred  income  taxes are  provided  for  temporary  differences  between  the
financial accounting basis and tax basis of assets and liabilities and temporary
differences in reporting income and expense.

The Company's Net Operating Losses ("NOL's") and Alternative Minimum Tax ("AMT")
NOL's total approximately $47,055,725 and $41,243,152, respectively, for 1999.
However, the utilization of these NOL's is limited under Internal Revenue Code
Section 382. On September 29, 1999 the Company reorganized under Chapter 11 of
the Bankruptcy Code (the "Reorganization"). Pursuant to the Reorganization, the
Company incurred a greater than fifty percent ownership change, thereby,
subjecting the NOL's to the Section 382 limitation. The Company estimates that
only $6.2 million of NOL's are available to be utilized to offset future taxable
income due to the Section 382 limitations.

The components of net deferred tax assets (liabilities) are as follows (in
thousands):
<TABLE>
<CAPTION>
                                   Three Months Ended  Nine Months Ended    Twelve Months Ended    Twelve Months Ended
                                   December 31, 1999   September 30, 1999   December 31, 1998      December 31, 1997
                                   -----------------   ------------------   -------------------    -------------------
<S>                                       <C>                  <C>                   <C>                    <C>
DEFERRED TAX ASSETS:
Net Operating Loss Carry-forwards       $2,486              $  880                $38,396                 $17,130
                                        ------              ------                -------                 -------
Reserves and Accruals                      785                 588                      -                       -
Depreciation                             2,591               2,591                   (559)                   (577)
Other                                      330                 290                    277                     239
                                        ------              ------                -------                 -------
Net deferred tax assets                  6,192               4,349                 38,114                  16,792
Tax asset reserve                       (6,192)             (4,349)               (38,114)                (16,792)
                                        ------              ------                -------                 -------
             Net deferred taxes         $    -              $    -                $     -                 $     -
                                        ======              ======                =======                 =======
</TABLE>

                                       47
<PAGE>


11.  COMMITMENTS AND CONTINGENCIES:

The Company has operating leases for office space and antenna sites for periods
greater than one year. Minimum payments under such operating leases are as
follows (in thousands):

                                    Year Ending
                                    -----------
                                        2000                    $ 1,551
                                        2001                      1,219
                                        2002                        586
                                        2003                        170
                                        2004                         32
                                        Thereafter                  125
                                                               --------
                                                                $ 3,683
                                                               ========


12.  RESTRUCTURING CHARGE

In the fourth quarter of 1998, the Company recorded a restructuring charge of
approximately $19.7 million. The charge was the result of management and
organizational changes designed to improve profitability, increase customer
focus, and decrease customer cancellations by becoming technologically neutral.
The major components of the charge are as follows (in thousands):

      Write-down RF network assets in unopened markets          $16,562
      VLU Contract Termination Costs                              1,373
      Deinstallation Costs                                          809
      Revolver Cancellation                                         752
      Abandoned RF Projects                                         172
                                                                -------
           Total                                                $19,668
                                                                =======

The Company no longer plans to open new markets using its proprietary RF
networks and has written down assets and the costs of deinstalling those assets.
The Company has terminated its agreement with its VLU supplier and was subject
to a penalty and write-off of VLU's that are not on the correct frequency. The
Company cancelled its revolving credit agreement and expensed the deferred costs
of the facility. The Company also expensed deferred costs of certain RF related
projects. As of December 31, 1999, no costs remain accrued for the
Reorganization.




                                       48
<PAGE>

13.  LEGAL PROCEEDINGS

          Prior to the acquisition of AirTouch Teletrac, PacTel Teletrac
(predecessor to AirTouch Teletrac) brought an action before the United States
Patent and Trademark Trial and Appeal Board against T.A.B. Systems ("TAB")
opposing TAB's registration of the mark "Teletrak." The Trademark Trial and
Appeal Board granted PacTel Teletrac's motion for summary judgment, but summary
judgment was reversed by the U.S. Court of Appeals for the Federal Circuit. TAB
then filed an infringement action against PacTel Teletrac, the Company and other
parties in the U.S. District Court for the Central District of California. On
December 22, 1997, the District Court granted summary judgment in favor of the
Company. This decision has been appealed by TAB to the U.S. Court of Appeals for
the Ninth Circuit. Such an appeal was pending as of the date the Company filed
its bankruptcy petition. The Bankruptcy Court has issued an order permitting the
Ninth Circuit appeal to proceed. Under the terms of the Asset Purchase Agreement
between AirTouch Teletrac and the Company, AirTouch Teletrac must pay the costs
of any litigation relating to this matter and must indemnify the Company against
any losses relating thereto. AirTouch Teletrac has notified the Company that it
intends to continue to litigate this matter on its own behalf as well as on
behalf of the Company, and that it will bear the cost of such litigation. There
can be no assurance that AirTouch Teletrac will be successful in such litigation
or that AirTouch Teletrac will honor its indemnification obligations (including
any costs or losses relating to a change of name, if required as a result of the
litigation).

          The Company is engaged in litigation in Bankruptcy Court with Milgo
Solutions f/k/a Raycal-Datacom, Inc. ("Milgo") and Newcourt Leasing, Inc.
("Newcourt"), regarding certain telecommunications equipment which the Company
believes it purchased from Milgo. Milgo and Newcourt have asserted that the
Company did not purchase this equipment, and allege that the Company holds same
pursuant to one or more leases. In the event Milgo and Newcourt prevail in this
litigation, the Company may be obligated for the full, remaining amounts due on
account of these purported leases, which are asserted to exceed $2.1 million,
rather than for the amounts payable to these parties under the Company's
confirmed Plan of Reorganization. Discovery has commenced with respect to this
matter, but has not yet been concluded.

          The Company is also a defendant in an American Arbitration Association
proceeding brought by Star Trac, Inc. ("Star Trac") on or about February 23,
2000. Star Trac asserts that the Company breached the dealer agreement between
the parties and seeks actual and puntive damages. The Company denies the claims
asserted by Star Trac and believes that these claims were discharged by the
bankruptcy proceeding and are therefore without merit. The Company intends to
defend vigorously against these claims.



                                       49
<PAGE>

                                    PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

          The board of directors and the executive officers of the Company and
their ages as of December 31, 1999, are as follows:

Name                       Age     Position
-----                      ---     --------

Steven D. Scheiwe          39      Chief Executive Officer, General Counsel and
                                   Director
Alan B. Howe               38      Chief Financial Officer, Vice-President
                                     of Finance and Corporate Development
Charles Scheiwe            33      Controller
Kenneth A. Wiesner         36      Vice-President of Customer Operations
Paul M. Albert, Jr.        57      Director
Mark E. Holliday           31      Director
Neil Subin                 35      Director
R. Ted Weschler            38      Director


          Steven D. Scheiwe, the Chief Executive Officer and General Counsel of
Teletrac, served as General Counsel and Secretary of Teletrac from November 1995
through September 1999. He also served as General Counsel and Secretary of
Premiere Page, Inc. ("Premiere Page"), a leading Southeast paging company, from
its 1988 start up as well as the predecessor companies to Premiere Page. He was
actively involved in raising capital, developing real estate, and managing human
resources. Mr. Scheiwe received his B.A. from the University of Colorado in 1982
and a J.D. degree from Washburn University in 1986.

          Alan B. Howe, the Chief Financial Officer, Vice-President of Finance
and Corporate Development of Teletrac, joined Teletrac in November 1995 from
Wireless Co., L.P., where he served as Director of Corporate Development.
Wireless Co., a joint venture of Sprint, TCI, Comcast and Cox Cable,
successfully acquired multiple personal communication system licenses throughout
the United States. Prior to his affiliation with Wireless Co., Mr. Howe held
various finance positions at Sprint in its Wireless Task Force and Corporate
Treasury Group. Before joining Sprint, Mr. Howe was an assistant Vice-President
at Manufacturers Hanover Trust. He received an M.B.A. from Indiana University,
Graduate School of Business, and a B.A. from the University of Illinois.

          Charles Scheiwe has served as Controller of Teletrac since 1995, in
which position he has been responsible for the Company's back office operations,
including accounting, billing and information systems. Mr. Scheiwe, a certified
public accountant, joined Teletrac in 1995 from Pentapage, where he served as
its Controller. Prior to Pentapage, Mr. Scheiwe held various positions at
Premiere Page from 1989 through 1995. Mr. Scheiwe received his B.A./B.S. from
the University of Colorado in 1989.


                                       50
<PAGE>

          Kenneth A. Wiesner, the Vice-President of Customer Operations, is
responsible for product distribution, product maintenance and service
implementation. He also manages field operations, national support and national
help desk support. Prior to joining Teletrac, Mr. Wiesner served as Regional
Vice-President of Premiere Page from 1995 through 1997, in which position his
responsibilities included overall sales growth, proper maintenance of the
Premiere System, and management of the Customer Services Department. Mr. Wiesner
received his B.A./B.S. from the University of Missouri and an M.B.A. in Finance
from Rockhurst University in Kansas City, Missouri.

          Paul M. Albert, Jr. has served as a director of EarthWatch
Incorporated since June 1999. Since December 1996, Mr. Albert has been retained
as a consultant and/or employee of The Globecon Group, a financial services
consulting company and also serves as an independent finance and capital market
consultant to corporate clients. Prior to such time, from September 1996 to
November 1996, Mr. Albert served as a consultant to Eccles Associates, Inc., a
financial consulting company working primarily with multinational financial
institutions in developing countries. From September 1983 to February 1996, he
served as a Managing Director, Investment Banking of Prudential Securities,
Inc., a financial services company. Mr. Albert received an A.B. degree from
Princeton University in 1964 and an M.B.A. degree from Columbia University
Graudate School of Business in 1970.

          Mark E. Holliday founded and has been the Managing Director of
Heartland Capital Corp. ("Heartland") since 1995. Heartland is a private hedge
fund focusing primarily on financially distressed companies. Prior to forming
Heartland, Mr. Holliday was affiliated with Option Opportunities and Continental
Partners. Mr. Holliday is a graduate of Northwestern University.

          Neil Subin is the Managing Director of Trendex Capital Management, a
private hedge fund focusing primarily on distressed and bankrupt companies.
Prior to forming Trendex Capital Management in 1991, Mr. Subin was affiliated
with Oppenheimer & Co. Mr. Subin currently is a member of the Board of Directors
of Nucentrix Broadband Networks, Inc., a provider of wireless broadband network
and multichannel subscription television services, located in Plano, Texas. Mr.
Subin received a Bachelor of Arts degree from Brooklyn College in 1985.

                                       51
<PAGE>


          R. Ted Weschler is the Managing Partner of Peninsula Capital Advisors,
LLC, a private investment management firm in Charlottesville, Virginia, a
position he has held since January 1, 2000. Mr. Weschler previously served as an
executive officer of Quad-C, Inc. ("Quad-C") since its formation in 1989. Quad-C
is a Charlottesville, Virginia-based investment firm that primarily engages in
the acquisition of businesses in partnership with company management. Mr.
Weschler is currently a director of Nucentrix Broadband Networks, Inc., a
provider of wireless broadband network and multichannel subscription television
services, located in Plano, Texas; WSFS Financial Corporation, a thrift holding
company based in Wilmington, Delaware; Deerfield Healthcare Corporation, a
provider of adult day care; Virginia National Bank, a national banking
association and NWS Holdings, a national furniture retailer. Prior to the
formation of Quad-C, Mr. Weschler was employed by W.R. Grace & Co., focusing on
acquisition and divestiture activities associated with W.R. Grace's restaurant,
retail, healthcare, natural resources and chemical operations. Mr. Weschler
received a Bachelor of Science degree in Economics with concentrations in
Finance and Accounting from The Wharton School of the University of Pennsylvania
in 1983.

          The executive officers of the Company are elected by the Board of
Directors and serve at its discretion.

          Pursuant to the Plan of Reoganization, effective September 29, 1999,
the Board of Directors was replaced with a new Board. The current Board of
Directors shall serve until the first annual meeting of stockholders of Teletrac
after the Reoganization or their earlier resignation or removal in accordance
with the Charter or Teletrac's by-laws, as the same may be amended from time to
time. Thereafter, all directors are elected annually and hold office until the
next annual meeting of stockholders and until their successors are duly elected
and qualified. Directors do not receive an annual retainer or meeting attendance
fees. However, the Company reimburses non-management directors for expenses
incurred in attending meetings of the Board of Directors.

          During 1999, the Board of Directors held two meetings. The only
standing committees of the Board of Directors are the Audit Committee and the
Compensation Committee. During 1999, the members of the Audit Committee were
Mark Holliday, Neil Subin and Paul Albert. The Audit Committee periodically
consults with the Company's management and independent public accountants on
financial matters, including the Company's internal financial controls and
procedures. The Audit Committee held one meeting in 1999. During 1999, the
members of the Compensation Committee were Steven Scheiwe, Neil Subin and Ted
Weschler. The Compensation Committee approves compensation arrangements for the
Company's executive officers and administers the Company's stock option plans.
The Compensation Committee held two meetings in 1999.



                                       52
<PAGE>

Item 11.  EXECUTIVE COMPENSATION

          The following table sets forth certain compensation information as to
the Chief Executive Officer and the four other highest paid executive officers
of the Company for the fiscal year ended December 31, 1999:

                                                                 LONG-TERM
                                                               COMPENSATION
                                ANNUAL COMPENSATION               AWARDS
                         ---------------------------------   -----------------
                                                             SECURI-   ALL
NAME AND                 YEAR   SALARY    BONUS    OTHER     TIES      OTHER
PRINCIPAL                       ($)       ($)      ANNUAL    UNDER-    COMPEN-
POSITION                                           COMPEN-   LYING     SATION
                                                   SATION    OPTIONS   ($)
                                                             (#)
----------               ----   -------   -----    -------   -------   -------

Sarto, John(1)           1997     N/A      N/A      N/A        N/A       N/A
Chairman of              1998   233,133   50,000
  The Board
Chief Executive          1999    95,996  125,000                -0-
   Officer

Steven D. Scheiwe        1997   125,130   30,467                -0-      1,000
Chief Executive
  Officer                1998   143,830   34,890                -0-      1,000
General Counsel          1999   188,861   15,925                         1,000


Lawrence P. Jennings(2)  1997   169,130   29,652         -      -0-      1,000
Vice President of
  Operations             1998   169,130   25,234                -0-      1,000
                         1999    70,470  107,707                -0-      1,000

Alan B. Howe             1997   114,128   28,450         -      -0-      1,000
Vice President of
  Finance and
  Corporate
  Development            1998   131,124   43,940                -0-      1,000
                         1999   156,724   13,163                -0-      1,000

Kenneth A. Wiesner       1997   124,950   23,195         -      -0-      1,000
Vice Prsident of
Customer Operations      1998   124,950   53,295                -0-      1,000
                         1999   150,799   19,390                -0-      1,000

-----------

(1)  John Sarto resigned from the Company on April 15, 1999.

(2)  Lawrence P. Jennings resigned from the Company on June 15, 1999.




                                       53
<PAGE>

Employment Agreements

          The four most senior officers of the Company (the "Principal
Officers") have employment agreements with the Company (the "Employment
Agreements") for a period of two years commencing on September 29, 1999.

          The Employment Agreements all provide the same terms, other than
salary and position, for each of the Principal Officers. Steven D. Scheiwe's
employment agreement defines his position as Chief Executive Officer, Vice
President, General Counsel and Secretary of the Company and provides for a
salary of $210,000 per annum. Alan B. Howe's employment agreement defines his
position as Chief Financial Officer and Vice President of Finance and Corporate
Development of the Company and provides for a salary of $174,000 per annum.
Charles Schiewe's employment agreement defines his position as Controller and
provides for a salary of $140,000 per annum. Kenneth A. Weisner's employment
agreement defines his position as Vice President of Customer Operations of the
Company and provides for a salary of $174,000 per annum.

          In addition to base compensation, the Employment Agreements also
provide that each Principal Officer is eligible for a bonus of $75,000 for the
fiscal year ending December 31, 1999 if the Company meets the target objectives
established by the Board. The bonus which each Principal Officer shall receive
during the remainder of his employment term shall be established by the
Compensation Committee of the Board of Directors and shall be based on target
performance objectives set by the Compensation Committee. The Employment
Agreements also grant each of the Principal Officers options to purchase 75,000
shares of Common Stock of the Company pursuant to the Company's stock option
plan, which is described below.

          The Employment Agreements contain a provision stating that in the
event that the employee is terminated other than for cause, or in the event that
all or a majority of the stock or the assets are sold to a purchaser, he shall
be entitled to severance compensation equal to the lesser of (i) one year's base
salary or (ii) the amount of the base salary for the remaining term of his
employment agreement. The Employment Agreements also include a confidentiality
provision which survives the employee's termination indefinitely and a
non-competition provision which remains in effect for a period of two years
after the employee's termination.

401(k) Plan

          The Company maintains a 401(k) Savings Plan for its full-time
employees which permits employee contributions up to 15% of annual compensation
to the plan on a pre-tax basis. In addition, the Company may make a matching
contribution of up to 50% of each participating employee's annual compensation,
not to exceed $1,000, before taxes. The Company may also make additional
discretionary contributions to the plan in any plan year up to the annual 401(k)
plan contribution limits as defined in the Internal Revenue Code of 1986, as
amended. The plan is administered by the Compensation Committee.

          For the plan year ended December 31, 1999, the Company has accrued an
aggregate of approximately $110,000 for matching contributions to the plan in
1999.


                                       54
<PAGE>

Stock Option Plan

          In connection with the Reorganization, on September 29, 1999, the
Company adopted the 1999 Stock Option and Restricted Stock Purchase Plan (the
"Plan") in order to provide incentives to attract, retain and motivate highly
competent persons as officers, non-employee directors and key employees of the
Company by providing them with options to purchase new Common Stock of the
Company. Additionally, the Plan is intended to assist in further aligning the
interests of the Company's directors, officers, key employees and consultants to
those of its stockholders. The Plan provides for the granting of "non-qualified
stock options" and "incentive stock options" to acquire Common Stock of the
Company and the granting of rights, or "awards" to purchase Common Stock of the
Company subject to certain restrictions.

          The Plan is administered by the Compensation Committee of the Board of
Directors of the Company, which has the sole authority under the Plan to: (i)
select the employees who will be granted options or awards to purchase Common
Stock, (ii) designate whether options will be granted as incentive stock options
or as non-qualified stock options; (iii) establish the number of shares of
Common Stock that may be issued under each option or award; (iv) determine the
time and the conditions subject to which options may be exercised in whole or in
part and awards may be made; (v) determine the amount and the form of the
consideration that may be used to purchase shares of Common Stock upon exercise
of an option or award; (vi) impose restrictions and/or conditions with respect
to shares of Common Stock acquired upon exercise of an option or award; (vii)
determine the circumstances under which shares of Common Stock acquired upon
exercise of any option or award may be subject to repurchase by the Company;
(viii) determine the circumstances and conditions subject to which shares
acquired upon exercise of an option or award may be sold or transferred; (ix)
establish a vesting provision for any option or award relating to the time or
circumstance when an option or award may be exercised; (x) accelerate the time
when outstanding options may be exercised; and (xi) establish any other terms,
restrictions and/or conditions applicable to any option or award not
inconsistent with the provisions of the Plan.

          The purchase price of Common Stock upon exercise of incentive stock
options must not be less than the fair market value of the Common Stock at the
date of the grant or, in the case of incentive stock options issues to holders
of more than 10% of the outstanding Common Stock, 110% of the fair market value.
The maximum terms of the incentive stock options is ten years, or five years in
the case of 10% shareholders. The aggregate fair market value, on the date of
the grant, of the stock for which incentive stock options are exercisable for
the first time by an employee during any calendar year may not exceed $100,000.
Options granted under the Plan are generally nontransferable by the optionee and
must be exercised by the optionee during the period of the optionee's employment
or service with the Company and within the optionee's lifetime or within a
specified period following termination of employment or service or the
optionee's death.



                                       55
<PAGE>

          The Company is currently authorized to issue an aggregate 1,500,000
shares under the Plan and has reserved 1,346,071 shares for issuance pursuant to
the exercise of nonqualified and incentive stock options.

          The exercise price of the options is $0.16 and was determined based on
the equity valuation of the Company during the Reorganization. As of December
31, 1999, options to purchase 1,216,750 shares were granted, and 28,250
forfeited, leaving options to purchase 1,188,500 shares outstanding.


Item 12.  SECURITY OWNERSHIP OF CERTAIN
          BENEFICIAL OWNERS AND MANAGEMENT


          The following table sets forth the information regarding the
beneficial ownership of the Company's Common Stock, par value $0.01 per share,
as of December 31, 1999 by (i) certain stockholders or groups of related
stockholders who, individually or as a group, are the beneficial owners of 5% or
more of the Common Stock, (ii) the Chief Executive Officer of the Company, the
four other most highly compensated executive officers of the Company and the
directors of the Company and (iii) the executive officers and directors of the
Company as a group.
                                                    SHARES
                                                  BENEFICIALLY      PERCENTAGE
NAME AND ADDRESS                                     OWNED (1)     OWNERSHIP (2)
-----------------                                ---------------   -------------

Principal Stockholders:

TD Securities (USA) Inc. . . . . . . . . . . . .     848,787          8.5%
    31 West 52nd Street
    New York, NY 10019-6101

Capital Research . . . . . . . . . . . . . . . .   1,890,480         18.9%
    135 South State College Blvd.
    Brea, CA 92821

Equitable Life Assurance Society . . . . . . . .     501,556          5.0%
    1345 Avenue of the Americas, 37th Floor
    New York, NY 10105

Miller, Lloyd I Funds. . . . . . . . . . . . . .     599,936          6.0%
    4550 Gordon Drive
    Naples, FL 34102

Lutheran Brotherhood . . . . . . . . . . . . . .   1,157,436         11.6%
    625 Fourth Avenue South
    Minneapolis, MN 55415

Aspen Partners . . . . . . . . . . . . . . . . .   1,906,444         19.1%
    1114 Avenue of the Americas, 38th Floor
    New York, NY 10036

Executive Officers and Directors:

Neil Subin . . . . . . . . . . . . . . . . . . .     127,379          1.3%



                                       56
<PAGE>

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

(1)  Unless otherwise indicated, the entities and individuals identified in this
     table have sole voting and investment power with respect to all shares set
     forth in the table.

(2)  The percentages shown are based on 10,000,000 shares of Common Stock
     outstanding on December 31, 1999.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          None.



<PAGE>
                                     PART IV

Item 14.  EXHIBITS, FINANCIAL STATEMENTS
          AND REPORTS ON FORM 8-K

          (a)(1 and 2) Financial Statements.

          See Index to Consolidated Financial Statements herein.

          (3) Exhibits:


Exhibit
Number    Description

2.1       The Company's Second Amended Plan of Reorganization, dated as of
          August 4, 1999 and effective as of September 29, 1999 (incorporated by
          reference to Exhibit 2.2 to the Company's Current Report on Form 8-K
          filed on September 30, 1999).

3.1       Amended and Restated Certificate of Incorporation of the Company as
          filed with the Secretary of State of Delaware on September 29, 1999
          (incorporated by reference to Exhibit 3.1 to the Company's Current
          Report on Form 8-K filed on September 30, 1999).

3.2       By-laws of the Company adopted on September 29, 1999 (incorporated by
          reference to Exhibit 3.2 to the Company's Current Report on Form 8-K
          filed on September 30, 1999).

4.1       Form of Indenture between the Company and HSBC Bank USA with respect
          to the 9% Note due 2004 (incorporated by reference to Exhibit 4.1 to
          the Company's Current Report on Form 8-K filed on September 30, 1999).

4.2       Form of 9% Note Due 2004 (incorporated by reference to Exhibit 4.2 to
          the Company's Current Report on Form 8-K filed on September 30, 1999).

4.3       Form of Deferred Interest Note (incorporated by reference to Exhibit
          4.3 to the Company's Current Report on Form 8-K filed on September 30,
          1999).

4.4       Form of Senior Secured Note and Class A Warrant Purchase Agreement
          among the Company and the several Purchasers named in Schedule I
          thereto (incorporated by reference to Exhibit 4.4 to the Company's
          Current Report on Form 8-K filed on September 30, 1999).



                                       57
<PAGE>

4.5       Form of 10% Senior Secured Note due 2000 (incorporated by reference to
          Exhibit 4.5 to the Company's Current Report on Form 8-K filed on
          September 30, 1999).

4.6       Form of Class A Stock Purchase Warrant (incorporated by reference to
          Exhibit 4.6 to the Company's Current Report on Form 8-K filed on
          September 30, 1999).

4.7       Form of Security Agreement between the Company and the several
          Purchasers on the signature page thereto (incorporated by reference to
          Exhibit 4.7 to the Company's Current Report on Form 8-K filed on
          September 30, 1999).

4.8       The Company and its Subsidiaries 1999 Stock Option and Restricted
          Stock Purchase Plan (incorporated by reference to Exhibit 4.9 to the
          Company's Current Report on Form 8-K filed on September 30, 1999).

4.9       Form of Class B Stock Purchase Warrant (incorporated by reference to
          Exhibit 4.10 to the Company's Current Report on Form 8-K filed on
          September 30, 1999).

 10.1     Mobile Data Terminal Purchase Agreement, dated as of February 8, 1996,
          between Micronet, Inc. and the Company.

*10.2     Amendment to Mobile Data Terminal Purchase Agreement, dated September
          20, 1999, between Micronet, Inc. and the Company.

10.3      Employment Agreement, dated as of September 29, 1999, between Steven
          D. Scheiwe and the Company.

10.4      Employment Agreement, dated as of September 29, 1999, between Alan
          Howe and the Company.

10.5      Employment Agreement, dated as of September 29, 1999, between Charles
          Scheiwe and the Company.

10.6      Employment Agreement, dated as of September 29, 1999, between Kenneth
          Weisner and the Company.

21.1      Subsidiaries of the Registrant.

27        Financial Data Schedule.

-----------

*    Certain confidential portions have been omitted from this Exhibit and filed
     separately with the Commission pursuant to a confidential treatment request
     under Rule 24b-2.

          (b) Reports on Form 8-K filed during the last quarter of the fiscal
year ended December 31, 1998:

          None.





                                       58
<PAGE>
                                   SIGNATURES

          Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date:  March 30, 2000              TELETRAC, INC.

                                    By:    /s/ STEVEN D. SCHEIWE
                                        ---------------------------------------
                                        Steven D. Scheiwe
                                        Chief Executive Officer, General Counsel
                                        and Director


          Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

Signature                         Title                            Date
---------------                   -----                            -----


/s/ ALAN B. HOWE            Chief Financial Officer, Vice-       March 30, 2000
-----------------------     President of Finance and Corporate
Alan B. Howe                Development


/s/ CHARLES SCHEIWE         Controller                           March 30, 2000
-----------------------
Charles Scheiwe


/s/ KENNETH A. WIESNER     Vice-President of Customer            March 30, 2000
-----------------------    Relations
Kenneth A. Wiesner


/s/ PAUL M. ALBERT, JR.     Director                             March 30, 2000
-----------------------
Paul M. Albert, Jr.


/s/ MARK E. HOLLIDAY       Director                              March 30, 2000
-----------------------
Mark E. Holliday


/s/ NEIL SUBIN             Director                              March 30, 2000
-----------------------
Neil Subin


/s/ R. TED WESCHLER        Director                              March 30, 2000
-----------------------
R. Ted Weschler