----

----

----

----

| o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------------------|

| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|--------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|---------------------------------------------------------------------------------------------|

----

----

|                                                 |   |                                           |
|------------------------------------------------------|--------|------------------------------------------------|
| N/A                                                  |   | ISRAEL                                         |
| (Translation of Registrant’sname into English) |   | (Jurisdiction of incorporationor organization) |

----

|         Title of each class         |   |         Name of each exchange on which registered         |
|---------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|
| Ordinary Shares, NIS 3.00 nominal value per share                                                                   |   | NASDAQ Capital Market                                                                                                                     |

----

----

| Large accelerated filer o |   | Accelerated filer  o |   | Non-accelerated filer  x |
|--------------------------------|--------|--------------------------------|--------|------------------------------------|

| U.S. GAAP x |   | International Financial Reporting Standards as issued bythe International Accounting Standards Board  o |   | Other  o |
|------------------|--------|-------------------------------------------------------------------------------------------------------------------|--------|--------------------|

----

----

| ITEM 18. | FINANCIAL STATEMENTS |
|----------|----------------------|

| ITEM 19. | EXHIBITS |
|----------|----------|

| 12.1 | Certification by Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002. |
|------|-----------------------------------------------------------------------------------------------------|

| 12.2 | Certification by Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002. |
|------|-----------------------------------------------------------------------------------------------------|

| 13.1 | Certification by Chief Executive Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.2 | Certification by the Chief Financial Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.3 | Consent of Baker Tilly Brasil Certified Public Accountants (Brazil). |
|------|----------------------------------------------------------------------|

----

|   | POINTER TELOCATION LIMITED |                               |
|--------|----------------------------|------------------------------------|
|   |                       |                               |   |
|   | By:                        | /s/ Yossi Ben Shalom          |   |
|   |                       | Yossi Ben Shalom                   |   |
|   |                       | Chairman of the Board of Directors |   |
|   |                       |                               |   |

----

----

| 1. | We have audited the accompanying balance sheets of POINTER DO BRASIL COMERCIAL S.A. ("the Company") as of 31st. December 2012 and 2011, and the related statements of income, of changes in shareholders’ equity accounts and of cash flows for each of the two years in the periods ended 31st December 2012 and 2011, accompanied by explanatory notes, expressed in US Dollars. These financial statements are the responsibility of the Company’s management.   Our responsibility is to express an opinion on these financial statements based on our audit. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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 misstatements.   An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.   We were not engaged to perform an audit of the Company’s internal control over financial reporting.   Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.   Accordingly, we express no such opinion. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation.   We believe that our audit provide a reasonable basis for our opinion. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the company as of 31st. December 2012 and 2011 and the results of its operations, the changes in shareholders’ equity accounts and its cash flows for each of the two years in the periods ended 31st December 2012 and 2011 in conformity with accounting principles generally accepted in the United States of America. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                                                                           | Note   |   | 31st. December |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------|--------|
|                                                                                                                           |   |   | 2012           |   |   | 2011 |   |
| ASSETS                                                                                                                         |   |   |           |   |   |   |   |
|                                                                                                                           |   |   |           |   |   |   |   |
| CURRENT ASSETS                                                                                                                 |   |   |           |   |   |   |   |
|                                                                                                                           |   |   |           |   |   |   |   |
| Cash and cash equivalents                                                                                                      |   |   |           | 682    |   |   |   | 336 |   |
| Trade receivables (net of allowance for doubtful accounts of $ 282 and $ 211 in Dec 31st 2012 and 2011 respectively) | 3      |   |           | 1,497  |   |   |   | 491 |   |
| Other accounts receivable and prepaid expenses                                                                                 | 4      |   |           | 218    |   |   |   | 258 |   |
| Inventories                                                                                                                    |   |   |           | 911    |   |   |   | 785 |   |
| Total current assets                                                                                                           |   |   |           | 3,308  |   |   |   | 1,870 |   |
|                                                                                                                           |   |   |           |   |   |   |   |   |   |
| NON-CURRENT ASSETS                                                                                                             |   |   |           |   |   |   |   |   |   |
| Property and equipment, net                                                                                                    | 5      |   |           | 2,682  |   |   |   | 2,251 |   |
|                                                                                                                           |   |   |           |   |   |   |   |   |   |
| TOTAL ASSETS                                                                                                                   |   |   |           | 5,990  |   |   |   | 4,121 |   |
|                                                                                                                           |   |   |           |   |   |   |   |   |   |
| LIABILITIES                                                                                                                    |   |   |           |   |   |   |   |   |   |
|                                                                                                                           |   |   |           |   |   |   |   |   |   |
| CURRENT LIABILITIES                                                                                                            |   |   |           |   |   |   |   |   |   |
|                                                                                                                           |   |   |           |   |   |   |   |   |   |
| Loans from banks                                                                                                               | 7      |   |           | 170    |   |   |   | 271 |   |
| Loans from shareholders                                                                                                        | 8      |   |           | 774    |   |   |   | - |   |
| Trade payables                                                                                                                 | 9      |   |           | 1,463  |   |   |   | 1,474 |   |
| Other accounts payable and accrued expenses                                                                                    | 10     |   |           | 1,192  |   |   |   | 786 |   |
|                                                                                                                           |   |   |           | 3,599  |   |   |   | 2,531 |   |
|                                                                                                                           |   |   |           |   |   |   |   |   |   |
| NONCURRENT LIABILITIES                                                                                                         |   |   |           |   |   |   |   |   |   |
| Loans from banks                                                                                                               | 7      |   |           | 276    |   |   |   | 301 |   |
| Loans from shareholders                                                                                                        | 8      |   |           | 711    |   |   |   | - |   |
| Other long-term liabilities                                                                                                    |   |   |           | -      |   |   |   | 12 |   |
|                                                                                                                           |   |   |           | 987    |   |   |   | 313 |   |
| EQUITY                                                                                                                         |   |   |           |   |   |   |   |   |   |
| Share capital – paid in                                                                                                  | 11     |   |           | 7,267  |   |   |   | 7,267 |   |
| Accumulated other comprehensive income                                                                                         |   |   |           | 251    |   |   |   | 367 |   |
| Accumulated deficit                                                                                                            |   |   |           | (6,114 | ) |   |   | (6,357 | ) |
|                                                                                                                           |   |   |           | 1,404  |   |   |   | 1,277 |   |
|                                                                                                                           |   |   |           |   |   |   |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                                                                                      |   |   |           | 5,990  |   |   |   | 4,121 |   |

----

----

|                                 | Note   |   | 2012   |   |   | 2011   |   |   | 2010(Unaudited) |   |
|--------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|-----------------|--------|
|                                 |   |   |   |   |   |   |   |   |            |   |
| Revenues – Services Rendered   |   |   |   | 7,623  |   |   |   | 3,802  |            |   |   | 311 |   |
|                                 |   |   |   |   |   |   |   |   |            |   |   |   |   |
| Cost of Services Rendered            |   |   |   | (4,810 | )      |   |   | (3,833 | )               |   |   | (405 | ) |
|                                 |   |   |   |   |   |   |   |   |            |   |   |   |   |
| Gross profit (loss)                  |   |   |   | 2,813  |   |   |   | (31    | )               |   |   | (94 | ) |
|                                 |   |   |   |   |   |   |   |   |            |   |   |   |   |
| OPERATING EXPENSES:                  |   |   |   |   |   |   |   |   |            |   |   |   |   |
|                                 |   |   |   |   |   |   |   |   |            |   |   |   |   |
| Selling and marketing                |   |   |   | (458   | )      |   |   | (994   | )               |   |   | (685 | ) |
|                                 |   |   |   |   |   |   |   |   |            |   |   |   |   |
| General and administrative           |   |   |   | (1,557 | )      |   |   | (2,065 | )               |   |   | (1,174 | ) |
|                                 |   |   |   |   |   |   |   |   |            |   |   |   |   |
| Operating profit (loss)              |   |   |   | 798    |   |   |   | (3,090 | )               |   |   | (1,953 | ) |
|                                 |   |   |   |   |   |   |   |   |            |   |   |   |   |
| Financial expenses, net              |   |   |   | (231   | )      |   |   | (55    | )               |   |   | (42 | ) |
| Income (loss) before taxes on income |   |   |   | 567    |   |   |   | (3,145 | )               |   |   | (1,995 | ) |
|                                 |   |   |   |   |   |   |   |   |            |   |   |   |   |
| Taxes on income                      | 12     |   |   | (324   | )      |   |   | -      |            |   |   | - |   |
|                                 |   |   |   |   |   |   |   |   |            |   |   |   |   |
| INCOME (LOSS) FOR THE YEAR           |   |   |   | 243    |   |   |   | (3,145 | )               |   |   | (1,995 | ) |

----

----

|                                        |   | Share capital |   |   | Accumulated other comprehensive income |   |   | Retained earnings |   |   | Total  |   |
|---------------------------------------------|--------|---------------|--------|--------|----------------------------------------|--------|--------|-------------------|--------|--------|--------|--------|
| Balance as of January 1, 2010 (unaudited)   |   |          | 1,378  |   |                                   |   | (110   | )                 |   |   | (1,217 | )      |   |   | 51 |   |
|                                        |   |          |   |   |                                   |   |   |              |   |   |   |   |   |   |   |   |
| Issuance of shares                          |   |          | 2,952  |   |                                   |   | -      |              |   |   | -      |   |   |   | 2,952 |   |
| Foreign currency translation adjustments    |   |          | -      |   |                                   |   | (40    | )                 |   |   | -      |   |   |   | (40 | ) |
| Net loss                                    |   |          | -      |   |                                   |   | -      |              |   |   | (1,995 | )      |   |   | (1,995 | ) |
|                                        |   |          |   |   |                                   |   |   |              |   |   |   |   |   |   |   |   |
| Balance as of January 1, 2011               |   |          | 4,330  |   |                                   |   | (150   | )                 |   |   | (3,212 | )      |   |   | 968 |   |
|                                        |   |          |   |   |                                   |   |   |              |   |   |   |   |   |   |   |   |
| Issuance of shares                          |   |          | 2,937  |   |                                   |   | -      |              |   |   | -      |   |   |   | 2,937 |   |
| Foreign currency translation adjustments    |   |          | -      |   |                                   |   | 517    |              |   |   | -      |   |   |   | 517 |   |
| Net loss                                    |   |          | -      |   |                                   |   | -      |              |   |   | (3,145 | )      |   |   | (3,145 | ) |
|                                        |   |          |   |   |                                   |   |   |              |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2011 (unaudited) |   |          | 7,267  |   |                                   |   | 367    |              |   |   | (6,357 | )      |   |   | 1,277 |   |
|                                        |   |          |   |   |                                   |   |   |              |   |   |   |   |   |   |   |   |
| Issuance of shares                          |   |          | -      |   |                                   |   | -      |              |   |   | -      |   |   |   | - |   |
| Foreign currency translation adjustments    |   |          | -      |   |                                   |   | (116   | )                 |   |   | -      |   |   |   | (116 | ) |
| Net income                                  |   |          | -      |   |                                   |   | -      |              |   |   | 243    |   |   |   | 243 |   |
|                                        |   |          |   |   |                                   |   |   |              |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2012             |   |          | 7,267  |   |                                   |   | 251    |              |   |   | (6,114 | )      |   |   | 1,404 |   |

----

----

|                                                                                       |   | 2012   |   |   | 2011   |   |   | 2010(unaudited) |   |
|--------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|-----------------|--------|
|                                                                                       |   |   |   |   |   |   |   |            |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                                       |   |   |   |   |   |   |   |            |   |
|                                                                                       |   |   |   |   |   |   |   |            |   |
| Net income                                                                                 |   |   | 243    |   |   |   | (3,145 | )               |   |   | (1,995 | ) |
| Adjustments required to reconcile net income to net cash provided by operating activities: |   |   |   |   |   |   |   |            |   |   |   |   |
| Depreciation                                                                               |   |   | 653    |   |   |   | 332    |            |   |   | 122 |   |
| Increase in trade receivables, net                                                         |   |   | (1,093 | )      |   |   | (432   | )               |   |   | (112 | ) |
| Decrease (increase) in other accounts receivable and prepaid expenses                      |   |   | 19     |   |   |   | (102   | )               |   |   | (215 | ) |
| Increase in inventories                                                                    |   |   | (199   | )      |   |   | (609   | )               |   |   | (248 | ) |
| Increase in trade payables                                                                 |   |   | 115    |   |   |   | 1,324  |            |   |   | 287 |   |
| Increase in other accounts payable and accrued expenses                                    |   |   | 491    |   |   |   | 733    |            |   |   | 94 |   |
| Decrease (increase) in other long term liabilities                                         |   |   | (12    | )      |   |   | (25    | )               |   |   | 37 |   |
| Net cash provided by (used in) operating activities                                        |   |   | 217    |   |   |   | (1,924 | )               |   |   | (2,030 | ) |
|                                                                                       |   |   |   |   |   |   |   |            |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                       |   |   |   |   |   |   |   |            |   |   |   |   |
|                                                                                       |   |   |   |   |   |   |   |            |   |   |   |   |
| Purchase of property and equipment                                                         |   |   | (1,297 | )      |   |   | (2,068 | )               |   |   | (803 | ) |
| Net cash used in investing activities                                                      |   |   | (1,297 | )      |   |   | (2,068 | )               |   |   | (803 | ) |
|                                                                                       |   |   |   |   |   |   |   |            |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                       |   |   |   |   |   |   |   |            |   |   |   |   |
|                                                                                       |   |   |   |   |   |   |   |            |   |   |   |   |
| Receipt of long-term loans from banks                                                      |   |   | 1,956  |   |   |   | 472    |            |   |   | 210 |   |
| Repayment of long-term loans from banks                                                    |   |   | (486   | )      |   |   | (45    | )               |   |   | (36 | ) |
| Proceeds from issuance of shares                                                           |   |   | -      |   |   |   | 3,609  |            |   |   | 2,866 |   |
| Net cash provided by financing activities                                                  |   |   | 1,470  |   |   |   | 4,036  |            |   |   | 3,040 |   |
|                                                                                       |   |   |   |   |   |   |   |            |   |   |   |   |
| Effect of exchange rate changes on cash and cash equivalents                               |   |   | (44    | )      |   |   | (41    | )               |   |   | 17 |   |
|  Increase in cash and cash equivalents                                                |   |   | 346    |   |   |   | 3      |            |   |   | 223 |   |
|                                                                                       |   |   |   |   |   |   |   |            |   |   |   |   |
| Cash and cash equivalents at the beginning of the year                                     |   |   | 336    |   |   |   | 333    |            |   |   | 110 |   |
|                                                                                       |   |   |   |   |   |   |   |            |   |   |   |   |
| CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR                                           |   |   | 682    |   |   |   | 336    |            |   |   | 333 |   |

| Cash paid during the year for: |   |   |   |   |   |   |   |   |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Interest                       |   |   | 92     |   |   |   | 21     |   |   |   | 10 |   |

----

----

| 1. | GENERAL |
|----|---------|

| 2. | SIGNIFICANT ACCOUNTING PRACTICES |
|----|----------------------------------|

| a. | Use of estimates: |
|----|-------------------|

| b. | Financial statements in U.S. Dollars: |
|----|---------------------------------------|

| c. | Cash equivalents: |
|----|-------------------|

----

| d. | Inventories: |
|----|--------------|

| e. | Allowance for doubtful accounts |
|----|---------------------------------|

| f. | Property and equipment: |
|----|-------------------------|

|                           | %      |
|--------------------------------|--------|
|                           |   |
| Computers and software         | 20-33  |
| Office furniture and equipment | 20     |
| Motor vehicles                 | 20     |
| Installed products             | 20     |
| Leasehold improvements         | 20     |

| g. | Revenue recognition: |
|----|----------------------|

----

| h. | Deferred income taxes: |
|----|------------------------|

----

| 3. | TRADE RECEIVABLES |
|----|-------------------|

|                                                                                                                                                   |   | 31st. December, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|--------|
|                                                                                                                                                   |   | 2012            |   |   | 2011 |   |
| Accounts receivable from Customers                                                                                                                     |   |            | 1,661  |   |   |   | 702 |   |
| Accounts receivable from Shareholders             (Pointer Telocation Ltd., note 6 a) |   |            | 118    |   |   |   | - |   |
| Allowance for doubtful accounts                                                                                                                        |   |            | (282   | ) |   |   | (211 | ) |
|                                                                                                                                                   |   |            |   |   |   |   |   |   |
| Total trade receivables                                                                                                                                |   |            | 1,497  |   |   |   | 491 |   |

| 4. | OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES |
|----|------------------------------------------------|

|                                                     |   | 31ST. DECEMBER |   |
|----------------------------------------------------------|--------|----------------|--------|
|                                                     |   | 2012           |   |   | 2011 |   |
| Prepaid expenses                                         |   |           | 171    |   |   |   | 162 |   |
| Taxes receivable                                         |   |           | 40     |   |   |   | 11 |   |
| Advances to suppliers                                    |   |           | 4      |   |   |   | 85 |   |
| Employees                                                |   |           | 3      |   |   |   | - |   |
|                                                     |   |           |   |   |   |   |   |   |
| Total of Other Accounts Receivables and Prepaid Expenses |   |           | 218    |   |   |   | 258 |   |

----

| 5.  | FIXED ASSETS |
|----------|--------------|

|                           |   | 31st. December   |   |   | Annual depreciation rate % |   |
|--------------------------------|--------|------------------|--------|--------|----------------------------|--------|
|                           |   | 2012             |   |   | 2011                       |   |   |   |
|                           |   | Acquisition cost |   |   | Accumulateddepreciation    |   |   | Net |   |   | Net |   |   |   |
| Computers and SW               |   |             | 750    |   |                       |   | (290 | ) |   |   | 460 |   |   |   | 545 |   |   |   | 20-33 |   |
| Office furniture and equipment |   |             | 45     |   |                       |   | (22 | ) |   |   | 23 |   |   |   | 31 |   |   |   | 20 |   |
| Motor vehicles                 |   |             | 39     |   |                       |   | (22 | ) |   |   | 17 |   |   |   | 27 |   |   |   | 20 |   |
| Installed products             |   |             | 2,818  |   |                       |   | (636 | ) |   |   | 2,182 |   |   |   | 1,648 |   |   |   | 20 |   |
|                           |   |             | 3,652  |   |                       |   | (970 | ) |   |   | 2,682 |   |   |   | 2,251 |   |   |   |   |   |

|                           |   | 31st. December   |   |
|--------------------------------|--------|------------------|--------|
|                           |   | 2011             |   |   | 2012 |   |
|                           |   | Acquisition Cost |   |   | Foreign Exchange Effect |   |   | New Acquisitions |   |   | Sales & Write-Offs |   |   | Ending Balance |   |
| Computers and SW               |   |             | 705    |   |   |   | (56 | ) |   |   | 101 |   |   |   | 0 |   |   |   | 750 |   |
| Office furniture and equipment |   |             | 46     |   |   |   | (4 | ) |   |   | 3 |   |   |   | 0 |   |   |   | 45 |   |
| Motor vehicles                 |   |             | 43     |   |   |   | (4 | ) |   |   | 0 |   |   |   | 0 |   |   |   | 39 |   |
| Installed products             |   |             | 1,858  |   |   |   | (149 | ) |   |   | 1,328 |   |   |   | (219 | ) |   |   | 2,818 |   |
|                           |   |             | 2,652  |   |   |   | (213 | ) |   |   | 1,432 |   |   |   | (219 | ) |   |   | 3,652 |   |

----

| 6.  | INTERCOMPAY TRANSACTIONS |
|----------|--------------------------|

| a. | Accounts Receivable |
|----|---------------------|

|                                   |   | 31st. December |   |
|----------------------------------------|--------|----------------|--------|
|                                   |   | 2012           |   |   | 2011 |   |
| Pointer Telocation Ltd. (note 3)       |   |           | 118    |   |   |   | - |   |
| Total Intercompany Accounts Receivable |   |           | 118    |   |   |   | - |   |

| b. | Trade Payables |
|----|----------------|

|                                |   | 31st. December |   |
|-------------------------------------|--------|----------------|--------|
|                                |   | 2012           |   |   | 2011 |   |
| Pointer Telocation Ltd. (note 9)    |   |           | 7      |   |   |   | 7 |   |
| Total Intercompany Accounts Payable |   |           | 7      |   |   |   | 7 |   |

| c. | Interest Paid |
|----|---------------|

|                                          |   | 31st. December |   |
|-----------------------------------------------|--------|----------------|--------|
|                                          |   | 2012           |   |   | 2011 |   |
|                                          |   |           |   |   |   |   |
| Pointer Telocation Ltd.                       |   |           | 17     |   |   |   | - |   |
|                                          |   |           |   |   |   |   |   |   |
| Total of Paid Interests on Intercompany Loans |   |           | 17     |   |   |   | - |   |

| 7. | CURRENT MATURITIES OF LONG-TERM AND LONG-TERM LOANS FROM BANKS |
|----|----------------------------------------------------------------|

|                      |   | Interest rate   |   |   | December 31, |   |
|---------------------------|--------|-----------------|--------|--------|--------------|--------|
|                      |   | 2012            |   |   | 2011         |   |   | 2012 |   |   | 2011 |   |
|                      |   | % (Nominal APR) |   |   |         |   |   |   |   |
|                      |   |            |   |   |         |   |   |   |   |   |   |   |
| Bradesco                  |   |            | 17     | %      |         |   | 17 | % |   |   | 12 |   |   |   | 41 |   |
| HSBC                      |   |            | 16     | %      |         |   | 16 | % |   |   | 57 |   |   |   | 120 |   |
| Santander                 |   |            | 12     | %      |         |   | 21 | % |   |   | 377 |   |   |   | 411 |   |
|                      |   |            |   |   |         |   |   |   |   |   | 446 |   |   |   | 572 |   |
|                      |   |            |   |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Less - current maturities |   |            |   |   |         |   |   |   |   |   | (170 | ) |   |   | (271 | ) |
|                      |   |            |   |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Long-term                 |   |            |   |   |         |   |   |   |   |   | 276 |   |   |   | 301 |   |

----

| 8. | LONG-TERM LOANS FROM BANKS AND SHAREHOLDERS |
|----|---------------------------------------------|

|                      |   | Interest rate   |   |   | December 31, |   |
|---------------------------|--------|-----------------|--------|--------|--------------|--------|
|                      |   | 2012            |   |   | 2011         |   |   | 2012 |   |   | 2011 |   |
|                      |   | % (Nominal APR) |   |   |         |   |   |   |   |
|                      |   |            |   |   |         |   |   |   |   |   |   |   |
| Pointer Telocation Ltd.   |   |            | 14     | %      |         |   | - |   |   |   | 316 |   |   |   | - |   |
| Bracco do Brasil Ltda.    |   |            | 6      | %      |         |   | - |   |   |   | 1,169 |   |   |   | - |   |
|                      |   |            |   |   |         |   |   |   |   |   | 1,485 |   |   |   | - |   |
|                      |   |            |   |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Less - current maturities |   |            |   |   |         |   |   |   |   |   | (774 | ) |   |   | - |   |
|                      |   |            |   |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Long-term                 |   |            |   |   |         |   |   |   |   |   | 711 |   |   |   | - |   |

| 9.  | TRADE PAYABLES |
|----------|----------------|

|                               |   | 31st. December |   |
|------------------------------------|--------|----------------|--------|
|                               |   | 2012           |   |   | 2011 |   |
| M1 & M2 System                 |   |           | 1,060  |   |   |   | 1,010 |   |
| Pointer Telocation Ltd. (note 6 b) |   |           | 7      |   |   |   | 7 |   |
| Others                             |   |           | 396    |   |   |   | 457 |   |
| Total other current liabilities    |   |           | 1,463  |   |   |   | 1,474 |   |

| 10.  | OTHER CURRENT LIABILITIES |
|-----------|---------------------------|

|                                                         |   | 31st. December |   |
|--------------------------------------------------------------|--------|----------------|--------|
|                                                         |   | 2012           |   |   | 2011 |   |
| Payroll accruals                                             |   |           | 200    |   |   |   | 387 |   |
| Deferred revenue                                             |   |           | 578    |   |   |   | 22 |   |
| Tax liability                                                |   |           | 240    |   |   |   | - |   |
| Installation, commission expenses and other accrued expenses |   |           | 174    |   |   |   | 377 |   |
| Total other current liabilities                              |   |           | 1,192  |   |   |   | 786 |   |

----

| 11. | SHAREHOLDER ́S EQUITY |
|-----|---------------------------|

| a. | Ordinary shares: |
|----|------------------|

| b. | Issued and outstanding share capital as at 31 December 2012: |
|----|--------------------------------------------------------------|

|                                                             |   | Shares     |       |   | Thousands of US$ equivalents |   |
|------------------------------------------------------------------|--------|------------|------------|--------|------------------------------|--------|
| Shareholder                                                      |   | Subscribed |       |   | Subscribed                   |   |   | Paid-In Capital |   |   | Unpaid Capital |   |
| Bracco do Brasil Empreendimentos e Participações Ltda. |   |       | 7.680.000  |   |                         |   | 4,094 |   |   |   | 3,774 |   |   |   | 320 |   |
| Pointer Telocation Ltd.                                          |   |       | 7.320.000  |   |                         |   | 3,902 |   |   |   | 3,493 |   |   |   | 409 |   |
| Total                                                            |   |       | 15.000.000 |   |                         |   | 7,996 |   |   |   | 7,267 |   |   |   | 729 |   |

| 12.  | INCOME TAXES |
|-----------|--------------|

----

|                                                |   | December 31, |   |
|-----------------------------------------------------|--------|--------------|--------|
|                                                |   | 2012         |   |   | 2011 |   |   | 2010(Unaudited) |   |
| Deferred tax assets:                                |   |         |   |   |   |   |   |   |   |
| NOLs at the tax rate                                |   |         | 1,538  |   |   |   | 1,401 |   |   |   | 884 |   |
| Other temporary differences                         |   |         | 96     |   |   |   | 53 |   |   |   | - |   |
| Gross deferred tax asset before valuation allowance |   |         | 1,634  |   |   |   | 1,454 |   |   |   | 884 |   |
| Valuation allowance                                 |   |         | (1,634 | ) |   |   | (1,454 | ) |   |   | (884 | ) |
| Net deferred tax assets                             |   |         | -      |   |   |   | - |   |   |   | - |   |

|                                                                                                  |   | December 31, |   |
|-------------------------------------------------------------------------------------------------------|--------|--------------|--------|
|                                                                                                  |   | 2012         |   |   | 2011 |   |   | 2010(Unaudited) |   |
| Income (loss) before taxes, as reported in the consolidated statements of operations                  |   |         | 567    |   |   |   | (3,145 | ) |   |   | (1,995 | ) |
|                                                                                                  |   |         |   |   |   |   |   |   |   |   |   |   |
| Statutory tax rate                                                                                    |   |         | 34     | % |   |   | 34 | % |   |   | 34 | % |
|                                                                                                  |   |         |   |   |   |   |   |   |   |   |   |   |
| Nominal tax expense  on the above amount at the Brazilian statutory tax rate                |   |         | 193    |   |   |   | (1,069 | ) |   |   | (678 | ) |
|                                                                                                  |   |         |   |   |   |   |   |   |   |   |   |   |
| Nondeductible temporal expenses and other                                                             |   |         | 550    |   |   |   | - |   |   |   | - |   |
| Operating carryforward losses for which a valuation allowance was provided in prior years (see above) |   |         | (419   | ) |   |   | 1,069 |   |   |   | 678 |   |
|                                                                                                  |   |         |   |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   |         | 324    |   |   |   | - |   |   |   | - |   |

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