<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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

                                    FORM 10-K

(Mark
 One)  /X/ Annual Report pursuant to Section 13 or 15(d) of the
           Securities Exchange Act of 1934 for the fiscal year ended
           December 31, 1998

                                       OR

      /  / Transition Report pursuant to Section 13 or 15(d) of the
           Securities Exchange Act of 1934 for the transition period from
           to

                        Commission File Number 000-21409

                              CELLNET FUNDING, LLC

             (Exact name of registrant as specified in its charter)

            Delaware                                      94-3298620
   (State or other jurisdiction of                     (I.R.S. Employer 
    incorporation or organization)                  Identification Number)
 

                 125 Shoreway Road, San Carlos, California 94070
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (650) 508-6000
        Securities registered pursuant to Section 12(b) of the Act: NONE
           Securities registered pursuant to Section 12(g) of the Act
           EXCHANGEABLE LIMITED LIABILITY COMPANY PREFERRED SECURITIES,
                           $25 Liquidation Preference
                                (Title of Class)

     Indicate by check mark whether the registrant (1) has filed all reports
required 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. /X/ YES / / 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. /X/

     There are 4,400,000 outstanding 7% Exchangeable Limited Liability Company 
Preferred Securities Mandatorily Redeemable June 1, 2010 (the "Redeemable 
Preferred Securites").  No affiliates of CellNet Data Systems, Inc. or 
CellNet Funding, LLC currently holds any Redeemable Preferred Securities.

     All of the issued and outstanding common securities of CellNet Funding, 
LLC are owned by CellNet Data Systems, Inc.

<PAGE>

<TABLE>
<CAPTION>
                                                                                                    Page
<S>                                                                                                <C>
PART I
         Item 1.     Business                                                                         3
         Item 2.     Properties                                                                       4
         Item 3.     Legal Proceedings                                                                4
         Item 4.     Submission of Matters to a Vote of Security Holders                              4

PART II
         Item 5.     Market for Registrant's Common Equity and Related Stockholder 
                     Matters                                                                          5
         Item 6.     Selected Financial Data                                                          6
         Item 7.     Management's Discussion and Analysis of Financial Condition and                  
                     Results of Operations                                                            7
         Item 7A.    Quantitative and Qualitative Disclosures about Market Risk                       8
         Item 8.     Financial Statements and Supplementary Data                                      9
         Item 9.     Changes in and Disagreements with Accountants on Accounting 
                     and Financial Disclosure                                                        19
                     
PART III
         Item 10.    Directors and Executive Officers of the Registrant                              19
         Item 11.    Executive Compensation                                                          20
         Item 12.    Security Ownership of Certain Beneficial Owners and Management                  20
         Item 13.    Certain Relationships and Related Transactions.                                 20

PART IV
         Item 14.    Exhibits, Financial Statement Schedules and Reports on Form 8-K.                20

SIGNATURES                                                                                           22
</TABLE>

                                      -2-

<PAGE>

                                     PART I

ITEM 1. BUSINESS

     THIS ITEM CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING 
OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE 
SECURITIES EXCHANGE ACT OF 1934. FUNDING'S ACTUAL RESULTS COULD DIFFER 
MATERIALLY FROM THE RESULTS ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS 
AS A RESULT OF CERTAIN FACTORS SET FORTH IN "MANAGEMENT'S DISCUSSION AND 
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" UNDER "RISK 
FACTORS THAT MAY AFFECT FUTURE OPERATING PERFORMANCE" AND ELSEWHERE IN THIS 
REPORT.

GENERAL

     CellNet Funding, LLC ("Funding") is a special purpose limited liability 
company formed on April 21, 1998 under the laws of the State of Delaware. 
Funding's principal executive offices are located at 125 Shoreway Road, San 
Carlos, California 94070. All of the common securities of Funding (the 
"Common Securities") are owned by CellNet Data Systems, Inc. ("CellNet"). 
CellNet is a Delaware corporation that files annual, quarterly and current 
reports with the Securities and Exchange Commission. CellNet's Commission 
File Number is 0-21409.

     Pursuant to the terms of the Amended and Restated Limited Liability 
Company Agreement of Funding, dated as of May 13, 1998 (the "LLC Agreement"), 
Funding was formed solely for the purposes of: (i) issuing limited liability 
interests of Funding, (ii) using at least 85% of the net proceeds of such 
issuances together with related capital contributions to purchase shares of 
preferred stock of CellNet ("CellNet Preferred Stock") in a private 
placement, (iii) investing 15% of the proceeds from its offering of Preferred 
Securities in U.S. Treasury securities ("Treasury Strips"), to be held in 
escrow in an amount sufficient to fund the cash payments of the first twelve 
quarterly dividends on Funding's preferred securities (the "Redeemable 
Preferred Securities"), and (iv) entering into, making and performing all 
contracts and other undertakings, and taking any and all actions to or for 
the furtherance of the purposes of Funding. Unless previously dissolved, 
Funding's term will continue until December 31, 2050.

     CellNet is the sole member of Funding that holds common securities. 
CellNet is also the Manager of Funding, and as such, manages the business and 
affairs of Funding. CellNet does not receive any compensation for performing 
such management services. Additionally, all of Funding's administrative 
expenses, which are insignificant, are paid by CellNet.

     Funding does not manufacture or sell any products, does not provide any 
services to any party and does not intend to enter into any business, other 
than complying with its obligations under the Redeemable Preferred Securities 
and effecting the purposes as set forth in the LLC Agreement.

     For financial information about Funding, see the financial statements 
included in response to Items 6 and 8 of Part II of this Annual Report on 
Form 10-K.

                                      -3-

<PAGE>

KEY TRANSACTIONS DURING FISCAL 1998

     On May 13, 1998, Funding completed the sale of 4.4 million shares of its 
Redeemable Preferred Securities for gross proceeds of $110.0 million. On May 
19, 1998, CellNet made a capital contribution of $8.3 million. Funding 
recorded the contribution as additional paid-in capital.

     On May 19, 1998, Funding used the proceeds from the registered offering 
of the Redeemable Preferred Securities, along with the capital contribution 
described above to purchase approximately $93.5 million of CellNet Preferred 
Stock and $21.4 million in Treasury Strips. The CellNet Preferred Stock 
cumulates dividends each March 1, June 1, September 1 and December 1, 
commencing on September 1, 1998 and through June 1, 2010 payable in 
additional shares of CellNet Preferred Stock through June 1, 2001. Subsequent 
to June 1, 2001, dividends on the CellNet Preferred Stock are payable in cash 
or shares of CellNet Common Stock or any combination of cash and shares of 
CellNet Common Stock, at the option of CellNet. The CellNet Preferred Stock 
is exchangeable, at the option of Funding, at any time prior to June 1, 2010 
into shares of CellNet Common Stock at an exchange rate based on the exchange 
rate of the Redeemable Preferred Securities. At the option of CellNet, the 
CellNet Preferred Stock is redeemable up to two business days prior to June 
1, 2010.

ITEM 2. PROPERTIES

     At December 31, 1998, Funding's property consisted of: (i) Treasury 
Strips in the amount of approximately $18.0 million held in escrow to pay 
quarterly cash dividends on the Redeemable Preferred Securities; (ii) CellNet 
Preferred Stock in the amount of $93.5 million; and (iii) a receivable for 
preferred dividends earned on the CellNet Preferred Stock of approximately 
$4.1 million. Funding does not own any real property.

ITEM 3. LEGAL PROCEEDINGS

     Funding is not a party to any pending legal proceedings.

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

     Not Applicable.


                                      -4-

<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SECURITYHOLDER
        MATTERS.

     To date, all issued and outstanding Common Securities of Funding are 
held by CellNet. There exists no established public trading market for 
Funding's Common Securities. CellNet purchased the Common Securities on May 
13, 1998 in a private placement pursuant to Section 4(2) of the Securities 
Act of 1933, as amended (the "1933 Act"). Since the formation of Funding and 
CellNet's initial capital investment for the Common Securities, there have 
been no sales or transfers of Common Securities of Funding. No cash dividends 
have been declared on the Common Securities of Funding.

     On May 13, 1998, Funding completed a registered public offering of 4.4 
million shares of the Redeemable Preferred Securities for an aggregate gross 
cash offering price of $110.0 million. 

     The Redeemable Preferred Securities are mandatorily redeemable by 
Funding on June 1, 2010 at the liquidation preference of $25.00 per security, 
plus accrued and unpaid dividends. Dividends on the Redeemable Preferred 
Securities are cumulative at the rate of 7% per annum and are payable in cash 
through June 1, 2001 and, thereafter, in cash, shares of CellNet Common 
Stock or some combination of cash and shares of CellNet Common Stock, at the 
option of Funding, provided that to the extent available, any dividend 
payment must be made with cash. 

     Funding's Redeemable Preferred Securities trade on the Nasdaq National 
Market under the symbol "CNDSP." The following table sets forth, for the 
periods indicated, the range of the low and high sales prices for Funding's 
Redeemable Preferred Securities as reported on the Nasdaq National Market.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
                                                           HIGH          LOW
-------------------------------------------------------------------------------
<S>                                                        <C>           <C>
Fiscal 1998
     Second Quarter (from May 15, 1998)                    $25.00        $22.50
     Third Quarter                                          23.25         16.00
     Fourth Quarter                                         17.13         12.00
-------------------------------------------------------------------------------

Fiscal 1999
     First Quarter (through March 29, 1999)                $19.50        $12.50
-------------------------------------------------------------------------------
</TABLE>

     As of March 29, 1999, there was one holder of record of Funding's 
Redeemable Preferred Securities. On March 29, 1999, the last reported sale 
price on the Nasdaq National Market for the Funding's Redeemable Preferred 
Securities was $13.75. The market for Funding's Redeemable Preferred 
Securities is highly volatile. 

     Effective August 15, 1998 and November 16, 1998, Funding declared cash 
dividends in the amount of $0.495833 and $0.4375 per Redeemable Preferred 
Security to holders of record at the close of business on August 15, 1998 and 
November 16, 1998, respectively, which were paid on September 1, 1998 and 
December 1, 1998, respectively. In accordance with their terms, the 
Redeemable Preferred Securities shall bear a cumulative dividend at the rate 
of 7% per annum. Such dividend is paid quarterly in arrears each March 1, 
June 1, September 1 and December 1. The dividend is payable in cash through 
June 1, 2001, and thereafter, in cash or shares of CellNet common stock, at 
the option of Funding. Funding's existing financing arrangements restrict the 
payment of any dividends other than those described above.

                                      -5-

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

The selected financial data for the period from April 21, 1998 (inception) to
December 31, 1998 has been derived from the audited financial statements of
Funding. The information set forth below should be read in conjunction with the
financial statements of Funding and the notes thereto included elsewhere in this
Annual Report. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

<TABLE>
<CAPTION>
                                                                           Period from
                                                                          April 21, 1998
                                                                          (inception) to
                                                                           December 31,
                                                                               1998
                                                                           --------------
                                                                           (in thousands)
<S>                                                                        <C>
Statement of Operations Data:
     Interest income                                                       $        687
     Dividend income from Parent preferred stock                                  4,106
                                                                           -------------
          Income before dividends and accretion on
           preferred securities                                                   4,793
     Dividends and accretion on preferred securities                             (4,951)
                                                                           -------------
           Net loss applicable to common member                            $       (158)
                                                                           -------------
                                                                           -------------
</TABLE>
<TABLE>
<CAPTION>
                                                                           December 31,
                                                                                1998
                                                                           -------------
                                                                           (in thousands)
<S>                                                                        <C>
Balance Sheet Data:
Dividends receivable from Parent                                           $      4,106
Investment in CellNet Preferred Stock                                            93,500
Restricted cash                                                                  17,984
Total assets                                                                    115,590
Accrued dividends payable to preferred security holders                             642
Payable to Parent                                                                   564
Mandatorily redeemable preferred securities                                     106,191
Total member's equity                                                             8,193
</TABLE>


                                      -6-

<PAGE>

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

OVERVIEW

     Funding is a special purpose limited liability company formed under the 
laws of the State of Delaware on April 21, 1998 as a wholly-owned subsidiary 
of CellNet. Funding has no independent operations and exists for the 
exclusive purposes of selling the Redeemable Preferred Securities, investing 
the proceeds of the sale thereof and engaging in other incidental activities. 
During May 1998, Funding completed the sale of the Redeemable Preferred 
Securities for gross proceeds of $110.0 million. Net proceeds from the 
offering, after offering costs, were approximately $106.0 million.

     The Redeemable Preferred Securities consist of 4,400,000 exchangeable 
preferred securities of Funding that bear a cumulative dividend at the rate 
of 7% per annum. The dividend is paid quarterly in arrears each March 1, June 
1, September 1 and December 1, and commenced September 1, 1998. The dividend 
is payable in cash through June 1, 2001 and thereafter, by cash or shares of 
CellNet Common Stock, at the option of Funding. The Redeemable Preferred 
Securities are exchangeable at any time prior to June 1, 2010, at the option 
of the holders, into CellNet Common Stock, at a rate of 1.8328 shares of 
Common Stock per Redeemable Preferred Security, or $13.64 per share, subject 
to adjustment. On or prior to June 1, 2001, the Redeemable Preferred 
Securities must be automatically exchanged for CellNet Common Stock at an 
exchange price of $13.64 per share in the event the Current Market Value 
(which is a formula as defined in the Written Action of the Manager of 
Funding, the "Written Action") of the CellNet Common Stock equals or exceeds 
the following percentage of the exchange price, for at least 20 days of any 
30-day trading period during the 12 month period ending on June 1 of the 
indicated year: 170% on or prior to June 1, 1999; 160% from June 2, 1999 
through June 1, 2000; and 150% from June 2, 2000 through June 1, 2001. The 
Redeemable Preferred Securities are subject to mandatory redemption on June 
1, 2010 at a redemption price of 100% of the liquidation preference of the 
Redeemable Preferred Securities, plus accrued and unpaid dividends, if any. 
Funding may redeem, at its option, the Redeemable Preferred Securities, in 
whole or in part, at any time on or after June 1, 2001 at certain redemption 
prices equal to a percentage of the liquidation preference (set forth in the 
Written Action) which declines each year until maturity of the Redeemable 
Preferred Securities, together with accrued and unpaid dividends, if any.

     Pursuant to and to the extent set forth in the guarantee of the 
Redeemable Preferred Securities (the "Guarantee") by CellNet for the benefit 
of the holders of the Redeemable Preferred Securities, CellNet has agreed to 
pay in full to the holders of the Redeemable Preferred Securities (except to 
the extent paid by Funding), as and when due, regardless of any defense, 
right of set off or counterclaim which Funding may have or assert, the 
following payments, without duplication: (i) any accrued and unpaid 
distributions that are required to be paid on the Redeemable Preferred 
Securities, to the extent Funding has sufficient funds legally available 
therefor, (ii) the redemption price, with respect to any Redeemable Preferred 
Securities called for redemption by Funding, to the extent Funding has 
sufficient funds legally available therefor, and (iii) upon a voluntary or 
involuntary dissolution, winding-up or termination of Funding, the lesser of 
(a) the aggregate of the liquidation preference and all accrued and unpaid 
dividends on the Redeemable Preferred Securities to the date of payment to 
the extent Funding has sufficient funds legally available therefor, and (b) 
the amount of assets of Funding remaining for distribution to holders of the 
Redeemable Preferred Securities upon the liquidation of Funding. The 
Guarantee may also be subject to contractual restrictions under agreements 
governing future indebtedness of CellNet.

RESULTS OF OPERATIONS

     Funding is a wholly-owned subsidiary of CellNet, has no independent 
operations and exists for the exclusive purposes of selling the Redeemable 
Preferred Securities, investing the proceeds from the sale thereof and 
engaging in other incidental activities. The restricted cash at December 31, 
1998 of $18.0 million includes a portion of the proceeds of the offering of 
the Redeemable Preferred Securities which are designated for the payment of 
cash dividends through June 1, 2001. Funding invested the restricted cash in 
Treasury Strips which were placed in escrow upon the closing of the offering 
of the Redeemable Preferred Securities. For the period of inception of 
Funding through December 31, 1998, Funding earned interest on the amounts 
invested in Treasury Strips of $687,000 and accrued dividend income on 
CellNet Preferred Stock of approximately $4.1 million (which will be paid in 
additional shares of CellNet Preferred Stock). During the period from April 
21, 1998 (inception) through December 31, 1998, Funding incurred $5.0 million 
in dividend expense and accretion on the Redeemable Preferred Securities, for 
an aggregate net loss applicable to CellNet of $158,000. Funding expects 
interest income to decrease each period through June 1, 2001 as restricted 
cash balances are used to pay cash dividends on the Redeemable Preferred 
Securities. Funding expects dividend income to be approximately $1.6 million 
per quarter, absent the conversion or redemption of the CellNet Preferred 
Stock. Funding expects that dividend expenses will be approximately $1.9 
million per quarter, absent conversion or redemption of the Redeemable 
Preferred Securities.

LIQUIDITY AND CAPITAL RESOURCES

     During May 1998, Funding completed the sale of the Redeemable Preferred 
Securities for gross proceeds of $110.0 million. Net proceeds from the 
offering, after offering costs, were approximately $106.0 million. The amount 
recorded as equity for the Redeemable Preferred Securities will fully accrete 
to the face value of $110.0 million on June 1, 2010.

     The restricted cash at December 31, 1998 of approximately $18.0 million 
includes the proceeds of the offering which are designated for the payment of 
cash dividends on the Redeemable Preferred Securities through June 1, 2001. 
Funding invested the restricted cash in Treasury Strips which were placed in 
escrow upon the closing of the offering of the Redeemable Preferred 
Securities. On May 19, 1998, Funding purchased $93.5 million of CellNet 
Preferred Stock (85% of the gross proceeds from the offering of the 
Redeemable Preferred Securities) with the remaining proceeds of the offering 
plus capital contributed by CellNet of $8.3 million. The CellNet Preferred 
Stock pays dividends each March 1, June 1, September 1 and December 1 in 
additional shares of CellNet Preferred Stock through June 1, 2001. Subsequent 
to June 1, 2001, dividends are payable in cash or shares of CellNet Common 
Stock, at the option of CellNet. The CellNet Preferred Stock is exchangeable, 
at the option of Funding, at any time prior to June 1, 2010 into shares of 
CellNet Common Stock at an exchange rate based on the exchange rate of the 
Redeemable Preferred Securities. The CellNet Preferred Stock is subject to 
mandatory redemption on June 1, 2010.

     The Redeemable Preferred Securities bear a cumulative dividend at the 
rate of 7% per annum which must be paid quarterly in arrears each March 1, 
June 1, September 1 and December 1, which commenced September 1, 1998. The 
dividend is payable in cash through June 1, 2001 and thereafter, by cash or 
shares of CellNet Common Stock, at the option of Funding. The Treasury Strips 
have been pledged to The Bank of New York as escrow agent (the "Escrow 
Agent") 

                                      -7-

<PAGE>

pursuant to an escrow agreement for the benefit of the holders of the 
Redeemable Preferred Securities. The Escrow Agent is required under the 
Escrow Agreement to release from escrow amounts sufficient to pay quarterly 
dividends on the Redeemable Preferred Securities through June 1, 2001. 
Funding paid dividends of approximately $4.1 million during the period from 
inception through December 31, 1998.

     Cash used for operating activities was approximately $4.0 million for 
the period April 21, 1998 (inception) through December 31, 1998 and consists 
primarily of dividends paid on the Redeemable Preferred Securities, offset by 
interest income received on Treasury Strips.

     Cash used for investing activities was $110.9 million for the period 
April 21, 1998 (inception) through December 31, 1998, and consists of the 
purchase of CellNet Preferred Stock for $93.5 million, and the purchase of 
the Treasury Strips for $21.4 million, partially offset by cash provided 
during the period of $4.1 million resulting from the subsequent proceeds 
received on maturity of two Treasury Strips. The restricted cash balance will 
decrease in each future period as preferred dividends are paid.

     Financing activities provided approximately $114.9 million for the 
period April 21, 1998 (inception) through December 31, 1998. Net cash 
provided by financing activities includes the net proceeds from the issuance 
of the Redeemable Preferred Securities in May 1998 of $106.0 million, capital 
contributions made to Funding by CellNet of $8.3 million to purchase CellNet 
Preferred Stock and advances made by CellNet to Funding of $564,000 for the 
offering costs associated with the issuance of the Redeemable Preferred 
Securities. Funding expects cash provided from financing activities will 
decrease as future periods are not anticipated to include proceeds from 
securities offerings.

CASH COMMITMENTS

     The Redeemable Preferred Securities require payments of dividends to be 
made in cash through June 1, 2001. Funding has cash dividend obligations on 
the Redeemable Preferred Securities of approximately $7.7 million in each of 
1999 and 2000, and $3.9 million in 2001.

YEAR 2000 COMPLIANCE

     As a wholly-owned subsidiary of CellNet, Funding's Year 2000 compliance 
plan is dependent on CellNet's Year 2000 compliance plans for its 
consolidated operations. Because Funding has no independent operations, 
Funding has not addressed the state of Year 2000 readiness, compliance costs, 
risks or contingency plans of Funding. A lack of Year 2000 compliance would 
not have a significant impact on Funding's operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Funding's restricted cash balances are invested in fixed income Treasury 
Strips having staggered maturities matching dividend payment dates of the 
Redeemable Preferred Securities. Accordingly, changes in market interest 
rates have no effect on Funding's operating results, financial condition and 
cash flows.

                                      -8-

<PAGE>

     At December 31, 1998, Funding had $93.5 million of CellNet Preferred 
Stock, which is exchangeable into shares of CellNet Common Stock, at an 
exchange rate based on the exchange rate of the Redeemable Preferred 
Securities. There exists no established public trading market for CellNet 
Preferred Stock. The risk of changes in fair market value of the underlying 
CellNet Common Stock, which is listed and trades on the Nasdaq National 
Market, is eliminated by the adjustable rate of exchange of shares of CellNet 
Preferred Stock. The CellNet Preferred Stock pays dividends in cash or 
additional shares of CellNet Preferred Stock sufficient to meet the dividend 
requirements on the Redeemable Preferred Securities. Although changes in the 
fair market value of CellNet Common Stock have no effect on Funding's 
financial condition or results of operations, such changes may influence 
Funding's decision to redeem the Redeemable Preferred Securities or a 
Redeemable Preferred Security holder's decision to exchange those securities 
for CellNet Common Stock.

     The information below summarizes Funding's financial instruments exposed 
to market risks associated with fluctuations in interest rates as of December 
31, 1998. The table presents principal cash flows and related interest rates 
by year of maturity for Funding's restricted cash and mandatorily Redeemable 
Preferred Securities in effect at December 31, 1998. This information 
excludes the potential exercise of the relevant redemption features. The 
notes to the financial statements contain a description of Funding's 
restricted cash and mandatorily Redeemable Preferred Securities, and should 
be read in conjunction with the table below (in thousands).

<TABLE>
<CAPTION>
                                                                 Year of Maturity                        Total          
                                                  ------------------------------------                  Due at    Fair 
                                                  1999    2000    2001    2002    2003    Thereafter   Maturity   Value
                                                  -----  ------  ------  ------  --------------------  --------- ---------
<S>                                               <C>     <C>     <C>     <C>     <C>     <C>          <C>        <C>  
INTEREST RATE SENSITIVITY
Restricted Cash-                                 
  Fixed Rate                                     $7,690  $7,657  $3,801     -       -          -        $19,148   $18,204
     Average Rate                                  5.6%    5.6%    5.7%

Mandatorily Redeemable Preferred Securities-
  Fixed Rate                                        -       -       -       -       -      $110,000    $110,000   $57,200
     Interest Rate                                  -       -       -       -       -          7.0%
</TABLE>


                                       9

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                       
                         INDEPENDENT AUDITORS' REPORT

CellNet Funding, LLC:

We have audited the accompanying balance sheet of CellNet Funding, LLC 
(Funding) (a wholly-owned subsidiary of CellNet Data Systems, Inc.) as of 
December 31, 1998, and the related statements of operations, member's equity 
and cash flows for the period from April 21, 1998 (inception) to December 31, 
1998. These financial statements are the responsibility of Funding's 
management. Our responsibility is to express an opinion on these financial 
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing 
standards. 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 audit provides a 
reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material 
respects, the financial position of CellNet Funding, LLC (a wholly-owned 
subsidiary of CellNet Data Systems, Inc.) at December 31, 1998, and the 
results of its operations and its cash flows for the period from April 21, 
1998 (inception) to December 31, 1998 in conformity with generally accepted 
accounting principles.

/s/ Deloitte & Touche LLP

San Jose, California
February 2, 1999


                                      10

<PAGE>

                            CELLNET FUNDING, LLC
           (A WHOLLY-OWNED SUBSIDIARY OF CELLNET DATA SYSTEMS, INC.)
                                BALANCE SHEET
                              DECEMBER 31, 1998
                                (in thousands)

<TABLE>
<S>                                                                                         <C>
ASSETS:
Noncurrent assets:

        Dividends receivable from Parent                                                    $      4,106

        Investment in CellNet Preferred Stock (Note 2)                                            93,500

        Restricted cash (Note 2)                                                                  17,984
                                                                                            ------------
             Total assets                                                                   $    115,590
                                                                                            ------------
                                                                                            ------------

LIABILITIES AND MEMBER'S EQUITY:

Current liability - accrued dividends payable to preferred security holders                 $        642

Payable to Parent                                                                                    564
                                                                                            ------------
             Total liabilities                                                                     1,206


Mandatorily reedemable preferred securities  (Note 2)                                            106,191

Member's  Equity:

       Common limited liability security outstanding                                                  10

       Additional paid-in capital                                                                  8,341

       Accumulated deficit                                                                          (158)
                                                                                            ------------
             Total member's equity                                                                 8,193
                                                                                            ------------
Total liabilities and member's equity                                                       $    115,590
                                                                                            ------------
                                                                                            ------------
</TABLE>

See accompanying notes to financial statements.


                                       11

<PAGE>

                            CELLNET FUNDING, LLC
           (A WHOLLY-OWNED SUBSIDIARY OF CELLNET DATA SYSTEMS, INC.)
                           STATEMENT OF OPERATIONS
          PERIOD FROM APRIL 21, 1998 (INCEPTION) TO DECEMBER 31, 1998
                                (in thousands)

<TABLE>
<S>                                                                                         <C>
Interest income                                                                             $            687 
Dividend income from Parent preferred stock                                                            4,106 
                                                                                            ---------------- 
       Income before dividends and accretion on preferred securities                                   4,793 

Dividends and accretion on preferred securities (Note 2)                                              (4,951)
                                                                                            ---------------- 

       Net loss applicable to common member                                                 $           (158)
                                                                                            ---------------- 
                                                                                            ---------------- 
</TABLE>

See accompanying notes to financial statements.


                                      12

<PAGE>

                            CELLNET FUNDING, LLC
           (A WHOLLY-OWNED SUBSIDIARY OF CELLNET DATA SYSTEMS, INC.)
                          STATEMENT OF MEMBER'S EQUITY
          PERIOD FROM APRIL 21, 1998 (INCEPTION) TO DECEMBER 31, 1998
                                (in thousands)


<TABLE>
<CAPTION>
                                                      Common
                                                      Limited          
                                                      Liability        Additional
                                                      Security         Paid-in           Accumulated
                                                      Outstanding      Capital           Deficit              Total
                                                      ----------------------------------------------------------------------
<S>                                                   <C>              <C>               <C>                  <C>           
Issuance of common limited liability security         $        10      $         -       $              -     $          10 
Additional capital contributed by CellNet                                     8,341                                   8,341 
Net loss applicable to common member                                                                  (158)            (158)
                                                      ----------------------------------------------------------------------
Balances, December  31, 1998                          $        10      $      8,341      $            (158)   $       8,193 
                                                      ----------------------------------------------------------------------
                                                      ----------------------------------------------------------------------
</TABLE>

See accompanying notes to financial statements.


                                      13

<PAGE>

                            CELLNET FUNDING, LLC
           (A WHOLLY-OWNED SUBSIDIARY OF CELLNET DATA SYSTEMS, INC.)
                          STATEMENT OF CASH FLOWS
          PERIOD FROM APRIL 21, 1998 (INCEPTION) TO DECEMBER 31, 1998
                              (in thousands)


<TABLE>
<S>                                                                                         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss applicable to common member                                                       $           (158)
     Adjustments to reconcile net loss applicable to common member to net cash                               
         used in operating activities:                                                                       
         Noncash interest income                                                                        (605)
         Accretion on preferred securities                                                               202 
         Changes in:                                                                                         
             Dividends receivable from Parent                                                         (4,106)
             Accrued dividends payable to preferred security holders                                     642 
                                                                                            ---------------- 
                Net cash used for operating activities                                                (4,025)
                                                                                            ---------------- 

CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchase of CellNet preferred stock                                                            (93,500)
      Increase in restricted cash                                                                    (21,486)
      Proceeds from maturity of restricted cash                                                        4,107 
                                                                                            ---------------- 
                Net cash used for investing activities                                              (110,879)
                                                                                            ---------------- 

CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from issuance of preferred securities, net of issuance costs                          105,989
      Proceeds from issuance of common liability security                                                 10
      Additional capital contributed by Parent                                                         8,341
      Payable to Parent                                                                                  564
                                                                                            ----------------
                Net cash provided by financing activities                                            114,904
                                                                                            ----------------
NET CHANGE IN CASH                                                                                         -
CASH, Beginning of period                                                                                  -
                                                                                            ----------------
CASH, end of period                                                                         $              -
                                                                                            ----------------
                                                                                            ----------------


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid for interest                                                                   $              -

   Cash paid for income taxes                                                               $              -

</TABLE>

See accompanying notes to financial statements.


                                      14

<PAGE>

CELLNET FUNDING, LLC
(A WHOLLY-OWNED SUBSIDIARY OF CELLNET DATA SYSTEMS, INC.)
NOTES TO FINANCIAL STATEMENTS
PERIOD FROM APRIL 21, 1998 (INCEPTION) THROUGH DECEMBER 31, 1998

1.   NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES


     NATURE OF OPERATIONS - CellNet Funding, LLC (Funding) is a special 
purpose limited liability company formed under the laws of the State of 
Delaware on April 21, 1998 as a wholly-owned subsidiary of CellNet Data 
Systems, Inc. (CellNet). Funding exists for the exclusive purpose of selling 
its preferred securities (see Note 2), investing the proceeds of the sale 
thereof in restricted cash and CellNet's preferred stock and engaging in 
other incidental activities.

     CellNet is the sole common member of Funding. The business and affairs 
of Funding are conducted by CellNet and CellNet pays all of Funding's 
administrative expenses, which are not significant.

     BASIS OF PRESENTATION - The accompanying financial statements have been
prepared in accordance with generally accepted accounting principles.

     INVESTMENT IN CELLNET PREFERRED STOCK - Investment in CellNet preferred 
stock includes the proceeds from the offering (see Note 2) which were used to 
purchase preferred stock of CellNet. The preferred stock pays dividends each 
March 1, June 1, September 1 and December 1 in additional shares of CellNet 
preferred stock through June 1, 2001. Subsequent to June 1, 2001, dividends 
are payable in cash or shares of CellNet common stock, at the option of 
CellNet. CellNet has not declared or paid dividends through December 31, 
1998. The investment in CellNet preferred stock is stated at cost.

     RESTRICTED CASH - Restricted cash includes the proceeds of the offering 
which are designated for the payment of cash dividends on the preferred 
securities through June 1, 2001 (see Note 2). These proceeds were invested in 
U.S. Treasury Strips and were placed in escrow upon the closing of the 
offering of the preferred securities and mature at each of the dividend 
payment dates. Restricted cash is stated at amortized cost.

     ACCRUED DIVIDENDS PAYABLE TO PREFERRED SECURITY HOLDERS - The preferred 
securities bear a cumulative dividend at the rate of 7% per annum. The 
dividend is paid quarterly in arrears each March 1, June 1, September 1 and 
December 1. The dividend is payable in cash through June 1, 2001, and 
thereafter, by cash or shares of CellNet common stock, at the option of 
Funding.

     INCOME TAXES - Funding is a U.S. limited liability company which is 
treated as a partnership for U.S. federal and state income tax purposes. 
Accordingly, Funding is not subject to U.S. federal and state income taxes. 
Funding's results of operations are allocated and included in the individual 
income tax returns of the security holders.

     NET LOSS PER SHARE- Funding's one issued and outstanding common limited 
liability company security is owned directly by CellNet. Accordingly, Funding 
does not present net loss per share in its financial statements as such 
diclosure is not considered to be meaningful.


                                      15

<PAGE>

     COMPREHENSIVE LOSS - Comprehensive loss, the change in net assets during 
the period from nonowner sources, and the reported net loss were the same for 
the period April 21, 1998 (inception) through December 31, 1998.

     SEGMENT INFORMATION - Funding operates in one reportable segment; 
issuing its preferred securities, investing the proceeds of the sale thereof 
in CellNet's preferred stock and restricted cash and engaging in other 
incidental activities.

     RECENTLY ISSUED ACCOUNTING STANDARDS - In June 1998, the Financial 
Accounting Standards Board issued Statement of Financial Accounting Standards 
(SFAS) No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, 
which defines derivatives, requires that all derivatives be carried at fair 
value, and provides for hedge accounting when certain conditions are met. 
SFAS 133 is effective for quarters of fiscal years beginning after June 15, 
1999. Funding has not fully assessed the implications of this new standard.

     FAIR VALUE OF FINANCIAL INSTRUMENTS - The estimated fair values of 
Funding's restricted cash and preferred securities were approximately 
$18,204,000 and $57,200,000, respectively, at December 31, 1998, which are 
based on quoted market prices.

2.  MANDATORILY REDEEMABLE PREFERRED SECURITIES

     In May 1998, Funding completed the sale of 7% Exchangeable Preferred 
Securities Mandatorily Redeemable 2010 (the Preferred Securities) for gross 
proceeds of $110,000,000. Net proceeds from the offering, after offering 
costs, were approximately $105,989,000. The recorded amount of the Preferred 
Securities will fully accrete to the face value of $110,000,000 on June 1, 
2010. The restricted cash at December 31, 1998 of approximately $17,984,000 
includes the proceeds of the offering which are designated for the payment of 
cash dividends on the Preferred Securities through June 1, 2001. Funding 
invested the restricted cash in U.S. Treasury strips (the Treasury Strips) 
which were placed in escrow upon the closing of the offering of the Preferred 
Securities. The Treasury Strips have been pledged to The Bank of New York as 
escrow agent (the Escrow Agent) pursuant to an escrow agreement for the 
benefit of the holders of the Preferred Securities. The Escrow Agent is 
required under the Escrow Agreement to release from escrow amounts sufficient 
to pay quarterly dividends on the Preferred Securities through June 1, 2001. 
Dividend payments of $4,107,000 were made in 1998 from proceeds of the 
Treasury Strips.

     The Preferred Securities consist of 4,400,000 exchangeable preferred 
securities of Funding that bear a cumulative dividend at the rate of 7% per 
annum. The dividend is paid quarterly in arrears each March 1, June 1,


                                      16

<PAGE>

September 1 and December 1. The dividend is payable in cash through June 1, 
2001 and thereafter, by cash or shares of CellNet common stock, at the option 
of Funding. The Preferred Securities are exchangeable at any time prior to 
June 1, 2010, at the option of the holders, into CellNet common stock, at a 
rate of 1.8328 shares of CellNet common stock per Preferred Security, or 
$13.64 per share, subject to adjustment. On or prior to June 1, 2001, the 
Preferred Securities must be automatically exchanged for CellNet common stock 
at an exchange price of $13.64 per share in the event the Current Market 
Value (which is a formula as defined in the Written Action of the Manager of 
Funding, (the Written Action)) of CellNet's common stock equals or exceeds 
the following percentage of the exchange price, for at least 20 days of any 
30-day trading period during the 12 month period ending on June 1 of the 
indicated year: 170% on and prior to June 1, 1999; 160% from June 2, 1999 
through June 1, 2000; and 150% from June 2, 2000 through June 1, 2001. The 
Preferred Securities are subject to mandatory redemption on June 1, 2010 at a 
redemption price of 100% of the liquidation preference of the Preferred 
Securities, plus accrued and unpaid dividends, if any. Funding may redeem, at 
its option, the Preferred Securities, in whole or in part, at any time on or 
after June 1, 2001 at certain redemption prices equal to a percentage of the 
liquidation preference (set forth in the Written Action) which declines each 
year until maturity of the Preferred Securities, together with accrued and 
unpaid dividends, if any.

     Pursuant to and to the extent set forth in the guarantee of the 
Preferred Securities (the Guarantee) by CellNet for the benefit of the 
holders of Preferred Securities, CellNet has agreed to pay in full to the 
holders of the Preferred Securities (except to the extent paid by Funding), 
as and when due, regardless of any defense, right of set off or counterclaim 
which Funding may have or assert, the following payments (the Guarantee 
Payments), without duplication: (i) any accrued and unpaid distributions that 
are required to be paid on the Preferred Securities, to the extent Funding 
has sufficient funds legally available therefor, (ii) the redemption price, 
with respect to any Preferred Securities called for redemption by Funding, to 
the extent Funding has sufficient funds legally available therefor, and (iii) 
upon a voluntary or involuntary dissolution, winding-up or termination of 
Funding, the lesser of (a) the aggregate of the liquidation preference and 
all accrued and unpaid dividends on the Preferred Securities to the date of 
payment to the extent Funding has sufficient funds legally available 
therefor, and (b) the amount of assets of Funding remaining for distribution 
to holders of Preferred Securities upon the liquidation of Funding. The 
Guarantee may also be subject to contractual restrictions under agreements 
governing future indebtedness of CellNet.

     On May 19, 1998, after the investment in Treasury Strips, Funding 
applied the remaining net proceeds from the offering of the Preferred 
Securities together with other capital contributed by CellNet to purchase 
$93,500,000 of CellNet's Preferred Stock (the CellNet Preferred Stock) which 
pays dividends each March 1, June 1, September 1 and December 1 in additional 
shares of CellNet Preferred Stock through September 1, 2001. Subsequent to 
June 1, 2001, dividends are payable in cash or shares of common stock, at the 
option of CellNet. The CellNet Preferred Stock is exchangeable, at the option 
of Funding, at any time prior to June 1, 2010 into shares of

                                      17

<PAGE>

CellNet's common stock at an exchange rate based on the exchange rate of 
the Preferred Securities. The CellNet Preferred Stock is subject to mandatory 
redemption on June 1, 2010. During the period May 19, 1998 through December 
31, 1998, Funding earned dividends on CellNet Preferred Stock of $4,106,000.


                                      18


<PAGE>

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

     None.



                                    PART III

     The information called for by Part III of this Form 10-K is incorporated 
by reference to the definitive proxy statement for the annual meeting of 
stockholders of CellNet which was filed with the Securities and Exchange 
Commission on March 22, 1999.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

         The Company has the following directors:

         John M. Seidl              Director
         Paul G. Manca              Director
         David L. Perry             Director


         The Company has the following executive officers:

         John M. Seidl              President
         Paul G. Manca              Vice President and Chief Financial Officer
         David L. Perry             Vice President and Secretary
         Ben H. Lyon                Vice President and Assistant Secretary


                                      19

<PAGE>

     The duties and authority of the officers and directors, if any, shall be 
determined by the Manager (CellNet) in its sole discretion. Its business 
affairs are managed by CellNet, as the Manager of Funding, pursuant to 
the LLC Agreement. 

ITEM 11. EXECUTIVE COMPENSATION

     Funding's executive officers are as follows: 

                       John M. Seidl        President
                       Paul G. Manca        Vice President and 
                                            Chief Financial Officer
                       David L. Perry       Vice President and 
                                            Secretary
                       Ben H. Lyon          Vice President and
                                            Assistant Secretary

     Its business affairs are managed by CellNet, as the Manager of Funding, 
pursuant to the LLC Agreement. Neither CellNet nor the Executive Officers 
receives any fees or compensation as Manager of the Company.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


<TABLE>
<CAPTION>
                             Name and Address of              Amount and Nature of              Percent of
Title of Class               Beneficial Owner                 Beneficial Ownership                Class
--------------------         ----------------------------     -----------------------------     ----------
<S>                          <C>                              <C>                               <C>
Common Securities            CellNet Data Systems, Inc.       1 Common Security owned              100%
                             125 Shoreway Road                beneficially with sole voting
                             San Carlos, California 94070     power
</TABLE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On May 19, 1998, CellNet made a capital contribution of $8.3 million to 
Funding. On May 19, 1998, Funding used the remaining proceeds from 
the private placement of the Redeemable Preferred Securities, along with the 
$8.3 million contributed by CellNet to purchase approximately $93.5 million 
of CellNet Preferred Stock.

     All of Funding's administrative expenses, which are insignificant, are 
paid by CellNet. Additionally, CellNet advanced approximately $564,000 
million to Funding during the period from April 21, 1998 (inception) through 
December 31, 1998 for the offering costs associated with the issuance of the 
Redeemable Preferred Securities.

                                     PART IV

ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<S>            <C>
(A)  (1)       FINANCIAL STATEMENTS.  The following financial statements are 
               included in Item 8 of Part II:

               Independent Auditors' Report .......................................... 10

               Balance Sheet, December 31, 1998....................................... 11

               Statement of Operations, Period from April 21, 1998 (inception) 
                 to December 31, 1998................................................. 12
</TABLE>


                                      20

<PAGE>

<TABLE>
<S>            <C>
               Statement of Member's Equity, Period from April 21, 1998 
                 (inception) to December 31, 1998..................................... 13

               Statement of Cash Flows, Period from April 21, 1998 (inception) to
                   December 31, 1998.................................................. 14

               Notes to Financial Statements, Period from April 21, 1998 
                   (inception) to December 31, 1998................................... 15

     (2)       FINANCIAL STATEMENT SCHEDULE.
               
               All other schedules have been omitted because they are not 
               applicable or are not required or the information required to be 
               set forth therein is included in the Financial Statements or 
               notes thereto.

     (3)       REPORTS ON FORM 8-K. None.

     (4)       EXHIBITS.

               CORPORATE ORGANIZATION.

                    3.1*:    Certificate of Formation of CellNet Funding, LLC filed 
                             April 21, 1998 with the Secretary of State of the State of 
                             Delaware.

                    3.2*:    Amended and Restated Limited Liability Company Agreement of 
                             CellNet Funding, LLC, dated as of May 13, 1998.

               INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES.

                    4.1*:    Guarantee Agreement, dated as of May 19, 1998, between 
                             CellNet Data Systems, Inc. and CellNet Funding, LLC.

                    4.2*:    Written Action of the Manager of CellNet Funding, LLC, 
                             dated as of May 13, 1998, with respect to the terms of the 
                             7% Exchangeable Limited Liability Company Preferred 
                             Securities.

                    4.3*:    Escrow and Security Agreement, dated as of May 19, 1998, 
                             among CellNet Data Systems, Inc., CellNet Funding, LLC and 
                             The Bank of New York.

               MATERIAL CONTRACTS.

                    10.1*:   Certificate of Designation, Rights and Preferences of the 
                             Redeemable Preferred Stock of CellNet filed May 18, 1998 
                             with the Secretary of State of the State of Delaware.

               FINANCIAL DATA SCHEDULE.

                    27.1:    Financial Data Schedule of CellNet Funding, LLC for the 
                             Fiscal Year Ended December 31, 1998.

</TABLE>

------------------------
(*) Incorporated by reference to Funding's Registration Statement on Form S-3 
    (File No. 333-50851) filed on May 13, 1998.

                                      21

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities 
and Exchange Act of 1934, the Registrant has duly caused this Report on Form 
10-K to be signed on its behalf by the undersigned, thereunto duly authorized 
in the City of San Carlos, State of California on March 30, 1999.

                                 CellNet Funding, LLC

                                 By:   CellNet Data Systems, Inc., its Manager
                                       ---------------------------------------

                                 By:   /s/ JOHN M. SEIDL                    
                                       ---------------------------------------
                                       John M. Seidl
                                       Chairman of the Board, President and
                                       Chief Executive Officer of
                                       CellNet Data Systems, Inc.


     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature 
appears below under the heading "Signatures" constitutes and appoints John M. 
Seidl and Paul G. Manca, and each of them individually, his true and lawful 
attorney-in-fact and agent with full power of substitution and 
resubstitution, for him and in his name, place and stead, in any and all 
capacities, to sign any or all amendments (including post-effective 
amendments) and supplements to this Report on Form 10-K, and to file the 
same, with all exhibits thereto, and other documents in connection therewith, 
with the Securities and Exchange Commission, granting unto said 
attorneys-in-fact and agents, and each of them, full power and authority to 
do and to perform each and every act and thing requisite and necessary to be 
done in connection with the above premises, as fully for all intents and 
purposes as he might or could do in person, hereby ratifying and confirming 
all that said attorneys-in- fact and agents, or any of them, or his or their 
substitute or substitutes, may lawfully do or cause to be done by virtue 
hereof.

     Pursuant to the requirements of Section 13 or 15(d) of the Securities 
and Exchange Act of 1934, this Report on Form 10-K has been signed by the 
following persons in the capacities on March 30, 1999.

<TABLE>
<CAPTION>
        SIGNATURE                                        TITLE
<S>                                        <C>
/s/ JOHN M. SEIDL                         Chairman of the Board, President
-------------------------------           and Chief Executive Officer 
John M. Seidl                             (Principal Executive Officer)

/s/ PAUL G. MANCA                         Vice President and Chief Financial 
-------------------------------           Officer (Principal Financial and 
Paul G. Manca                             Accounting Officer)

/s/ DAVID L. PERRY
-------------------------------            Secretary and Director of CellNet  
David L. Perry                             Funding, LLC
</TABLE>


                                      22